A Swiss bank receives an instruction to transfer funds from a corporate account. The compliance system flags the account holder as a person subject to Swiss sanctions measures administered by the State Secretariat for Economic Affairs (SECO – Switzerland's authority for the implementation and enforcement of economic sanctions). The transfer is blocked. The relationship manager asks: what happens next? Who must be notified? Can any payments from the account continue at all? And if the designation turns out to be an error, what is the route back?
Frozen-account management under SECO is governed by Switzerland's autonomous sanctions ordinances and by UN Security Council measures that Switzerland implements directly. Once an account is frozen, the holding institution carries a series of sequenced obligations – identification, reporting, and ongoing management – and a specific authorisation from SECO is required before any asset movement is lawful. The position differs in important respects from comparable OFAC and OFSI regimes, and those differences are operationally significant for any cross-border institution.
This guide walks through each stage in sequence: identifying the freeze obligation, notifying SECO, managing the account while it is frozen, applying for an authorisation, and handling the situation where the designation itself may be challengeable. As of June 2026, SECO's sanctions measures remain active across multiple programme areas and the notification obligations are in force as described below.
Step 1: Identifying the freeze obligation – who and what is caught?
The first step in frozen-account management is to confirm that a freeze obligation actually attaches to the account or asset in question. Switzerland's sanctions ordinances designate specific natural persons and legal entities; they also incorporate UN Security Council lists by reference, which means that any person or entity on the UN Consolidated List is also subject to Swiss measures. The key question for the holding institution is whether the account holder, or any entity owned or controlled by a listed person, falls within the scope of the relevant ordinance.
Switzerland applies an ownership and control test (a standard that catches entities held or effectively directed by a listed person) in a manner broadly aligned with the EU approach. This is a meaningful departure from the purely mechanical OFAC 50 percent rule (OFAC's rule treating entities owned 50 percent or more by blocked persons as themselves blocked). Under SECO's approach, effective control can result in an entity being caught even where the listed person holds less than a majority stake. In our experience, institutions that rely on automated screening calibrated only to the OFAC threshold will regularly under-identify exposures in the Swiss context.
The scope of the freeze is broad. It covers accounts, securities, real property rights, claims, and other economic resources held by or on behalf of the designated person. Indirect holdings routed through nominees or shell structures are not exempt. A thorough ownership-chain analysis is therefore a prerequisite before an institution can be confident that it has identified all frozen assets.
Step 2: Reporting to SECO – what must be reported and by when?
Once a freeze obligation is identified, Swiss-based financial intermediaries and other holders of the frozen assets carry an immediate obligation to report to SECO. The reporting obligation applies not only to banks but to any natural or legal person in Switzerland who holds or manages assets subject to the freeze. This is a materially wider obligation than the OFSI reporting model in the United Kingdom, which is framed primarily around financial sanctions compliance by financial institutions.
The report must include the identity of the designated person or entity, a description and estimated value of the frozen assets, and information about the circumstances in which the holding arose. Institutions must keep the reported information current: any material change to the frozen assets – whether through accrued interest, dividend payments, or a change in valuation – triggers a further reporting obligation. The regime is therefore not a one-time notification; it is an ongoing disclosure obligation for as long as the freeze remains in force.
What happens if the report is delayed? The obligation to report arises at the moment the institution knows or has reasonable grounds to believe that it holds frozen assets. Delay does not suspend the freeze; the assets remain frozen regardless. But a delayed or incomplete report is itself a potential enforcement matter. We regularly advise institutions on the content and framing of SECO reports where there is uncertainty about the identity of the designated person or the scope of the assets involved.
Step 3: Managing the account during the freeze – what is and is not permitted?
During the freeze, the institution may not transfer, convert, credit, or otherwise deal with the frozen assets except where a specific exemption or authorisation applies. The prohibition extends to making funds or economic resources available to the designated person, directly or indirectly. This is the core prohibition, and it applies automatically on designation – no further regulatory instruction is required.
