A Swiss-registered trading company receives a notice from its bank: an account linked to a recently acquired subsidiary has been frozen. The reason is straightforward in administrative terms, though commercially alarming – a shareholder in the target company appears on a list maintained by SECO (Switzerland's State Secretariat for Economic Affairs, the authority responsible for administering Swiss autonomous sanctions and for implementing United Nations Security Council measures). The question the board puts to counsel is not whether the designation is correct. The question is: how do we exit this position lawfully, and how quickly must we act?
Divesting a sanctioned interest under SECO requires a structured sequence: mapping the legal basis for the freeze, securing any authorisation required before assets move, executing the disposal under controlled conditions, reporting the transaction, and maintaining records that will satisfy SECO if scrutinised. Swiss ordinances implementing autonomous Swiss measures and UN Security Council resolutions give SECO broad powers to freeze assets and to condition or prohibit their transfer. Timing matters. As of January 2026, unauthorised dealings with frozen assets – including a disposition that has not been properly authorised – can expose a business to criminal and civil consequences under the applicable Swiss ordinances.
This guide walks through the process step by step, identifies where Swiss obligations diverge from those under OFAC, OFSI, and the EU, and flags the risk points that most often cause a divestiture to stall or attract regulatory scrutiny. We also address the cross-border complications that arise when the sanctioned interest sits in a chain that touches multiple jurisdictions simultaneously.
Step 1 – Identify the legal basis for the restriction before you plan the exit
The first task in any sanctioned-interest divestiture under Swiss rules is to establish exactly which legal instrument is in play. Switzerland implements two distinct types of measure: autonomous Swiss sanctions adopted by the Federal Council under the Embargo Act, and measures flowing from UN Security Council resolutions that Switzerland is obliged to transpose into domestic law. The obligations, the authorisation routes, and the competent authority differ depending on the source.
SECO administers both categories through a network of ordinances, each targeted at a specific geographic or thematic programme. The practical starting point is therefore not the designation list alone, but the specific ordinance under which the designation is made. An asset freeze under an autonomous Swiss programme may carry different conditions and exceptions than a freeze imposed because a person appears on the UN Consolidated List. The ordinance determines whether an exemption exists for the divestiture you are considering and, critically, whether a prior authorisation from SECO is required before any transfer can take place.
In our experience, businesses frequently reach the planning stage without having identified which specific ordinance applies. That gap creates downstream problems: an application to SECO submitted under the wrong legal instrument is invalid on its face and loses time. Before a divestiture strategy is finalised, qualified counsel must map the designating instrument, confirm the relevant ordinance, and check whether the person or entity in question appears on both the Swiss autonomous list and the UN Consolidated List – because where both apply, the stricter prohibition governs.
A brief ownership and control analysis runs in parallel with this step. Swiss rules, like EU rules, operate on an ownership and control test (the principle that assets beneficially owned or effectively controlled by a listed person are caught, even where legal title sits elsewhere). The boundaries of that test under Swiss ordinances are not always co-extensive with the EU position, and the US 50 percent rule (OFAC's rule treating entities owned 50 percent or more by blocked persons as themselves blocked) does not translate directly into Swiss law. The analysis must be jurisdiction-specific from the outset.
Step 2 – Determine whether a prior authorisation from SECO is required
Swiss ordinances generally prohibit dealings with frozen assets without prior written authorisation from SECO. A "dealing" in this context is broad: it covers the sale or transfer of a shareholding, the disposition of a debt instrument, the settlement of an account, and in many cases an intra-group restructuring that changes effective control without touching legal title. The question of whether your proposed divestiture is a "dealing" requiring SECO authorisation is one of the first things to establish, not the last.
Some ordinances carry limited exceptions – for example, for transactions that reduce rather than increase the assets available to the designated person, or for disposals executed through a process formally supervised by a competent Swiss authority. The scope and availability of those exceptions vary by ordinance and by the programme in question. Where an exception appears to apply, it is worth obtaining written confirmation from SECO before proceeding, because reliance on a misread exception will not be treated as a defence in the same way that a formal authorisation would be.
Where no exception applies, the business must submit an application for authorisation to SECO. The application should identify the proposed transaction with precision, explain why the disposal does not increase the economic benefit available to the designated person, attach the ownership and control analysis, and set out the proposed mechanics of the transfer and the identity of the proposed transferee. SECO will assess whether the transaction is permissible and, if so, whether conditions should be attached. The process involves correspondence and, in more complex cases, a meeting with SECO officials.
