How to control ship-to-ship transfer risk under SECO

A Swiss-based trading house charters a vessel carrying controlled commodities. Mid-voyage, the cargo is transferred to a second vessel in international waters. By the time the transfer is complete, the receiving ship is linked to a designated operator. The deal collapses. Sanctions exposure has crystallised before anyone raised a flag. That sequence is not hypothetical: ship-to-ship transfer risk controls under SECO matter precisely because the moment of exposure often arrives before compliance teams have a chance to act.

As of January 2026, Switzerland's State Secretariat for Economic Affairs (SECO – the Swiss federal authority that administers economic sanctions through ordinances) applies prohibitions that can catch ship-to-ship transfers either as a primary activity or as facilitation of a broader prohibited transaction. The operative question is whether a Swiss person, Swiss-flagged vessel, or Switzerland-connected service provider is involved – and whether the transfer moves goods, funds, or services that are controlled under the applicable Swiss ordinance. SECO aligns frequently with EU measures, which means the exposure analysis rarely stops at the Swiss border.

This guide walks through what you need to establish before a transfer takes place, the controls that belong in your pre-approval checklist, the red flags that should halt a transaction, and the points at which involving sanctions counsel becomes necessary.

What you need before you start: understanding the SECO regime and its reach

Switzerland administers its sanctions regime through ordinances issued under federal law, and SECO is the competent authority for economic measures. The starting point for any ship-to-ship transfer risk controls programme is understanding which ordinance applies to the trade in question and whether the goods, counterparties, or route bring a Swiss nexus into scope.

Swiss sanctions ordinances typically mirror EU restrictive measures in scope and structure, though they are enacted as separate Swiss instruments and are not automatically synchronised. SECO publishes an updated list of designated persons and entities. A transfer that is cleared under EU rules may still require separate verification against the SECO list – and vice versa. That gap is where compliance teams most frequently underestimate their exposure.

The Swiss nexus test covers more than Swiss-flagged vessels. It extends to Swiss-domiciled legal entities, Swiss-resident individuals acting as brokers or intermediaries, Swiss banks processing freight payments, and Swiss insurers or reinsurers providing cover for the voyage. Any one of those connections is sufficient to bring the transaction within the scope of SECO's prohibitions. In our experience, many counterparties do not identify their Swiss insurer as a sanctions-relevant connection until a compliance review forces the issue.

SECO's prohibitions extend not only to direct transactions but also to assistance, brokering, and the provision of financial services that enable a sanctioned activity. Ship-to-ship transfers often involve a dense network of services – freight forwarding, charterparty brokerage, bunker supply, P&I cover, cargo insurance, and trade finance. Each service layer is a potential nexus point, and each must be assessed against the applicable ordinance.

Before you begin the checklist steps below, confirm: (a) which SECO ordinance applies; (b) which counterparties and service providers have a Swiss nexus; and (c) which EU measures, if any, are replicated in the Swiss instrument you are relying on. That baseline determines the scope of your due-diligence obligations.

What do you need before the pre-approval checklist can run?

The pre-approval checklist for a ship-to-ship transfer is only as reliable as the information fed into it. Three categories of information are non-negotiable inputs: vessel identity data, ownership and control information for each counterparty, and cargo documentation. Gaps in any of these categories are themselves a red flag.

Vessel identity data covers the IMO number of both the transferring and the receiving vessel, the current flag state, the registered owner, the commercial operator, and the manager. The IMO number is the stable identifier; name and flag can be changed, and a recent change in either is a diversion indicator. Where AIS data is available, cross-reference the vessel's declared position against its stated voyage plan. An AIS transmission gap in a region associated with ship-to-ship transfer activity warrants investigation before any approval is issued.

Ownership and control information must go beyond the first corporate layer. In our practice, we regularly advise clients who have screened a shipowner and cleared the immediate counterparty, only to find that the beneficial owner – reached through a holding structure – is a designated person or an entity owned more than fifty percent by one. SECO aligns with the EU control test for asset-freeze purposes, which looks to actual control as well as ownership. Where the EU test and the OFAC 50 percent rule (OFAC's rule treating entities owned 50 percent or more by blocked persons as themselves blocked) both apply because of the counterparty's US-dollar clearing or US-nexus goods, the stricter prohibition governs.

Cargo documentation must identify the goods by description sufficient to determine whether they are controlled under the applicable SECO ordinance, the country of origin, the stated destination, and the end-use. A stated destination that differs from the vessel's AIS-reported route is a red flag requiring explanation before the checklist can proceed.

