A SECO matter: digital-asset counterparty diligence in practice

A Swiss technology group signs a token-purchase agreement with a digital-asset platform. The buyer's compliance team screens the counterparty by name. Clean. But three weeks before settlement, a deeper review of the platform's ownership chain flags a wallet cluster linked to a person on Switzerland's national sanctions list, administered by SECO (the State Secretariat for Economic Affairs, Switzerland's principal sanctions authority). The deal does not close on time. The question is whether it closes at all – and what the team must do to protect the business in the meantime.

The lesson from digital-asset counterparty diligence matters under SECO sanctions is not that Swiss law is unusually demanding. It is that name-level screening – on its own – fails to surface the ownership-chain and wallet-level risks that define exposure in digital-asset transactions. SECO implements and frequently aligns with EU measures, so where the EU asset-freeze extends to making economic resources available indirectly, Swiss obligations run in parallel. A business that screens only the contracting party misses the structure that actually determines its legal position.

This case comment sets out the lesson first, then the situation that produced it, the regime analysis across SECO and the EU, the options considered, and what a business in the same position should do before the next transaction.

The core lesson: name-level screening is not counterparty diligence

In digital-asset counterparty diligence, the gap between a clean name screen and a clear legal position is often the full length of the ownership chain. This matter illustrated that gap clearly. The platform itself was not listed. Its controlling entity was not listed. But an intermediate holding vehicle – two steps removed from the contracting party – was beneficially owned 50 percent or more by a person whose assets were frozen under the applicable SECO ordinance, as currently in force, verify before reliance. The token-purchase agreement, by providing economic resources to the platform, would have made those resources available indirectly to a person subject to an asset freeze.

In our cross-border practice, this pattern recurs. The businesses most exposed are those whose compliance processes were designed for traditional counterparties – legal entities with clean corporate registries and audited accounts – and have not been adapted for digital-asset platforms, which can have layered, offshore, or opaque ownership structures. Is your due-diligence process built for the counterparty you actually face, or for the counterparty you expect?

The second lesson is about timing. The ownership-chain review here was triggered by a routine pre-settlement check, not by the initial onboarding. The gap between those two moments was three weeks of transaction work – legal fees, technical integration, commercial negotiation – that was placed at risk by a diligence gap that could have been closed at the outset. A late sanctions hit is among the most disruptive compliance failures a cross-border team faces, because it forces a choice between a delayed transaction and a potential breach.

The situation: what the matter involved

The Swiss buyer was a regulated technology group with an active digital-asset programme. The counterparty was a digital-asset platform incorporated outside Switzerland but operating across European markets. The transaction was structured as a token purchase, with settlement to occur in part through a stablecoin transfer and in part through a fiat leg. The platform presented standard corporate documentation: certificate of incorporation, register extract, AML onboarding forms, and a beneficial-ownership declaration attesting to a clean ownership structure.

The beneficial-ownership declaration was not false in the narrow sense. The platform's direct shareholder was a holding company that was not listed and that was not itself in breach of any obligation. What the declaration did not capture – and what the onboarding process did not independently verify – was a further layer of indirect ownership through a vehicle registered in a low-disclosure jurisdiction. That vehicle had as its majority beneficial owner an individual subject to an asset freeze under a SECO ordinance aligned with the corresponding EU Council Regulation.

The wallet cluster connection emerged when a third-party blockchain-analytics provider, engaged as part of the pre-settlement check, flagged a series of transactions between the platform's settlement wallet and addresses associated with the individual. The buyer's legal team escalated immediately. Trading in the tokens was paused pending advice.

How the SECO regime applies to digital-asset transactions

Switzerland's sanctions are administered by SECO through ordinances that give direct effect to asset-freeze and dealing prohibitions. For financial-sanctions purposes, SECO measures frequently align with EU Council Regulations, meaning that the scope of the prohibitions – and the ownership and control tests that extend them – track EU positions closely. This alignment is significant for digital-asset transactions. The EU asset-freeze prohibition extends to making funds or economic resources available, directly or indirectly, to or for the benefit of listed persons. Switzerland's equivalent instrument operates on materially similar language.