Swiss sanctions ordinances do, however, recognise a set of permitted transactions that parallel (though do not exactly replicate) the general-licence concept used by OFAC and OFSI. Depending on the programme, these may include payments for basic needs, legal costs, or other specified categories. The key operational question is whether a proposed payment falls within a recognised exemption or whether it requires a specific authorisation (a case-by-case written approval from SECO to carry out an otherwise prohibited transaction). The distinction matters because acting without an authorisation when one is required is an offence under Swiss law, regardless of intent.
Interest and dividends that accrue on frozen assets present a recurring practical question. In our cross-border practice, we see institutions taking divergent approaches to whether accumulated interest is itself frozen. The legally cautious position – and the one we advise – is to treat all accretions as part of the frozen asset pool until SECO confirms otherwise or grants a specific authorisation.
Record-keeping during the freeze is non-negotiable. All transactions affecting the frozen account, all communications with the account holder, and all internal decisions about the account must be documented and retained. Swiss law imposes record-keeping obligations that require institutions to maintain complete files on frozen assets for a defined period. Verify the current retention period with counsel before setting a policy, as requirements can vary by programme and instrument.
Step 4: Applying for a SECO authorisation to release or use frozen assets
An authorisation from SECO is the formal mechanism by which an institution or the designated person can request permission to carry out a transaction that would otherwise be prohibited. The authorisation process is distinct from – and should not be confused with – a delisting petition: an authorisation permits a specific transaction while the designation remains in force, whereas delisting seeks to remove the designation itself.
The application must set out the identity of the applicant, the proposed transaction in detail, the legal and factual basis for the request, and any supporting documentation. SECO evaluates applications against the criteria set out in the relevant ordinance and, where the measure implements a UN Security Council resolution, against the terms of that resolution and any guidance issued by the relevant sanctions committee. The outcome is not guaranteed; SECO retains full discretion.
For time-sensitive matters – for example, where the frozen account is the operating account of a business that needs to meet payroll or maintain supplier payments – the timing of the application is critical. SECO's review period is not fixed by statute at a uniform interval, and the elapsed time depends on the programme, the complexity of the request, and the completeness of the application. Incomplete applications are returned, which restarts the clock. Preparing a well-documented, legally grounded application at the outset is therefore far more effective than a rapid but inadequate submission.
How does this compare to the OFAC specific-licence process? The structural logic is similar – a written application, agency review, a discretionary decision – but the analytical framework differs. OFAC's licensing decisions under IEEPA are guided by its Statement of Licensing Policy for the relevant programme. SECO's analysis tracks the Swiss ordinance and, for UN measures, the resolutions and committee guidance. A business operating across both jurisdictions should not assume that a successful OFAC application creates any precedent or expectation in the SECO context.
The position between the UK and Switzerland offers another useful comparison. OFSI (His Majesty's Treasury's Office of Financial Sanctions Implementation) also operates a specific-licence regime, and its published guidance describes the categories of licensing that may be available. But OFSI licensing decisions are taken under SAMLA and the UK's thematic sanctions regulations, not under Swiss law. Where a cross-border institution needs authorisations from both SECO and OFSI simultaneously – which is not uncommon in multi-jurisdiction matters – the applications must be prepared and managed in parallel, with different evidence standards and different regulatory contacts.
The position between the EU and Switzerland deserves particular attention. Switzerland has aligned its autonomous sanctions measures broadly with EU measures in many programme areas. But alignment is not identity. Swiss ordinances are enacted independently; they may lag an EU measure, diverge in personal scope, or apply different exemption categories. An institution subject to both EU sanctions and Swiss sanctions on the same asset – because it has branches or entities in both jurisdictions – must satisfy both regimes. The stricter prohibition governs for each jurisdiction separately.
The position across the bridge from licensing to general exemptions also requires care. Where a Swiss ordinance provides a standing exemption for a category of transaction – analogous to a general licence (a standing authorisation that permits a defined class of transactions without a separate application) in the OFAC sense – the institution must confirm that the proposed payment falls squarely within the terms of that exemption before proceeding. Reliance on an exemption that does not actually cover the proposed transaction is a compliance failure, not a defence.
The position between the EU and Switzerland deserves particular attention. Switzerland has aligned its autonomous sanctions measures broadly with EU measures in many programme areas. But alignment is not identity.
