A Swiss-headquartered trading house has a long-standing supply agreement with a counterparty that has just been designated under both EU and SECO sanctions. The contract still has three months to run. Warehoused goods are in transit. Outstanding receivables sit in a blocked account. The compliance team needs to know, with precision, whether it can wind down the position – and under which authority, on which timeline, and subject to which conditions.
Wind-down authorisations allow businesses to complete or terminate pre-existing contracts with sanctioned counterparties without incurring liability, provided the activity falls within the scope of the authorisation and is completed within its permitted window. As of June 2026, the EU and SECO both provide wind-down relief, but they do so through structurally different instruments, administered by different authorities, with different procedural requirements and different tolerance for discretionary judgment. The divergences are material and, in a cross-border matter, they govern whether a single transaction plan works or whether two separate authorisation tracks are required.
This analysis maps the key divergences criterion by criterion: legal basis and authority, scope of permissible activity, the applicable tests, procedural requirements, time windows, and the practical risk flags that determine when counsel must be involved before the business acts.
How are wind-down authorisations structured under the EU regime?
Under the EU regime, wind-down relief is embedded in the relevant Council Regulation as a specific derogation, administered at member-state level by the competent authority of the member state where the entity seeking the authorisation is established. The Council sets the outer limits of what the derogation covers; national competent authorities apply the test and issue the authorisation. That layered structure means the authorisation you receive in one member state is not automatically valid in another, and the administrative culture of the issuing authority matters as much as the text of the Regulation.
The EU's wind-down derogation is typically time-limited on its face, setting a defined window – expressed as a number of weeks from the designation date – within which contracts entered into before a specified cut-off may be completed. The window is not open-ended. In our experience, businesses that fail to read the precise temporal language of the derogation, and instead treat it as a general permission to conclude existing business at any pace, find themselves outside the authorised window before the goods have cleared the border. The designation date and the contract-execution date are both critical inputs that must be established with documentary precision before any wind-down activity begins.
What the EU derogation covers is also narrower than it appears at first reading. The derogation typically authorises the receipt of payments due under contracts concluded before the designation, and in some regimes the delivery of goods already in transit, but it does not generally authorise new performance obligations or the amendment of pre-existing contracts to extend their duration or expand their scope. A refinancing, a payment-terms extension, or a novation of an existing contract in favour of a non-sanctioned entity requires a separate analysis – and, in many cases, a separate specific licence rather than reliance on the general derogation.
How does SECO's wind-down approach differ in legal structure?
SECO administers Switzerland's autonomous sanctions regime under the relevant SEMA ordinances and, where applicable, the separate ordinances implementing UN Security Council measures. Switzerland maintains an independent sanctions regime that does not automatically replicate EU measures, though in practice SECO ordinances frequently track EU designations with short time lags. That tracking is not guaranteed, and it is not immediate – a counterparty designated by the EU may not yet be designated under Swiss ordinances, which creates a brief window of regulatory asymmetry that a cross-border business must handle carefully to avoid inadvertently violating one regime while relying on the other.
SECO's wind-down authorisations operate through a centralised licensing mechanism. Unlike the EU's member-state architecture, a single SECO licence covers Swiss-territory activity without the need to navigate multiple national authorities. That structural simplicity is an advantage. However, SECO's licensing practice places a heavier emphasis on documented justification from the outset. In our experience advising on Swiss-nexus matters, SECO expects the applicant to demonstrate three things before it will issue a wind-down authorisation: that the contract was concluded before the designation date, that performance is genuinely in the wind-down phase and not an extension of the commercial relationship, and that there is no alternative route to conclude the matter that avoids the sanctioned counterparty entirely. The third requirement has no direct parallel in the standard EU derogation text, and it represents a meaningful additional bar.
SECO also applies a more explicit proportionality assessment to the value and nature of the transaction being wound down. A high-value, technically sensitive contract will attract more scrutiny and a longer review timeline than a routine payment collection. The EU national competent authority system can produce similar variation in practice, but SECO's centralised process makes the proportionality filter more predictable and more explicit as an element of the application.
Where do the substantive tests diverge most sharply?
The most operationally significant divergences between the EU and SECO wind-down regimes sit in four areas: the temporal test, the "new performance" boundary, the ownership-and-control perimeter, and the treatment of payments through intermediary financial institutions.
On the temporal test, the EU derogation typically runs from the designation date, not from the date the business discovers the designation. A business that is unaware of a designation for several days – which is common in markets where real-time screening integration is imperfect – may already be partway through the authorised window before it has identified the problem. SECO's approach to the temporal question is more licence-specific; the window runs from the date of the ordinance entry but SECO has in practice accepted applications filed shortly after the discovery date where the business can show good-faith, contemporaneous screening processes. That flexibility is not guaranteed, but it is a feature of the SECO licensing culture that practitioners should factor into the application strategy.