The position above covers the standard case. Your facts – the structure of the shareholding, the identity of the transferee, the presence of co-investors, the interaction with parallel UN measures – change the analysis. For a first assessment of whether your transaction requires formal authorisation, contact Calder & Vance at info@caldervance.com.
Step 3 – Prepare and submit the authorisation application or exemption reliance file
Whether you are submitting a formal authorisation application or building an exemption-reliance file for your records, the content requirements are substantially the same: a complete factual picture, a legal analysis, and documentation that a regulator reading the file a year later will find coherent and self-standing.
The documentation package for a SECO authorisation application typically includes the following elements:
- A description of the interest to be divested – legal form, percentage of ownership or control, chain of title back to the designating event.
- An identification of every designated person in the ownership and control chain, cross-referenced to the specific ordinance and the UN Consolidated List where applicable.
- Proposed mechanics of the transfer: the identity and status of the proposed acquirer, the consideration, the settlement arrangements, and any escrow or ring-fencing of proceeds.
- A statement of the rationale – why the transaction does not increase the economic benefit available to the designated person and why it falls within any applicable exception or the general permission to divest.
- Representations from the proposed transferee confirming its sanctions status and, where the regime requires it, agreeing to ongoing restrictions on the transferred interest.
- The output of the ownership and control analysis, showing that no other designated person holds a triggering interest in the acquirer.
Gaps in documentation are the most common reason SECO requests further information, which extends the timeline. A well-prepared application – one that anticipates SECO's questions rather than waiting for them – moves significantly faster through the review. We regularly advise clients on structuring the documentation package before submission, and we have seen the difference in practice between a file that generates a single round of correspondence and one that generates three or four.
How does SECO differ from OFAC, OFSI, and the EU on divesting a sanctioned interest?
Swiss rules share structural features with the EU and UK regimes but diverge from OFAC in ways that matter for a cross-border divestiture. Understanding those differences is not academic: where a transaction touches assets or counterparties in multiple jurisdictions, the obligations run in parallel and the most restrictive position governs each leg of the transaction.
Under OFAC, the primary question is whether the seller or the buyer is a US person, or whether US-origin goods, technology, or financial infrastructure is involved. OFAC's 50 percent rule is a mechanical ownership threshold: if blocked persons own 50 percent or more in the aggregate, the entity is itself blocked regardless of who controls it operationally. There is no separate "control" limb in the OFAC analysis for most programmes. Secondary-sanctions risk also extends the US regime's reach to non-US businesses, which means a Swiss entity divesting an interest to a non-US, non-Swiss acquirer may still need to consider OFAC if the acquirer has US-dollar exposure or US-person involvement.
OFSI in the United Kingdom and the EU Council regulations both employ an ownership and control test that is broader than OFAC's threshold rule. Control is assessed qualitatively: a listed person who does not hold a majority stake but who has the power to direct decisions, appoint management, or veto material transactions may still bring an entity within the scope of the freeze. The practical implication for a divestiture is that the analysis cannot stop at the ownership percentage. It must also examine governance arrangements, shareholder agreements, and contractual rights that a listed person holds.
SECO's position under its ordinances sits closer to the EU model in its treatment of ownership and control, though the precise scope of the control limb varies by ordinance and has not been subject to the same volume of case law as the EU General Court's jurisprudence on comparable EU measures. This means the analysis in a Swiss context relies more heavily on counsel's reading of the ordinance text and of SECO's published guidance – and, in ambiguous cases, on direct engagement with SECO before proceeding.
One further divergence worth noting: the licensing and authorisation processes differ in form and in practice. OFAC operates a public licensing system with published general licences and a written application process for specific licences. OFSI has a comparable specific-licence route with a statutory duty on the licensee to keep records and, in some cases, to report. SECO's process is primarily conducted by correspondence with the authority, with fewer published general exceptions than OFAC and a culture of direct engagement that rewards early, well-structured dialogue.
If a transaction has already been flagged by a bank or a counterparty, 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.
Step 4 – Execute the disposal, report, and maintain records
Once authorisation is in place – or once a well-founded exemption reliance file confirms that no prior authorisation is required – the disposal may proceed. But the regulatory obligation does not end at execution.
Swiss ordinances require persons who freeze assets or who execute a transaction in relation to frozen assets to report to SECO. The reporting obligation covers both the freezing event and, in most programmes, any subsequent dealings with the frozen assets, including authorised disposals. The precise scope and timing of the reporting obligation under each ordinance should be confirmed at the authorisation stage, not after the transaction closes.
