A cross-border acquisition team has signed heads of terms on a Swiss target. The underlying business is clean on OFAC and OFSI screening. But the target holds a majority stake in a subsidiary with two shareholders resident in a jurisdiction subject to Swiss autonomous measures. Does the deal proceed? Does it require a licence? These questions are not hypothetical. As of January 2026, SECO administers one of the most active autonomous sanctions programmes in Europe, and its ordinances bind any party transacting in or through Switzerland – including foreign acquirers whose deal merely touches Swiss assets, Swiss banks, or Swiss counterparties.
Sanctions due diligence in M&A under SECO requires a structured, multi-layer review of the target, its beneficial owners, and all entities in the ownership chain against the Swiss Consolidated Sanctions List and any applicable programme-specific ordinances. The test is not confined to direct counterparties: Swiss law applies an ownership and control standard (the principle that a non-listed entity in which a designated person holds a controlling or majority interest may itself be subject to prohibitions) that extends exposure down and across corporate structures. Unlike OFAC's mechanical fifty-percent rule, the Swiss position requires a judgment on both ownership and control, making independent legal analysis indispensable.
This guide walks through the diligence process step by step: the governing authority, the screening and ownership analysis, the cross-regime comparison, the risk flags that most often surface in Swiss M&A, and the point at which external sanctions counsel should be instructed.
Step 1: Understand the governing authority and legal basis
SECO – the State Secretariat for Economic Affairs – administers Switzerland's autonomous sanctions regime and enforces the embargo ordinances enacted under the Federal Act on the Implementation of International Sanctions. Switzerland implements United Nations Security Council measures directly by ordinance, and it also adopts autonomous measures that may align with, depart from, or exceed EU positions. That distinction matters in M&A: a transaction cleared under EU Council regulations may still require separate analysis under the applicable Swiss ordinance.
The Swiss Consolidated Sanctions List is the operational screening tool. It consolidates designations across all active Swiss programme ordinances. SECO publishes updates to the list, and the obligation to act on a relevant match does not wait for a periodic compliance review. For an M&A team, this means the list must be screened at signing, at closing, and at any material point in between where ownership or control of the target could shift. We regularly advise deal teams that treat closing-day screening as a formality – it is not. A designation can land in the interval between signing and closing, and a failure to catch it in that window can leave the acquirer holding blocked assets from day one.
The position above covers the standard entry point. Your target structure – the jurisdictions in which subsidiaries are incorporated, the nationality of beneficial owners, the nature of the assets – will shape which programme ordinances apply and how broadly exposure extends.
For teams managing multi-regime exposure across their deal portfolios, our correspondent banking and de-risking advisory service addresses the financial-institution dimension of Swiss and cross-border sanctions exposure.
Step 2: Build the ownership and control map
The ownership and control analysis is the operational centre of sanctions diligence under SECO, and it is where most M&A diligence exercises either succeed or fall short. The starting point is a full beneficial-ownership map of the target and each entity in the chain – not merely to the first or second tier, but to the ultimate natural person or state body with economic interest.
Switzerland's approach to ownership and control does not operate a single bright-line numerical threshold equivalent to OFAC's 50 percent rule (OFAC's rule treating entities owned 50 percent or more in the aggregate by blocked persons as themselves blocked). Swiss law asks whether a designated person holds direct or indirect ownership, or whether they exercise de facto control through any arrangement – contractual, structural, or otherwise. This is a qualitative judgment. A beneficial owner holding forty percent with effective veto rights over disposals may trigger the prohibition just as reliably as a majority shareholder.
In our experience, the ownership map must cover:
- All direct shareholders above any reporting threshold, cross-checked against the Swiss Consolidated Sanctions List;
- Indirect shareholders through intermediate holding vehicles, trusts, and foundations;
- Board members and senior management with operational control;
- Contractual arrangements – shareholders' agreements, side letters, call options – that confer control without appearing in the share register;
- State-linked entities where the relevant programme ordinance extends to state ownership.
The aggregation question is particularly acute in Swiss diligence. Two shareholders, neither of whom individually meets a conventional threshold, may together bring the target within the prohibition if both are designated. A screening tool that flags each name in isolation without aggregating their combined position will miss this exposure. Have you checked whether your screening logic aggregates across co-owners?
Step 3: Screen against all applicable lists – not just SECO
A comprehensive sanctions diligence exercise for a Swiss M&A transaction does not stop at the Swiss Consolidated Sanctions List. Cross-regime screening is mandatory in any deal with a cross-border dimension, and virtually every M&A transaction of meaningful scale has one.
