A designated individual retains Swiss counsel the morning after an asset-freeze notice lands. The retainer agreement is signed. Then the question arrives from the bank: who authorises the transfer? Under the Swiss sanctions ordinances administered by SECO (the State Secretariat for Economic Affairs, Switzerland's primary sanctions authority), releasing frozen funds to pay lawyers is not automatic. It requires a specific licence – and the procedural path is tighter than many clients expect.
Legal-fees licences under SECO allow a designated person or entity to draw on frozen assets to pay reasonable legal representation costs, subject to prior authorisation from SECO under the applicable Swiss ordinance. The licence is granted on a case-by-case basis. It is not self-executing, and the financial institution holding the funds may not release them without it. As of June 2026, the regime is active across the major Swiss thematic sanctions programmes, and SECO applies its own procedural standards that diverge in important respects from those of OFAC, OFSI, and the EU.
This guide walks through the governing authority, the application process, the common points of failure, and how the Swiss route compares with parallel regimes a cross-border matter will often engage simultaneously.
Who administers legal-fees licences in Switzerland, and what is the legal basis?
SECO administers Switzerland's autonomous sanctions regime under the Federal Act on the Enforcement of International Sanctions, commonly known by its German abbreviation. Each thematic sanctions programme – covering asset freezes, travel bans, and associated prohibitions – is implemented by a Federal Council ordinance. The legal-fees carve-out is embedded in those ordinances, and SECO is the competent authority to grant, condition, and revoke a licence within that carve-out.
Switzerland is not a member of the European Union. It therefore operates an independent legislative cycle, and its sanctions ordinances do not automatically replicate EU Council regulations. In practice, Switzerland has aligned significant portions of its autonomous regime with EU measures over time, but that alignment is never guaranteed and the procedural rules for licensing diverge materially. A cross-border matter involving both an EU-nexus and a Swiss-nexus will require engagement with two separate licensing tracks.
SECO sits within the Federal Department of Economic Affairs, Education and Research. It publishes sanctioned-party lists, issues guidance on asset-freeze obligations, and maintains a licensing desk for authorised payments. The Swiss Financial Market Supervisory Authority (FINMA) oversees the financial institutions that implement asset freezes at the account level, but the licensing decision itself rests with SECO.
What does this mean operationally? It means that even where the EU General Court or OFAC has already granted relief permitting the payment of legal fees under a parallel regime, Switzerland will not automatically follow. A separate application to SECO is required, and the Swiss timetable runs independently.
What qualifies as a fundable legal-fees expense under Swiss sanctions law?
Not every legal cost qualifies. Swiss ordinances limit the authorised payment to fees and expenses that are reasonable and necessary for representation directly connected to the designated person's situation under sanctions – typically the defence of criminal or civil proceedings, the challenge to the designation itself, or routine legal advice on the scope of the freeze.
Several categories frequently cause difficulty. Contingency-fee arrangements raise questions about whether the payment is truly for legal services or a form of value transfer contingent on outcome. Lump-sum retainers drawn far in advance of actual services attract scrutiny. Third-party funding structures, where a non-designated funder advances fees and then seeks reimbursement from frozen assets, are treated with particular care by SECO.
In our cross-border practice, we regularly advise on structuring the fee arrangement before the application is filed. The description of services in the retainer agreement, the billing interval, and the relationship between counsel and the designated party all feed into SECO's proportionality assessment. Getting the structure right at the outset reduces the risk of a conditional grant or an outright refusal.
Disbursements – court fees, expert witness costs, translation, travel – can in principle be included, but they must be itemised and justified. SECO does not approve a global envelope without a breakdown. The application must anticipate this and build in the supporting schedule from the start.
Step 1 – Identify the applicable ordinance and confirm SECO jurisdiction
Before drafting an application, confirm which Swiss ordinance governs the freeze. Not all Swiss programmes include a legal-fees carve-out in identical terms, and a handful of programme-specific ordinances impose additional conditions. This step sounds mechanical, but a mismatch between the ordinance cited in the application and the one that actually applies to the designated party's listing is a straightforward reason for SECO to return a filing without substantive review.