The standard of care expected in SECO authorisation applications has risen markedly in recent years. We have acted for institutions where an initial application was returned as insufficient and where a reworked submission, supported by a full legal analysis and updated ownership documentation, was ultimately granted. The lesson is consistent: quality of preparation is the primary variable within the applicant's control.
Step 5: Challenging the designation – when and how?
Where the designated person believes that the listing is wrong in law or on the facts, a challenge to the designation itself may be possible. This is a distinct track from the authorisation route. The mechanism depends on the legal basis for the designation: Swiss autonomous designations can be challenged through the Swiss administrative and judicial system, whereas UN Security Council designations involve a different and more constrained process through the UN Consolidated List procedures.
For Swiss autonomous designations, the designated person may submit a petition to the competent Swiss authority seeking removal from the ordinance. If the administrative review does not result in delisting, the matter can proceed to the Federal Administrative Court and, in certain cases, to the Federal Supreme Court. The procedural requirements are precise: the petition must be lodged within the applicable time limit, must set out the legal and factual grounds in detail, and must be supported by evidence. A petition that is procedurally defective will be rejected on that basis without reaching the merits.
For UN-listed persons, the route is through the relevant Security Council sanctions committee and, for ISIL/Al-Qaida listings, the Office of the Ombudsperson. Switzerland, as a UN member state, is bound to implement these measures; it cannot unilaterally delist a person from a UN list. The Swiss authority can, however, transmit a delisting petition to the relevant committee and support the application diplomatically. In practice, the Ombudsperson route for ISIL/Al-Qaida designations involves a structured review process, though the outcome remains with the Security Council committee.
Cross-regime dimension: where a person is listed under both Swiss autonomous measures and EU Council regulations, a successful challenge in one jurisdiction does not automatically remove the listing in the other. EU listings are challenged through annulment actions before the EU General Court; Swiss designations through the Swiss administrative system. We have managed proceedings in both systems concurrently where a client faced parallel designations. The evidence package must be adapted to the procedural requirements of each forum, and the timelines do not run in parallel.
Risk flags and when to involve counsel
Four risk patterns recur consistently in SECO frozen-account matters and justify immediate involvement of sanctions counsel.
First, the ownership and control question. Where the designated person's interest in the account holder is indirect – routed through one or more intermediate entities – the freeze obligation may not be self-evident from the face of the account documentation. An institution that does not trace the ownership chain to its origin carries the risk that it is managing an unfrozen account that should be frozen, or conversely, applying a freeze that is not legally required. Both errors have regulatory consequences.
Second, the accruals question. Accounts that earn interest, or portfolios that generate dividend income, during a freeze period create an accumulating stock of assets whose treatment is not always explicitly addressed in the ordinance. Where there is no clear standing exemption, each decision about accumulated income requires an assessment against the freeze prohibition.
Third, the multi-jurisdictional question. Institutions with a Swiss branch or subsidiary and entities elsewhere – particularly in the EU, the UK, or the United States – face the problem of parallel freeze obligations under different regimes. A decision taken at the Swiss level that is compliant with the SECO ordinance may breach an EU Council regulation or the OFAC regulations if the asset also has a nexus to those jurisdictions. The analysis must be run for each relevant regime; the stricter prohibition governs.
Fourth, the authorisation-delay question. Where time is pressing – for example, where the frozen account is the primary operating account of a commercial entity with active obligations to third parties – the gap between the freeze and any SECO authorisation creates commercial and legal pressure. Managing that gap requires a clear internal protocol, documented decision-making, and, where appropriate, early contact with SECO.
A common objection we hear is that frozen-account management is a banking problem, not a legal problem, and that the compliance team can handle it without specialist counsel. That position misidentifies the risk. The determination of whether the freeze obligation attaches, whether a standing exemption covers a proposed payment, and whether an authorisation application is adequately framed are all legal questions. An institution that handles them without qualified legal analysis carries the risk of an incorrect outcome – either an unlawful payment or an unnecessarily constrained account – and of an inadequate SECO report.
Related practices
- Frozen-account management under BIS and the EAR – understanding the US export-control dimension of frozen-asset questions
- Frozen-account management under Singapore sanctions – a step-by-step guide to the Singapore regime and its interaction with global measures