On the "new performance" boundary, both regimes prohibit using a wind-down authorisation to conduct activity that effectively extends or renews the commercial relationship. The EU test is primarily textual: does the activity fall within the pre-designation contract as written? SECO's test incorporates an economic-substance element: does the activity, viewed commercially, continue to benefit the designated counterparty beyond the minimum necessary to close the position? The economic-substance element creates uncertainty for transactions such as bonded-goods releases, pre-paid service completions, and royalty payments under pre-existing licences. Each of those must be assessed under both regimes separately, and the stricter prohibition governs the overall transaction plan.
On ownership and control, the EU applies its standard ownership and control (the test under which a non-listed entity is caught if a designated person owns or controls it) analysis to wind-down transactions. A payment to a non-listed entity that is owned or controlled by the designated counterparty may itself require separate authorisation. SECO applies a functionally similar test but its published guidance is less granular on the control limb than the EU's. Where the ownership chain involves intermediate entities in both EU and Swiss perimeter, businesses need to map the entire chain before relying on either wind-down authorisation – the designation of the ultimate parent captures the payment route even if the immediate payee is not itself listed.
On payments through intermediary financial institutions, the EU regime requires the financial institution in the payment chain to have a clear legal basis for processing the transaction. A wind-down authorisation issued to the trading house does not by itself authorise the correspondent bank to process the payment; the bank needs to satisfy itself that its own regulatory position is covered, which in practice means obtaining a copy of the authorisation and, in some jurisdictions, confirming the position with its own competent authority. SECO-licensed transactions face an additional dimension: a Swiss bank processing a payment under a SECO wind-down authorisation must also consider whether EU or US correspondent-banking relationships introduce a secondary-sanctions or parallel-regime complication. That intersection – where a SECO authorisation covers the Swiss-law position but OFAC's rules reach the USD leg of the same payment – is one of the most frequently underestimated risks in cross-border wind-down work.
What are the procedural requirements and how do the timelines compare?
Under the EU system, the procedural path varies by member state. Some national competent authorities have published standardised wind-down authorisation forms and process applications within a matter of weeks; others require a fuller written application with supporting documents and take considerably longer. There is no single EU-wide procedural standard for wind-down applications below the level of the Regulation's substantive limits. A business established in multiple EU member states, or whose goods and payments travel through multiple EU jurisdictions, may need to engage with more than one competent authority – and the authorisations issued may not be co-extensive in their coverage.
SECO operates a single-window process. Applications are submitted to SECO directly, and SECO issues a decision that covers Swiss-territory activity. The SECO process is more predictable in structure, though response times vary with workload and the complexity of the transaction. SECO does not publish a fixed statutory decision window for wind-down authorisations; in practice, straightforward applications are resolved more quickly than contested or high-value ones. Businesses should not assume a rapid turnaround and should file before the wind-down activity begins, not after.
Both regimes impose record-keeping obligations on businesses that rely on a wind-down authorisation. The EU requirement to maintain records supporting compliance with the Regulation is a standing obligation; businesses must be in a position to demonstrate, on examination, that their activity fell within the scope of the authorisation. SECO similarly expects documentary evidence of the pre-designation contract, the designation date, the scope of the wind-down, and the final close-out. Where the same transaction touches both regimes, maintaining a single, unified record set that satisfies both sets of requirements is both possible and advisable – a two-file approach for the same transaction creates unnecessary inconsistency risk.
The position above covers the standard case. Your specific facts – the counterparty's ownership structure, the goods in transit, the currency of the outstanding payment, the jurisdictions of the correspondent banks in the payment chain – can change the analysis materially.
To discuss a wind-down authorisation matter under the EU or SECO regime, contact Calder & Vance at info@caldervance.com.
What are the risk flags that require counsel before the business acts?
Several patterns consistently indicate that a business should not self-assess its wind-down authorisation and should instruct counsel before any transaction is executed. The first is designation lag. Where the EU and SECO ordinances designate the same person on different dates, the business must identify which regime governs each element of the transaction and whether the authorised window under one has already expired before the other opened. Acting on the assumption that a single wind-down plan covers both regimes without checking the respective designation dates is one of the most common errors in multi-regime wind-down work.
The second risk flag is pre-designation contract ambiguity. Wind-down authorisations cover contracts concluded before the relevant cut-off. Where the contract was amended, extended, or subject to a framework arrangement under which specific orders were placed, the question of whether the activity is covered by the "pre-designation" test becomes contestable. Both SECO and EU competent authorities will scrutinise the contract documentation. A business that has a framework agreement with annual call-off orders must determine whether each call-off is a separate contract or a performance under the framework – and the answer determines whether the wind-down authorisation covers it.
