A Swiss trading house holds a facility with a European correspondent bank. Overnight, a counterparty's parent company appears on the EU's consolidated sanctions list (the list of persons and entities subject to EU restrictive measures). The European bank freezes the account. The Swiss entity, operating under the oversight of SECO (Switzerland's State Secretariat for Economic Affairs, which administers Swiss autonomous sanctions), wants to know whether its own blocked funds can be released – and whether the answer is the same in both jurisdictions. It is not. As of May 2026, the EU and SECO operate parallel but meaningfully divergent regimes for the release of blocked funds, and the route that succeeds under one will not necessarily succeed under the other.
The release of blocked funds under EU sanctions law turns on a specific authorisation granted by the competent authority of the relevant EU member state, operating within a framework set by the applicable Council Regulation. Under Swiss law, SECO holds direct competence to authorise derogations from asset-freeze obligations imposed by Swiss autonomous sanctions ordinances. Both regimes allow release in defined circumstances, but the legal tests, procedural pathways, timelines, and cross-border interaction differ in ways that decide how a business must structure its application.
This analysis maps the two regimes side by side, identifies the points of divergence that matter most to cross-border businesses, and sets out how to manage a release application that spans both jurisdictions.
What legal authority governs each regime, and who decides?
Under EU sanctions law, the legal basis for an asset freeze is the relevant Council Regulation imposing restrictive measures on specific persons, entities, or sectors. The Council Regulation is directly applicable across all EU member states. It creates prohibitions and, in parallel, sets out the conditions under which a competent authority may authorise a derogation – including the release or unblocking of frozen funds. Critically, the Council Regulation identifies the categories of permissible derogation at EU level, but the decision to grant an authorisation in any specific case rests with the national competent authority (NCA) – the designated ministry, treasury, or central bank in each member state.
This architecture produces an immediate practical consequence. A frozen account held at a French bank is subject to a French NCA decision. The same funds held in Germany require a German NCA authorisation. The substantive test derives from the same EU instrument, but the administrative process, the required documents, and the effective timeline are set by each member state. In our experience advising clients across multiple EU jurisdictions, the divergence between member state practice is often as significant as the divergence between the EU and SECO.
SECO's position is structurally different. Swiss autonomous sanctions are enacted through federal ordinances, and SECO is the single federal competent authority for granting exemptions from those ordinances. There is no sub-national layer. A Swiss bank freezing funds under the applicable Swiss ordinance looks to a SECO derogation. The application goes to one body, and the legal basis is the single federal ordinance rather than a patchwork of national implementing decisions.
The position above covers the standard case. Your facts – the specific ordinance in play, the category of funds, the relationship between the account holder and the designated person – change the analysis materially.
For an assessment of your exposure across the EU and SECO regimes, contact Calder & Vance at info@caldervance.com.
What are the permissible grounds for release in each regime?
Both regimes permit the release of blocked funds in defined categories, but the categories are not co-extensive. Understanding where they overlap and where they diverge is the first step in any release application.
EU Council Regulations typically provide for authorisations in at least the following categories: payment of basic needs (food, rent, medicines, taxes); payment of reasonable professional fees or reimbursement of expenses associated with legal services; payment of extraordinary expenses where the designated person or entity can demonstrate a specific need; and payments intended for official bodies such as courts or arbitral tribunals. Some Council Regulations also include a category for prior contractual obligations – amounts due under contracts entered into before the designation. The specific categories available depend on which Council Regulation applies to the relevant programme, and not all programmes carry identical derogation provisions.
SECO's exemption categories under the applicable Swiss ordinances are broadly comparable, but the drafting and the administrative interpretation differ. Swiss ordinances typically permit derogations for basic needs, legal expenses, and prior contractual obligations. SECO also has a humanitarian exception pathway. However, the threshold for demonstrating necessity – particularly for extraordinary expenses – is applied through SECO's own administrative practice, which does not track EU NCA practice. A payment category that a French NCA would authorise as an extraordinary expense may require a differently framed application to satisfy SECO.
One divergence that practitioners encounter regularly concerns contractual obligations. Some EU Council Regulations limit the prior-contract derogation to contracts concluded before the designation date, with a short window for completion. Swiss ordinances may frame the equivalent provision differently. In our cross-border practice, we have seen businesses apply on both sides simultaneously and obtain different substantive outcomes for economically identical payment requests.
How does the procedural pathway differ – and how long does it take?
The procedural pathway for a release application reflects each regime's institutional architecture. Neither the EU nor SECO publishes a guaranteed turnaround time that is verifiable as a binding regulatory commitment, and actual processing times vary materially depending on the complexity of the case, the member state NCA involved, and SECO's current caseload. That said, there are structural differences in how each pathway is organised.