For digital assets, this matters in two distinct ways. First, transferring tokens or stablecoin value to an entity through which a listed person receives an economic benefit falls within the scope of the prohibition – even if the listed person is not the direct recipient. Second, and less intuitively, the provision of platform services – exchange access, liquidity, settlement infrastructure – to an entity owned or controlled by a listed person can itself constitute making economic resources available indirectly. The question is not whether the buyer intended to benefit the listed person. The prohibition is not intent-dependent.

Blockchain analytics introduces an additional dimension. Where a sanctions authority can trace wallet activity and establish a link between a platform's addresses and a designated person's known cluster, that evidence can underpin a finding of indirect economic benefit regardless of what the corporate documentation states. In our experience, SECO's approach to digital assets mirrors the evidentiary logic applied by the EU General Court: objective and sufficiently weighty evidence of the connection, not merely its formal denial. This is consistent with emerging EU case law confirming that control or beneficial ownership must be established by objective evidence – meaning that a contractually clean structure will not shelter a buyer if the transaction economics tell a different story.

How the SECO matter compared to OFAC and EU positions

The cross-regime comparison matters for any business operating across Swiss, EU, and US counterparties simultaneously. OFAC's 50 percent rule (the rule treating entities owned 50 percent or more by blocked persons as themselves blocked) is mechanical: ownership is the trigger, and it is assessed directly, indirectly, and in the aggregate. The EU ownership criterion operates similarly for asset-freeze purposes, with a threshold of more than 50 percent. SECO, aligning with EU measures, applies an equivalent test.

Where the regimes diverge is in the control analysis. OFAC's ownership rule does not incorporate a separate control limb for the automatic blocking effect: ownership at or above the threshold triggers the rule; control below it does not. The EU and UK positions differ. Under OFSI and the EU, the ownership-and-control test can catch a non-listed entity that is controlled by a designated person even where the ownership threshold is not met. This means that a structure in which a listed person holds, say, a 35 percent stake but exercises operational control through contractual rights or governance mechanisms may be caught under Swiss and EU rules but would require separate analysis under OFAC.

For the matter at hand, the individual held a majority indirect interest, so the ownership threshold was met under all three regimes. But the cross-regime analysis was still necessary, because the buyer had USD-denominated settlement obligations and a US correspondent bank in the payment chain. Once the SECO and EU issues were identified, OFAC exposure was assessed in parallel. A US nexus – a US-dollar leg, a US financial institution, or US-person involvement anywhere in the transaction – brings OFAC into scope alongside SECO, and the stricter prohibition governs. That layering is not a technicality. It is the operating reality for any digital-asset transaction with a European-US dimension.

Options considered and the route taken

Once the ownership-chain issue was identified, the buyer had three options. The first was to terminate the transaction immediately and document the termination to create a clear record that no prohibited transfer had been made. The second was to seek clarification from SECO on whether a specific licence or authorisation would permit the transaction to proceed, given that the direct counterparty was not itself listed. The third was to restructure the transaction to remove the element – specifically, the stablecoin transfer leg – that created the clearest risk of indirect economic benefit.

Each option carried its own timeline and risk profile. Termination was clean but created commercial exposure under the agreement. A SECO licensing enquiry carries no guaranteed outcome and no guaranteed timeline; for digital-asset matters in particular, the position is not settled in a way that allows confident predictions. Restructuring required the counterparty's agreement and reopened commercial terms that had been finalised.

In practice, the route taken combined elements of the first and third options. The stablecoin leg was removed from the settlement mechanics, and the fiat leg was routed through a correspondent that had itself conducted enhanced due diligence on the platform. The buyer obtained a legal opinion confirming that the restructured transaction did not constitute making economic resources available to or for the benefit of the identified individual, given the removal of the direct wallet-to-wallet transfer. The transaction closed, on amended terms, several weeks after the original settlement date. There was no guarantee that the route would succeed, and no promise was made to that effect.

What made the outcome achievable was the early escalation. The moment the blockchain-analytics flag appeared, the in-house team stopped trading and sought external advice. That decision preserved the options available; continued processing would have narrowed them materially.

Risk flags a digital-asset compliance team should watch for

Several risk indicators in this matter were visible before the blockchain-analytics check and were not acted upon. Understanding them is useful for any compliance counsel advising on similar digital-asset counterparty diligence.