The third flag is USD or euro-denominated payments through regulated correspondent networks. As noted above, a SECO or EU wind-down authorisation does not resolve the position of the correspondent bank. Where the payment passes through a US-correspondent bank, OFAC's rules apply independently of the SECO or EU authorisation. We regularly advise businesses that have obtained a valid EU or SECO authorisation only to find that the payment leg is blocked at the correspondent bank because OFAC's position on the same transaction has not been addressed. The resolution requires either a separate OFAC authorisation or a payment route that does not engage the US financial system.
A fourth flag is goods in transit crossing multiple jurisdictions. Where goods are already in transit at the time of designation, the wind-down question intersects with export-control and customs obligations. The delivery of designated-origin goods, or goods subject to a separate export authorisation, may require a parallel clearance that the wind-down authorisation does not cover. This is a point where the BIS/EAR service analysis may become directly relevant even for a primarily EU or SECO-focused transaction.
If a transaction has already been flagged by a bank or a competent authority, or a filing has been refused, an early legal review preserves options that narrow with time. Delays in instructing counsel after a problem has been identified consistently reduce the range of available remedies.
To discuss a wind-down or licensing matter at an early stage, contact us at info@caldervance.com.
Does a stricter regime automatically govern? Understanding the "stricter prohibition" principle
Where a transaction is subject to both EU and SECO sanctions simultaneously, the applicable rule is that the stricter prohibition governs. This principle has practical consequences for wind-down planning. A business cannot satisfy itself by obtaining an authorisation under the less restrictive regime and then conducting activity that the stricter regime prohibits. The wind-down plan must be consistent with both regimes, and where the two authorisations have different temporal scopes or different activity limits, the business must operate within the narrower intersection of the two.
In our cross-border practice, the most frequent consequence of this principle in EU/SECO wind-down matters is a shortened effective window. The EU derogation may permit wind-down activity for a defined period. SECO's licence may cover a shorter window, or may impose conditions that effectively reduce the scope of permissible activity below what the EU derogation allows. The business must build its wind-down plan around the shorter, more restrictive perimeter.
A related question arises where the EU and Swiss regimes have designated different persons in the same corporate group. It is possible for the EU to have designated entity A (the immediate counterparty) while SECO has designated entity B (a parent or affiliate) but not entity A. In that scenario, a payment to entity A may be permissible under SECO's rules (no direct designation of A), but the EU's ownership-and-control analysis may treat entity A as caught through entity B's EU listing. Or the reverse. Each leg of the corporate ownership chain must be traced under each regime independently. There is no shortcut.
This analytical complexity is also addressed in our further analysis of EU and SECO wind-down divergences, which covers the treatment of subsidiary designations, the interaction with UN Consolidated List measures, and the position of third-country intermediaries.
A common misconception: one authorisation covers the whole transaction
A persistent misconception among businesses managing a multi-regime wind-down is that a single authorisation from their "home" competent authority is sufficient to cover the entire transaction, including legs that touch other regimes. It is not. An EU national competent authority authorisation covers EU-law obligations. It does not address SECO, OFAC, or OFSI. A SECO licence covers Swiss-law obligations. It does not extend to EU member-state requirements or to correspondent-bank obligations under US rules.
The consequence of relying on a single authorisation across a multi-regime transaction is that the other regimes remain fully operative. A business that receives an EU wind-down authorisation but does not address the OFAC position of the USD payment, or the SECO position on the Swiss-held goods, remains exposed to enforcement action under the uncovered regimes. The authorisation provides a defence only for activity falling within its specific scope and jurisdiction. Enforcement authorities in each jurisdiction assess compliance with their own regime; they do not give weight to authorisations issued under a parallel foreign regime unless there is a specific treaty or regulatory provision requiring them to do so.
We regularly advise businesses – including financial institutions and trading houses operating across EU, Swiss, and US perimeters simultaneously – on the construction of a transaction plan that is authorised across all relevant regimes before the first step is taken. The earlier that work begins relative to the wind-down timeline, the more options remain available. For additional cross-regime analysis on the OFAC and Canadian wind-down position, see our comparative analysis of OFAC vs Canada wind-down authorisations.
Related practices
- Frozen Account Management – BIS/EAR – managing blocked accounts and BIS licence requirements under the EAR in parallel with sanctions authorisations
- EU vs SECO Wind-down Authorisations – Further Analysis – subsidiary designations, UN list interaction, and third-country intermediary treatment