Under the EU regime, the applicant identifies the NCA of the member state where the funds are held. The application is typically addressed to that NCA and supported by: evidence of the identity of the account holder; documentation establishing the relationship between the account holder and the designated person (including any ownership or control analysis); the basis for the derogation claimed; and financial documentation supporting the amount requested. Some NCAs require translation into the national language. Some impose prescribed forms; others accept free-form submissions. The NCA may consult the EU member state or competent committee before deciding. It may also seek additional information from the applicant, which pauses the assessment clock.
SECO operates a centralised process. Applications are submitted to SECO directly, supported by equivalent documentary evidence. SECO will examine the legal basis under the applicable ordinance, the identity and ownership structure of the applicant, and the specific purpose of the requested payment. SECO may request additional information. Switzerland's administrative procedure rules apply to SECO decisions, which means that a refusal carries a formal right of appeal through the Swiss administrative courts. The EU regime, by contrast, routes a challenge to an NCA refusal through the national administrative or judicial review system of the relevant member state – after which a further challenge may be available before the EU General Court, though that route targets the underlying designation rather than the NCA's derogation decision directly.
What this means in practice: a business managing a simultaneous freeze in France and Switzerland must run two separate processes, on different forms, with different administrative cultures, and with appeals routed through entirely different courts. In our experience, the Swiss process is generally more predictable in its administrative pathway, because there is a single point of contact. The EU process can be faster in jurisdictions with streamlined NCA procedures, but the variance is high.
How do the ownership and control tests interact across the two regimes?
One of the most consequential points of divergence is the test used to determine whether a non-listed entity's funds are subject to the freeze in the first place – and therefore whether a release application is necessary at all.
Under the applicable EU Council Regulations, funds belonging to entities owned or controlled by a designated person are frozen. The EU test is a combined ownership and control test (the test that determines whether a non-listed entity is caught through a listed person's ownership or control of it). Ownership alone – at any significant level – may be sufficient. Control, even without majority ownership, can also trigger the freeze if the designated person can direct or influence the entity's decisions. EU guidance and General Court case law have confirmed that this test extends beyond formal shareholding to encompass indirect control through board composition, contractual rights, or operational dependency.
Switzerland's ordinances impose asset-freeze obligations on designated persons and, in some programmes, on persons and entities acting on their behalf or under their control. The Swiss control test is broadly similar in concept to the EU test, but SECO's administrative interpretation of what constitutes "control" does not always track EU NCA practice. A structure that an EU NCA treats as caught by the control test may be analysed differently by SECO under the applicable ordinance, particularly where the ordinance language tracks the underlying UN Security Council resolution rather than the EU Council Regulation.
This divergence has a direct consequence for release applications. A business that concludes its funds are not subject to the EU freeze on the basis that control is absent may nonetheless find SECO taking a different view under the Swiss ordinance – or vice versa. In cross-border matters, ownership and control analysis must be run separately against both legal instruments before an application is filed. Filing a release application that implicitly concedes that the freeze applies may be premature if a non-freeze argument is available under one of the regimes.
Does your counterparty's ownership structure satisfy both the EU and Swiss control tests independently? That question is worth answering before the first application is submitted.
What are the key risk flags in a cross-border release application?
Several risk patterns recur in cross-border release applications spanning the EU and SECO regimes. Addressing them early protects both the application and the applicant's broader compliance position.
The first risk is inconsistent ownership analysis. Applicants who produce different ownership-and-control analyses for the EU and Swiss processes – perhaps because different advisers prepared them, or because different information was available – create a credibility risk. If the NCA and SECO reach different conclusions on the same structure, one of those conclusions may be wrong, and a regulator reading both files will notice the inconsistency. A single, consolidated ownership analysis should underpin both applications.
The second risk is concurrent criminal exposure. In some EU member states, the officer of a company that retains or transacts with frozen funds without authorisation faces personal liability, not merely a civil penalty for the company. SECO enforcement under the applicable Swiss ordinance can also carry criminal consequences. If the funds have already been used – even for a purpose that would likely qualify for a derogation – the application needs to address that history honestly. A voluntary self-disclosure (VSD – a proactive report of a potential violation to the competent authority, made before enforcement is initiated) may be appropriate in conjunction with the release application. In our experience, early disclosure materially affects the regulatory response in both the EU member state and Switzerland.