The beneficial-ownership declaration was based on self-attestation. The platform provided a completed form; the buyer did not independently verify the structure against a corporate registry or a third-party ownership database. In a traditional transaction with a regulated counterparty, self-attestation can be adequate. In a digital-asset transaction involving an entity with cross-border, layered ownership – particularly where one or more holding layers is in a low-disclosure jurisdiction – independent verification is the appropriate standard.

The settlement wallet had not been screened against blockchain-analytics data at onboarding. Wallet-level screening is a distinct step from name-level screening. It is not yet universally required, but for any transaction where value will be transferred via a digital-asset network, it is the step that closes the gap that name-level screening leaves open. The EU transfer-of-funds regime requires originator and beneficiary information regardless of value for transfers between crypto-asset service providers, which signals the direction of regulatory expectations, as currently in force, verify before reliance.

The low-disclosure intermediate holding vehicle should itself have been a heightened-risk indicator. A sharp change in ownership-chain transparency between one layer and the next – from a well-registered operating entity to an opaque offshore vehicle – is a structural red flag that warrants additional enquiry rather than reliance on the attestation provided. In our experience advising on cross-border transactions, this pattern is one of the most reliable indicators that a deeper ownership-chain review is warranted.

Finally, the timeline of the transaction created a diligence gap. Onboarding was conducted at commercial terms stage; the full ownership-chain review was deferred to pre-settlement. For a standard commercial contract, that sequencing may be efficient. For a digital-asset transaction where the counterparty's ownership structure and wallet activity are both material to the legal analysis, the two reviews should run in parallel, not in sequence.

When does a digital-asset compliance team need specialist counsel?

A compliance team managing digital-asset counterparty diligence under SECO sanctions should bring in specialist counsel at three points. The first is when the ownership chain cannot be independently verified to a satisfactory standard within the team's own capacity. Opaque structures, low-disclosure holding layers, or a counterparty that is slow to provide documentation are all triggers for an external review.

The second is when blockchain-analytics data produces a flag that the team cannot confidently resolve without legal analysis. A wallet-cluster association, a transaction pattern that suggests indirect benefit, or a known-address match requires a legal assessment of whether the association reaches the threshold of an asset-freeze prohibition. That assessment is not a factual question – it is a legal one, and it turns on how the applicable ordinance's indirect-benefit language applies to the specific transaction mechanics.

The third is when a transaction has a multi-regime dimension. A digital-asset transaction that involves a US-dollar leg, a US correspondent, or a US-person participant may engage OFAC in addition to SECO. A transaction with an EU financial institution in the chain may engage EU Council Regulation prohibitions directly. Where the stricter prohibition governs, a team advising only on Swiss law may produce a legally correct but operationally incomplete analysis. The buyer in this matter required advice on SECO, EU, and OFAC concurrently. That is the norm, not the exception, for cross-border digital-asset transactions of any scale.

We regularly advise multinationals and financial institutions on exactly this kind of multi-regime digital-asset diligence, from the initial ownership-chain analysis through to the cross-regime legal opinion that allows a transaction to proceed or terminates it cleanly. The cost of early specialist engagement is consistently lower than the cost of resolving a compliance failure identified at pre-settlement.

What the myth does not survive contact with is the transaction itself. A common assumption among commercial teams is that the seller's representations and warranties transfer the buyer's sanctions risk – that a well-drafted reps-and-warranties clause means the buyer can rely on what the counterparty says about its own structure. That assumption is wrong. Sanctions prohibitions are not contractual obligations that run between the parties. They are statutory duties owed to the regulator. A breach of warranty by the seller gives the buyer a contractual claim; it does not undo a sanctions violation by the buyer. Reps-and-warranties coverage does not substitute for independent diligence.

We act for multinationals, financial institutions, and exporters on sanctions and export-control matters across the major regimes. For a confidential review of digital-asset counterparty diligence under SECO or any comparable regime, contact Calder & Vance at info@caldervance.com.

Related practices

• AIS anomaly indicators – EU service – screening vessel-level risk in cross-border EU transactions
• Vessel insurance verification – OFAC matter – insurance-cascade risk in an OFAC enforcement context

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