Ship-to-ship transfer risk controls: the step-by-step checklist

The following sequence reflects a practitioner's view of how a SECO-compliant pre-transfer assessment should run. It is structured as a readiness check: each item must be resolved before the transaction proceeds. This is the core of any ship-to-ship transfer risk controls compliance checklist adapted to the SECO regime.

Step 1 – Screen both vessels and all counterparties. Screen the transferring vessel, the receiving vessel, the registered owner, the commercial operator, the manager, the charterer, the cargo shipper, and the stated consignee against the SECO designated-persons list, the EU Consolidated List, and the UN Consolidated List. The EU list is operationally important because of SECO's alignment with EU measures. Screen again if any of these identities change after initial approval.

Step 2 – Map the ownership and control chain for each counterparty. For any counterparty that triggers an ownership query, trace the chain to the ultimate beneficial owner. Apply the ownership test under the applicable SECO ordinance and, where a Swiss insurer or Swiss bank is involved, confirm that neither is itself exposed to a control or ownership issue. Document the result of the ownership analysis in writing. Undocumented analysis is, in enforcement terms, no analysis.

Step 3 – Verify the cargo classification. Determine whether the goods are subject to an export or transfer prohibition under the applicable SECO ordinance. Where the goods are also subject to EU dual-use controls or US EAR jurisdiction – for instance, because they incorporate US-origin technology – those regimes apply independently. Controls can attach to the release of controlled technology to a foreign person, including through remote access or through disclosure during the transfer process. Confirm that no re-export or deemed export obligation is triggered by the transfer.

Step 4 – Verify AIS continuity and vessel behaviour. Obtain the AIS history for both vessels covering the 30-day period before the proposed transfer. Note any transmission gaps, flag changes, name changes, or port calls at jurisdictions associated with sanctions circumvention risk. A sharp change in the pattern of calls to a neighbouring transit jurisdiction is a diversion red flag. This step cannot be replaced by a commercial AIS subscription alone: the data must be reviewed by someone with the authority to halt the transaction.

Step 5 – Confirm insurance and P&I cover. Identify the P&I club or insurer for both vessels. A designation of an insurer can cascade into loss of cover for the vessels it insures, which is itself a compliance trigger for charterers and ports. Confirm that the insurer is not itself designated and that providing cover for this transfer will not require the insurer to make funds available – directly or indirectly – to a designated person. Where Swiss reinsurance is involved, the same analysis applies to the reinsurer.

Step 6 – Assess the transfer location. Port-access and port-call restrictions operate independently of cargo-level prohibitions. Determine whether the intended transfer location – anchorage, offshore zone, or port – is itself subject to any restriction under the applicable ordinance. Transfers conducted in international waters may still be caught if a Swiss-nexus service provider is facilitating the operation.

Step 7 – Document and approve. Record the outcome of each step, the date of each screening run, the databases checked, and the identity of the person who conducted the review. Approval must be given by someone with delegated authority under your compliance programme. If any step is unresolved, approval is withheld pending resolution. A transaction that proceeds on an unresolved flag is an apparent violation, regardless of ultimate intent.

A per-requirement readiness check before signing

Once the seven steps are complete, conduct a final readiness check. This is the gate before any binding commitment is made.

First, confirm that all screening runs have been completed within a timeframe that reflects the risk level of the transaction. Screening conducted weeks before execution may not reflect current designations. Re-screen on execution day, or as close to it as the operational timeline allows. Sanctions records must be kept for five years under US rules; Swiss and EU record-keeping obligations run on comparable timelines. Maintain records that would allow a regulator to reconstruct the diligence trail entirely.

Second, confirm that your approval documentation records not only that a screen was run, but what was found, how any partial match was resolved, and who took the decision. "We screened the name" is not, on its own, a complete control. The resolution of each potential match is the substance of the control.

Third, confirm that any contractual representations from the seller or charterer about sanctions compliance have been reviewed and that you have not treated those representations as a substitute for your own diligence. This is the point at which a widespread misunderstanding causes real exposure: a seller's representations do not remove the buyer's own sanctions risk. If the goods are delivered to a designated person because the buyer failed to conduct independent diligence, the buyer's liability under SECO does not dissolve because the seller gave a warranty. The two obligations are independent.

Fourth, confirm that your compliance programme includes a provision for halting the transaction mid-execution if a new designation is published after the pre-approval check but before the transfer is complete. Designations take effect on publication. A transfer that begins lawfully can become a violation before it ends.

How does SECO compare with other regimes on ship-to-ship transfer risk?