The third risk is the interaction with other regimes. A business subject to an EU and Swiss freeze may also be subject to OFAC blocking if the designated person has a nexus to a US-sanctions programme. OFAC's 50 percent rule (OFAC's rule treating entities owned 50 percent or more in the aggregate by blocked persons as themselves blocked) operates independently of the EU and Swiss tests. A successful EU derogation does not authorise a transaction that would simultaneously violate OFAC's blocking requirements. Secondary-sanctions exposure – the risk that a non-US transaction triggers US secondary measures – must be assessed alongside the primary EU and SECO analysis. Our analysis of OFAC considerations in the parallel OFAC vs OFSI context, available at release of blocked funds – OFAC vs OFSI analysis, sets out how these interactions work.
The fourth risk concerns record-keeping. Both the EU regime and SECO expect applicants to maintain documentation of the basis for any authorised payment. Where funds are released under a derogation, that authorisation letter and the supporting materials should be retained for the applicable period – which is set by the relevant national rules and the Swiss administrative requirements. Losing the authorisation documentation makes it very difficult to defend a subsequent enforcement inquiry.
If a transaction has already been flagged, or a filing has been refused, an early review can preserve options that narrow with time. Contact Calder & Vance at info@caldervance.com for a confidential assessment.
A common misconception: one authorisation covers both regimes
A myth we regularly correct in cross-border mandates is the assumption that an authorisation obtained from an EU NCA provides cover for the corresponding transaction under Swiss law, or that a SECO exemption is automatically recognised by EU NCAs. It is not, and it never has been.
The EU and Switzerland are separate legal systems. Switzerland is not an EU member state. An authorisation letter issued by a French or German NCA under the applicable Council Regulation is a decision of that national authority under EU law. It carries no legal weight under the Swiss ordinance. SECO does not treat EU NCA authorisations as binding or even as persuasive precedents in the same case, though a well-documented EU approval may, as a practical matter, support the credibility of the Swiss application.
The reverse is equally true. A SECO exemption does not authorise a payment that would otherwise be prohibited under the applicable EU Council Regulation. A European correspondent bank processing a payment on the strength of a SECO decision – without an EU NCA authorisation – remains exposed to EU enforcement, since the bank's own obligations arise under EU law and are assessed by reference to EU instruments.
This is not an obscure technical point. We have advised clients who were within days of executing a payment on the assumption that one authorisation covered both sides, and who would have been in breach under the other regime. The question to ask before any payment is: which legal systems impose obligations on this transaction, and does each authorisation cover each relevant obligation? Answering that question correctly requires mapping the transaction against each applicable regime independently.
For guidance on the US-Canada equivalent analysis, see our companion piece at release of blocked funds – OFAC vs Canada analysis, which addresses how parallel-authorisation questions work under those regimes. For export-control and frozen-account management under BIS and EAR, see frozen account management under BIS and EAR.
Practical decision sequence for a cross-border release application
The sequence below reflects how we structure a cross-border release matter spanning the EU and SECO. It is not a guarantee of any outcome, and the steps will need adjustment for specific facts.
The first step is identifying all applicable legal regimes. Before a release application is filed anywhere, the team needs to confirm which sanctions programmes have triggered a freeze, which legal instruments govern each freeze, and which competent authorities hold decision-making power. This mapping should also flag OFAC, UK OFSI, or other-regime exposure, because a partial authorisation that leaves one regime unsatisfied does not solve the business problem.
The second step is running a consolidated ownership and control analysis. A single, cross-regime ownership analysis should be prepared, identifying the designated person, the chain of ownership or control to the account holder, and the applicable tests under each regime. Where the tests diverge, the analysis should explain the differences explicitly rather than applying a single standard.
The third step is identifying the correct derogation category under each instrument. The applicable Council Regulation and the applicable Swiss ordinance each set out permissible grounds for release. The strongest application is one that fits squarely within a specified category. Where more than one category is available, the analysis should identify which produces the clearest legal basis and the least administrative friction.
The fourth step is preparing the applications. EU and SECO applications should be prepared in parallel but are submitted to different bodies, in potentially different languages, and with different supporting materials. Coordination between the filings is important: the ownership analysis, the description of the funds, and the stated purpose of the release should be consistent across both.
The fifth step is managing follow-up enquiries. Both NCAs and SECO routinely request supplementary information. Responding promptly and consistently, without introducing new inconsistencies, is critical. Each response is part of the administrative record that an enforcement body or appellate court may later review.
The final step is preserving the record. Once authorisations are granted and the payment is made, the documentation – the authorisation letters, the applications, the supporting materials, and the payment records – should be retained in a compliance file for the applicable record-keeping period under each regime.
Related practices
- Frozen Account Management – BIS/EAR – manage frozen accounts and licensing requirements under US export-control rules
- Release of Blocked Funds – OFAC vs OFSI Analysis – cross-regime comparison of US and UK release pathways and authorisation tests