Record-keeping is equally important. Where Swiss obligations align with broader international expectations, businesses should maintain their authorisation applications, SECO correspondence, ownership and control analyses, transaction documentation, and evidence of the acquirer's screening for a minimum period consistent with Swiss administrative law requirements. The period applicable under the relevant ordinance should be confirmed, but a baseline of five years is consistent with the record-keeping expectations that apply across the major regimes and is a sensible minimum even where the Swiss ordinance does not specify an explicit term. Records should be stored in a form that can be produced promptly if SECO requests them, whether as part of a routine compliance check or in the context of a formal inquiry.
Where the disposal involves an escrow of proceeds – because the ordinance requires that any economic benefit flowing to the divesting party must itself be monitored to ensure it does not pass to a designated person – the escrow arrangement requires its own documented legal basis. This is an area where the divestiture mechanics interact closely with the reporting obligations, and where the structure of the transaction should be agreed with SECO in advance.
Step 5 – Manage the cross-border dimension and residual risk
For a business with operations that extend beyond Switzerland, the divestiture under SECO is one part of a wider picture. A shareholding that triggers Swiss obligations may simultaneously trigger EU measures if the entity holds assets in an EU member state, or UK measures if there are UK-domiciled entities in the ownership chain, or OFAC considerations if any US-person involvement or US-dollar settlement is contemplated.
The sequencing of authorisations across multiple regimes requires careful planning. Each authority has its own process and its own timeline. Submitting to SECO first makes sense where the Swiss position is the most operationally urgent, but the SECO authorisation does not authorise the EU or UK legs of the same transaction. Each jurisdiction must be addressed on its own terms, and the conditions that one authority attaches may affect the feasibility of obtaining authorisation from another.
In our cross-border practice, we have managed divesting situations where a single disposal required parallel engagement with three authorities simultaneously. The documentation burden is material, but the alternative – proceeding piecemeal, or worse, proceeding without all necessary authorisations in place – creates a risk of criminal and civil exposure that is significantly worse than the organisational cost of a co-ordinated approach. Compliance counsel needs to be across all applicable regimes from day one of the transaction, not brought in to solve a problem that has already crystallised.
Consider too the screening of the proposed acquirer. A disposal that transfers a sanctioned interest to a clean acquirer is plainly the goal. But does the acquirer itself have connections to designated persons? Is the acquirer in a jurisdiction where onward transfer to a sanctioned entity would be straightforward? These questions are part of the transaction due diligence, and SECO will expect evidence that the seller has addressed them before authorisation is granted.
Common mistakes and risk flags in a SECO divestiture
Five risk patterns emerge with regularity in SECO divestiture matters. Each is avoidable.
Misidentifying the applicable ordinance. Switzerland operates multiple sanctions ordinances simultaneously. A business that prepares its authorisation application by reference to the wrong ordinance will need to start again. The designating instrument must be confirmed before any other step is taken.
Relying on an exception without checking its current scope. Exemptions in sanctions ordinances are sometimes narrowed or removed as a programme evolves. An exception that was available when the position was first analysed may have been withdrawn by the time the transaction proceeds. The scope of any exception should be re-confirmed immediately before it is relied upon.
Failing to screen the proposed acquirer. SECO will assess the identity and status of the transferee. A disposal to a person or entity that is itself designated, or that is connected to a designated person through the ownership and control test, will not be authorised. This screening step must be completed before the acquirer's identity is disclosed to SECO, because a failed application revealing a defective acquirer is harder to recover from than a pre-submission check.
Incomplete ownership and control analysis. The analysis must cover every layer of the chain, not just the immediate shareholding. Intermediate holding companies, trust arrangements, nominee structures, and contractual control rights all need to be examined. A report that covers only the direct legal ownership position will not satisfy SECO and may suggest to the authority that the business has not conducted the inquiry required.
Ignoring parallel UN obligations. Where the designated person also appears on the UN Consolidated List, the Swiss ordinance implementing the UN measure will apply alongside any autonomous Swiss measure. The UN measure may carry additional restrictions or fewer exceptions. Treating the two as interchangeable is a mistake that can undermine the authorisation application.
There is also a persistent myth worth correcting here: businesses sometimes assume that because the disposal reduces the listed person's effective control over an asset, the transaction is self-evidently lawful and no authorisation is required. That assumption is wrong. The obligation to obtain authorisation before dealing with frozen assets does not turn on whether the transaction is economically favourable or unfavourable to the designated person. The freeze attaches to the asset; the authorisation requirement attaches to any dealing with it. A well-intentioned disposal conducted without prior authorisation is still an unauthorised dealing.
Related practices
- Correspondent banking and de-risking under OFAC – managing sanctions exposure in cross-border financial relationships
- Divesting a sanctioned interest under Singapore rules – the MAS framework and how it compares with SECO