SECO's treatment of ship-to-ship transfers is broadly aligned with the EU position, which makes Switzerland's approach more prescriptive than some other regimes and more demanding than a purely UN-implementing framework. Understanding the divergences matters when a transaction spans multiple jurisdictions – as most maritime trades do.

Under the EU regime, specific restrictions on ship-to-ship transfers have been introduced in certain thematic measures, including requirements relating to insurance, flagging, and the provision of port access for vessels engaged in such transfers. SECO has adopted equivalent measures in the corresponding Swiss ordinances. In our experience, the practical effect is that a trade which is prohibited under the EU rules is almost invariably prohibited under SECO, but the reverse is not always true: Swiss ordinances can impose obligations on Swiss-nexus actors even where no EU-nexus exists.

The UK OFSI regime and the US OFAC regime impose their own controls that can bite independently. OFSI applies to UK-flagged vessels, UK persons, and services provided from the United Kingdom – including insurance and reinsurance through the London market. OFAC's reach extends to USD-denominated payments, US-nexus goods, and transactions routed through US correspondent banks. A transfer that appears clean under SECO may still be caught if a P&I payment routes through a US bank or if the cargo contains US-origin controlled content. The rule is consistent across all regimes: where two or more apply, the stricter prohibition governs.

Canada's SEMA framework and Australia's autonomous sanctions regime impose broadly comparable controls, though their nexus tests differ. Transit through a third country does not change an item's controlled status under any of these regimes. Origin and end-use analysis follows the item, not the route. A Swiss trading house that routes a shipment through a third-country port to obscure origin is not creating a safe harbour; it is creating a diversion red flag. A sharp change in trade flows to a neighbouring or transit jurisdiction is specifically treated as such under US, EU, and Swiss enforcement practice.

The divergence between SECO and OFAC is most acute on the ownership test. OFAC's 50 percent rule is mechanical. SECO, like the EU, applies a control test that reaches beyond ownership percentage to the practical and economic reality of the relationship. That means an entity not caught by the OFAC threshold may still be caught under SECO if a designated person exercises actual control over its decision-making. In our practice, this divergence is one of the most common sources of unexpected exposure for multinationals who have run OFAC-aligned screening but have not separately applied the Swiss or EU control analysis.

Risk flags that require you to stop and involve counsel

Not every red flag requires counsel, but some require immediate escalation. Identifying that distinction in advance – before a transaction is under time pressure – is itself a risk control.

The following indicators require the transaction to be halted and sanctions counsel involved before any further step is taken. First, a confirmed or probable match between a counterparty or vessel and any SECO, EU, UN, or OFAC designation list. Second, an AIS transmission gap of material duration in a location associated with ship-to-ship transfers used to avoid monitoring. Third, a beneficial ownership structure that cannot be resolved to a clear ultimate owner within a reasonable investigation period. Fourth, cargo documentation that is internally inconsistent or that conflicts with intelligence about the stated trade route. Fifth, a flag change or vessel name change in the period immediately before the proposed transfer. Sixth, any indication that the transfer is structured to obscure the origin, destination, or nature of the cargo.

These are not theoretical scenarios. Maritime sanctions compliance turns on verifying insurance cover, monitoring AIS transmission gaps, and scrutinising ship-to-ship transfers – and each of those three elements can surface an exposure point that requires legal analysis before it can be resolved.

Where a transaction has already proceeded and a potential violation is identified after the fact, the position is different but equally urgent. Early legal review can preserve options that narrow with time. A voluntary self-disclosure (VSD – a voluntary report of an apparent violation to the relevant regulator) is a recognised mitigating factor under OFAC's Enforcement Guidelines, and comparable provisions exist under SECO and EU enforcement practice. The decision to make a VSD, the timing, and the scope of disclosure are themselves legal questions that require advice specific to your facts.

We act for multinationals, financial institutions, and exporters on sanctions and export-control matters across the major regimes. If a ship-to-ship transfer has already been flagged, or if your pre-approval checklist has surfaced an unresolved issue, contact Calder & Vance at info@caldervance.com for a confidential review.

Related practices

• AIS anomaly indicators under EU sanctions – identifying vessel behaviour patterns that trigger EU diligence obligations
• Transit rerouting red flags: Canada guide – how SEMA treats diversion-risk indicators in transit shipments
• Transit rerouting red flags: EU guide – the EU anti-circumvention instrument and diversion indicators in practice

This publication is general information and does not constitute legal advice. For advice on your situation, contact info@caldervance.com.