The layers to screen include the OFAC SDN List (OFAC's list of Specially Designated Nationals and blocked persons) and the Consolidated List maintained by the United Nations Security Council. Where the target has operations, counterparties, or financing touching the United States or US persons, OFAC's secondary-sanctions exposure must also be considered. A target clean on SECO screens but with a major customer subject to OFAC secondary-sanctions risk carries a real compliance cost for the acquirer.
For deals with a UK element – a UK incorporated subsidiary, a UK bank in the financing syndicate, or a UK-person seller – OFSI's consolidated list and the ownership-and-control test under the UK Sanctions and Anti-Money Laundering Act must be run in parallel. OFSI's test, like SECO's, goes beyond simple numerical ownership. It incorporates a control limb that can reach entities without a majority shareholder link to a designated person.
EU Council regulation screening is equally necessary where the target holds assets in an EU member state or the selling or acquiring entity is EU-incorporated. The EU also maintains an ownership-and-control standard for non-listed entities. Where the EU position diverges from SECO – which can and does occur for autonomous measures – the stricter prohibition governs the transaction parties' conduct in each respective jurisdiction.
This is the core cross-border challenge in Swiss M&A diligence: four sets of rules can apply simultaneously, and none of them fully defers to the others. Our practice provides co-ordinated analysis across all four from a single advisory relationship, removing the gap risk that can appear when separate advisers handle each regime in isolation.
If your transaction involves a target with a Singapore or UAE nexus, our regime-specific guides cover those diligence obligations in detail:
Related practices
- M&A sanctions diligence under Singapore's regime – step-by-step analysis of MAS obligations for deal teams
- M&A sanctions diligence under the UAE regime – CBUAE and Executive Office obligations for cross-border transactions
Step 4: Assess programme-specific prohibitions and licensing requirements
Screening tells you who is designated. The programme-specific ordinance tells you what is prohibited – and the two analyses are distinct. A clean list result does not mean the transaction is unconstrained: sector-based prohibitions under certain Swiss programme ordinances can restrict transfers of assets, provision of financial services, or access to capital markets regardless of whether the target's beneficial owners are individually listed.
In our cross-border practice, we see deal teams focus intensively on the name-screening exercise and then treat the prohibition analysis as secondary. That approach carries risk. Under certain active Swiss programme ordinances, restrictions apply to categories of transaction – capital market investments, real-estate acquisitions, asset transfers – that can intersect with a standard M&A structure even where the identified counterparties are unlisted.
The licensing question follows from the prohibition analysis. Where a transaction engages a prohibition, the deal team must assess whether a general authorisation covers it or whether a specific application to SECO is required. Swiss licensing practice is less voluminous in precedent than OFAC's, and applications require careful factual preparation. Timelines should be factored into the deal timetable at an early stage: regulatory uncertainty late in a transaction is disproportionately expensive.
A decision sequence for this step looks as follows. If screening produces no match and the prohibition analysis identifies no sector-level restriction, the transaction may proceed subject to ongoing monitoring. If screening produces a potential match, the next step is the ownership-and-control analysis under Step 2. If the ownership-and-control analysis results in a conclusion that a designated person holds a controlling position, or if a sector-level prohibition applies, the question shifts to whether an authorisation exists or must be sought. If no authorisation applies or can be obtained in the required timeframe, the deal faces either a structural remedy or a conditional close.
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 to discuss the specific position.
Step 5: Address risk flags and document the diligence trail
Documentation of the sanctions diligence process is not a formality. It is the primary evidence of good-faith compliance if a regulator or an acquirer's own board later questions the adequacy of the pre-closing review. In our experience, undocumented diligence – however thorough in practice – provides little protection in an enforcement or post-deal dispute context.
The risk flags that most commonly surface in Swiss M&A diligence are the following. Opaque or fragmented ownership structures are the most frequent: holding layers in jurisdictions with limited company-registry disclosure, nominee arrangements, and foundations used as intermediate vehicles all complicate the beneficial-ownership map and require additional steps to resolve. Complex ownership is not itself a prohibition, but it must be worked through to the underlying person before any conclusion on exposure is sound.
A second flag is geographic concentration. Where the target derives a substantial share of revenue from, or holds assets in, a jurisdiction subject to a Swiss programme ordinance, the prohibition analysis must extend to those operations – not merely to the ownership chain of the acquisition vehicle.