Jurisdiction also has a geographic dimension. SECO's legal-fees licensing competence extends to frozen assets held at Swiss financial institutions and to payments routed through Switzerland. If the legal representation is being funded from accounts held in a non-Swiss jurisdiction, the Swiss ordinance may be the wrong starting point altogether. In a matter where assets are frozen across multiple jurisdictions, mapping which authority controls which asset pool is the first task for counsel.
- Identify the programme-specific ordinance under which the asset freeze was imposed.
- Confirm that a legal-fees carve-out is available under that ordinance.
- Map which assets are subject to Swiss freeze obligations and which are held elsewhere.
- Identify any parallel freeze obligations in other regimes that require separate licensing.
Step 2 – Prepare and file the application: what SECO requires
A SECO legal-fees licence application must be filed in writing, typically addressed to the Export Controls and Sanctions division. SECO does not operate a pre-application call service equivalent to the OFAC licensing hotline, so the filing must be substantially complete before submission.
The core documentation package includes the following elements. First, proof of the asset freeze: SECO needs to confirm that the funds are in fact frozen under the applicable ordinance. Second, identification of the parties: the designated person or entity, the holding institution, the account details, and the legal representative to be paid. Third, the retainer agreement or draft engagement letter: SECO reviews the terms of the representation to assess whether the fee structure is proportionate. Fourth, an itemised fee estimate covering the period for which the licence is sought. Fifth, a statement of the purpose of the legal representation – what proceedings, what forum, what the advice relates to.
SECO may request additional documentation during review. There is no fixed statutory deadline for SECO to respond, unlike some other regimes. Processing times vary with programme activity and application complexity. In our experience, straightforward applications for an ongoing set of proceedings are processed more quickly than applications involving novel structures or contested fee arrangements.
The financial institution holding the account must be notified of the application in most cases. The bank will have its own compliance requirements and may impose additional conditions before releasing funds even after a licence is granted. Building the bank's requirements into the timeline is essential, and we regularly advise on managing that interface in parallel with the SECO application.
Step 3 – Manage the licence once granted: conditions, reporting, and renewal
A SECO legal-fees licence is typically time-limited and subject to conditions. The licence will specify the maximum amount that may be released, the identity of the payee (the law firm or individual counsel), the period covered, and often a reporting obligation. The licence is not a standing authority to draw down unlimited fees; it is a defined authorisation for a defined purpose.
Reporting requirements matter. Where SECO imposes a condition that periodic reports on expenditure be provided, non-compliance with that condition risks the withdrawal of the licence or a refusal of any renewal. The financial institution is also bound by the licence terms and will not release funds beyond the authorised amount. Any change in the fee arrangement – a new counsel, a material increase in the estimate, an extension of the proceedings – typically triggers a fresh application or at minimum a formal variation request.
Record-keeping is the silent compliance obligation that practitioners often underweight. Each release of funds under the licence must be documented, and those records are subject to inspection by the relevant authorities. The designated person's counsel, the holding institution, and any intermediary all have a role in maintaining the paper trail. In a cross-border matter, the records may also be relevant to a parallel licensing authority in another jurisdiction.
How does the SECO process compare with OFAC, OFSI, and the EU?
The SECO legal-fees licensing process shares its basic architecture – prior authorisation, case-by-case assessment, conditions – with OFAC, OFSI, and the EU. But the divergences matter for cross-border matters, and understanding them prevents the common mistake of assuming that a grant from one authority shortens the path to a grant from another.
Under OFAC, specific licences (case-by-case authorisations to conduct an otherwise prohibited transaction) for legal fees are a well-developed category. OFAC has published guidance on what it considers in the legal-fees context, and there is a body of practitioner experience on application content and processing timelines. OFAC applications are filed through its online portal, and the regime is built for volume. SECO has no comparable pre-existing published guidance specifically on legal-fees applications, and the procedural expectations are informed largely by general licensing practice and bilateral engagement.
OFSI in the United Kingdom operates its own licensing regime under SAMLA and the thematic regulations. Unlike OFAC, OFSI applies both an ownership test and a control test (the UK and EU standard under which a non-listed entity may be caught through a listed person's control, not only ownership). This affects whether a legal services payment involves a designated party in the first place, before the licensing question even arises. SECO's ownership-and-control analysis is closer to the EU position than to OFAC's purely mechanical test.