A third is financing structure. If the deal is funded through a bank in a jurisdiction where additional sanctions screening obligations apply, the financing syndicate may conduct its own list-screening and ownership review, with different standards and timelines. The acquirer's diligence and the bank's own review can surface different results. Co-ordinating the two is a counsel function, not a procedural checklist item.
Record-keeping is the final discipline. The diligence file should hold the list-screening results (dated and sourced), the ownership-and-control analysis with supporting documentation, the prohibition assessment and its legal basis, any licensing conclusions, and a closing-day re-screen confirmation. This is the file that demonstrates reasonable steps were taken, in the event that a designation surfaces post-close.
How does SECO differ from other regimes – and why does that difference matter in M&A?
The most practically significant divergence between the Swiss regime and its principal counterparts lies in the absence of a mechanical bright-line ownership threshold. OFAC's approach is arithmetic: the aggregate interest of all blocked persons is computed, and if it reaches fifty percent the entity is treated as blocked, full stop. SECO's approach is evaluative: it asks whether a designated person owns or controls the entity, and control can be established by means other than shareholding percentages. This means the Swiss analysis takes longer, requires more judgment, and can produce different conclusions than an OFAC analysis on the same set of facts.
A second divergence is the interaction between Swiss autonomous measures and UN Security Council measures. Switzerland implements UN measures by direct ordinance, and those ordinances sometimes carry different operational parameters from the autonomous programme ordinances. A deal team must identify which ordinances are in play and whether the relevant prohibitions derive from UN authority (where certain procedural routes, including the UN Focal Point mechanism, may be relevant for designated persons) or from Swiss autonomous authority (where the applicable route is engagement with SECO directly).
A third point of divergence is the public-authority stance on voluntary reporting and compliance engagement. Practices differ across regimes in how proactively they communicate on compliance questions, and Swiss practice should not be assumed to mirror the more detailed published guidance available from OFAC or OFSI. In our practice, this places a greater burden on the legal analysis rather than on regulatory precedent: Swiss M&A diligence requires strong substantive legal judgment, not only a procedural checklist.
The EU comparison is also instructive. For deals with both a Swiss and an EU dimension – which covers the majority of significant Swiss M&A – the two ownership-and-control tests must be run independently. A conclusion that the EU control test is not met does not resolve the Swiss analysis, and vice versa. Where the programmes apply to the same target and the prohibitions diverge, the stricter rule governs the relevant party's conduct in each jurisdiction. There is no harmonisation mechanism that resolves the conflict: the party must comply with both.
When should you instruct external sanctions counsel?
External sanctions counsel should be instructed as early as the target is identified, not after signing. This is the point where the legal analysis is cheapest and the options are widest. Sanctions diligence that surfaces a licensing requirement or a structural problem three days before a scheduled closing creates a crisis that appropriate early-stage review would have converted into an orderly process.
The specific triggers for instructing counsel in a Swiss M&A context are as follows. First, where the target has beneficial owners, subsidiaries, or significant counterparties in a jurisdiction subject to any Swiss programme ordinance. Second, where the ownership structure involves opaque layers – foundations, trusts, or multi-tier holding vehicles – that cannot be resolved through standard registry searches. Third, where the target's financing, banking relationships, or asset base involves parties subject to OFAC, OFSI, or EU measures, creating a multi-regime analysis obligation. Fourth, where the deal timetable is tight and a licensing question or a SECO engagement may affect it. Fifth, where post-close integration involves assets or personnel subject to any continuing programme restriction.
A common objection is that sanctions diligence is adequately covered by the general M&A legal team or by the acquirer's internal compliance function. In our experience, this is rarely true for cross-border transactions with a Swiss dimension. The ownership-and-control analysis, the programme-specific prohibition assessment, and the multi-regime co-ordination work are specialist tasks. The cost of under-resourced diligence is a blocked asset, a post-close enforcement question, or a deal that cannot be integrated because a subsidiary is caught by a prohibition the acquirer did not identify pre-close.
In a recent matter, a financial services acquirer conducting diligence on a Swiss financial-services target identified – late in the process – that a holding company one tier above the target shared a beneficial owner with an entity subject to an EU autonomous measure. The same beneficial owner did not appear on the Swiss list directly. We assessed the ownership-and-control position under both Swiss and EU rules, advised on the deal structure, and co-ordinated with the acquirer's EU counsel to align the two analyses before closing. The matter completed, subject to structural adjustments. The lesson: list-screening alone would not have identified the issue.