The EU regime, administered through Council regulations with authorisations granted by competent authorities in each member state, is structurally the closest comparator to SECO. Switzerland has observed EU practice closely, and the ordinances often use similar language. But the competent authority and the procedural rules differ, and the EU member state that holds the relevant assets – not Switzerland – will issue the EU-side authorisation. Do not assume that an EU member state's grant of a legal-fees licence automatically travels to the Swiss account holding the same person's assets.
A practical comparison across regimes:
- OFAC: online portal, developed guidance, established processing track. Secondary-sanctions risk affects non-US persons involved in the payment.
- OFSI: written application, ownership and control both tested, time-limited grants, periodic reporting conditions common.
- EU (competent authority by member state): closest structural parallel to SECO; member-state procedures vary; no pan-EU single portal.
- SECO: written application only, no published legal-fees-specific guidance, case-by-case assessment, conditions typical, bank interface must be managed in parallel.
For any client whose assets are frozen across two or more of these regimes, the licensing timetables must be sequenced. In our experience, the regime with the longest processing window sets the critical path for when legal representation can actually be funded.
What are the main risk flags that lead to refusal or delay?
Several patterns recur in applications that encounter difficulty. Identifying them early prevents a correctable problem from becoming a timeline disaster for the client's legal defence.
First, an incomplete or structurally ambiguous retainer agreement. SECO will not fill in gaps about the scope of representation or the fee calculation. If the retainer is drafted in general terms, SECO has no basis on which to assess proportionality. The fix is straightforward but requires counsel to engage at the drafting stage, not after the fact.
Second, a failure to identify all relevant frozen assets and the institutions holding them. An application that refers only to one account when there are three creates inconsistencies. SECO's review may surface those inconsistencies and require the application to be restarted.
Third, treating the Swiss application as sequential to a parallel OFAC or OFSI application rather than running the tracks in parallel. Where the matter is genuinely multi-jurisdictional, waiting for OFAC to grant before filing with SECO introduces delay that falls entirely on the client's ability to fund its defence.
Fourth, under-resourcing the bank interface. The financial institution holding the frozen account is not a passive conduit. It has its own compliance function, its own legal risk appetite, and – in some cases – its own regulator (FINMA) watching how it handles the sanctioned-party relationship. A licence from SECO is necessary but not always sufficient; the bank may require additional representations or indemnities before it releases funds.
Fifth, an application that is perceived as a vehicle for value extraction beyond genuine legal services. SECO is alert to structures where the "legal fees" cover expenses that are in substance a transfer of value to the designated person's associates or an attempt to monetise frozen assets. Applications that do not clearly separate the legal representation costs from these categories create regulatory risk beyond the immediate application – they can attract a compliance investigation.
A common myth: Swiss neutrality means a more permissive licensing regime
Some clients approach SECO expecting a faster or more generous outcome than they would receive from OFAC or OFSI, on the assumption that Switzerland's political stance makes its sanctions administration less rigorous. This is a misconception. Switzerland enforces its sanctions obligations in full, and SECO's licensing decisions are made on the same case-by-case proportionality basis as those of any other competent authority. The absence of published legal-fees-specific guidance does not mean that the standards are lower; it means that practitioners must build the application to the implied standard rather than working from a published checklist.
In a recent matter, a financial-services business subject to an asset freeze across two jurisdictions filed with SECO on the assumption that the Swiss process would resolve first and relieve cashflow pressure on the legal team. The Swiss application was, in fact, the slower of the two – not because SECO was unusually demanding, but because the application had been filed without the retainer agreement and without the itemised fee schedule. Supplementary requests from SECO consumed weeks that parallel preparation could have saved.
The practical lesson: treat the SECO application with the same preparation discipline as an OFAC specific-licence filing. Completeness at the outset is the single most reliable predictor of a smooth process.
Related practices
- Frozen account management under BIS/EAR – navigating account holds and release under US export-control rules
- Legal-fees licences under MAS (Singapore) – procedural comparison for cross-border matters with Asian nexus
- Legal-fees licences: Singapore – extended guide – deeper analysis of MAS licensing conditions and bank interface requirements