A Swiss trading house finalises a commodities contract with a counterparty based in a third-country hub. Standard screening passes. Three weeks later, a compliance review surfaces a layered ownership structure: a beneficial owner with restricted status under Swiss ordinances sits two tiers above the direct counterparty. The transaction is already partially settled. What are the firm's obligations under the Swiss sanctions regime? How does SECO's approach differ from OFAC's, and what does a credible risk assessment actually require?
As of August 2026, Switzerland's sanctions regime is administered by the State Secretariat for Economic Affairs (SECO), which implements restrictive measures through ordinances enacted under the federal Embargo Act. A sanctions risk assessment under SECO rules requires firms to identify prohibited counterparties, map ownership and control structures against the applicable consolidated lists, and maintain documented evidence of that analysis. The regime is autonomous from the EU, though Swiss ordinances often mirror Council measures closely, and cross-border businesses must manage divergence between Swiss, EU, UK, and US positions simultaneously.
This briefing sets out who is subject to SECO's rules, what a sanctions risk assessment must address, how the ownership and control test operates, where the major regimes diverge, the reporting and record-keeping obligations, the enforcement posture, and when to involve specialist counsel.
Who administers the Swiss sanctions regime and what is its legal basis?
SECO, operating within the Federal Department of Economic Affairs, Education and Research, is the competent authority for economic sanctions in Switzerland. It acts under the Federal Act on the Implementation of International Sanctions – known as the Embargo Act – and gives effect to UN Security Council measures as a matter of legal obligation, while adopting autonomous measures by Federal Council ordinance.
Switzerland is not a member of the European Union. It therefore adopts its own measures independently and is not bound to follow EU Council regulations automatically. In practice, however, Swiss ordinances frequently track EU restrictive measures closely, often enacted in parallel when the EU moves. That parallelism is not guaranteed. There are instances where the scope, timing, or exemption structure of a Swiss ordinance diverges from the corresponding EU regulation, and those divergences matter to a business with operations across both jurisdictions.
The United Nations Security Council Consolidated List is directly binding on Switzerland through domestic ordinances implementing Chapter VII resolutions. Beyond UN-mandated measures, the Federal Council exercises a discretionary power to enact autonomous ordinances. Both categories are administered and enforced through SECO. SECO also maintains a dedicated consolidated list of natural and legal persons subject to Swiss restrictive measures, which businesses subject to the regime must screen against.
In our cross-border practice, we regularly advise clients who assume that EU compliance covers their Swiss exposure. It does not. Switzerland administers its own list, its own exemption architecture, and its own enforcement procedure. A firm with a Swiss subsidiary, a Swiss banking relationship, or a Swiss-based counterparty carries a separate and standalone SECO obligation.
Who is subject to SECO sanctions obligations?
Swiss sanctions obligations apply to any natural or legal person subject to Swiss jurisdiction – including Swiss-domiciled entities, Swiss nationals wherever located, and persons conducting business through Swiss territory, including its financial system. The scope captures banks, asset managers, trading companies, freight intermediaries, and service providers whose activities touch Switzerland.
The personal and territorial scope is broader than many cross-border businesses appreciate. A transaction routed through a Swiss correspondent bank or cleared through a Swiss financial infrastructure is within scope, even if neither party is Swiss-domiciled. Swiss financial institutions are themselves primary obligated parties, and they carry due diligence obligations that flow downstream to their clients.
For financial institutions, the obligations include screening all clients, counterparties, and transactions against SECO's consolidated list and the UN Consolidated List. For trading companies and exporters, the obligations attach at the point of contracting, performance, and payment. Goods, services, technology, and funds are all within scope depending on which thematic ordinance applies to the relevant counterparty or destination.
Does your compliance programme identify Swiss-nexus transactions separately, or does it treat EU and Swiss screening as interchangeable? In our experience, firms in the second category carry a gap that SECO enforcement can expose.
What does a sanctions risk assessment under SECO rules require?
A sanctions risk assessment under SECO rules requires firms to identify the risk of dealing with a prohibited counterparty, transacting in prohibited goods or services, or facilitating a transaction that benefits a listed person – and to document the process and outcome of that analysis.
The core elements of a credible SECO sanctions risk assessment are:
- Identification of the counterparty and all material principals in the transaction chain, including beneficial owners.
- Screening of those persons against SECO's consolidated list, the UN Consolidated List, and any sector-specific list relevant to the applicable ordinance.
- An ownership and control analysis to determine whether any non-listed entity is indirectly caught through a listed beneficial owner.
- Assessment of the goods, services, or funds involved against applicable prohibitions and derogations.
- Documentation of the methodology, the data sources consulted, the results of screening, and the conclusion reached.
- A record-keeping system that preserves that documentation for the required period.
SECO does not publish a single prescriptive checklist for this process. The obligations derive from the applicable ordinances, SECO's published guidance, and the general principles of Swiss administrative law. In practice, the standard expected tracks the level of sophistication of the obligated party and the risk profile of the transaction. A Swiss private bank advising on a large cross-border transfer faces a more demanding standard than a small trading company placing a routine domestic order.
The position above covers the standard case. Your facts – the counterparty, the goods, the route, the payment chain, and the applicable ordinance – change the analysis materially.
Sanctions compliance audit and testing – how Calder & Vance evaluates and stress-tests compliance programmes across regimes.
How does the SECO ownership and control test compare with OFAC and OFSI?
Swiss ordinances apply an ownership and control test to determine whether a non-listed entity is caught through its relationship to a listed person, but the precise formulation differs from the US, UK, and EU approaches in ways that directly affect how a risk assessment must be structured.
Under OFAC, the test is mechanical: an entity owned 50 percent or more in the aggregate by one or more blocked persons is itself treated as blocked, regardless of control indicators. Intention is irrelevant. The calculus is pure arithmetic across the ownership chain.
Under OFSI and the EU rules, the test adds a control limb alongside ownership. A non-listed entity can be caught where a listed person owns or controls it, and control can be established through contractual rights, board influence, or economic dependency even where ownership remains below the threshold. That broader net means that two transactions that clear the OFAC 50 percent threshold may not clear the OFSI or EU analysis.
Swiss ordinances draw on the EU model and apply both an ownership and a control criterion. The threshold and the methodology for aggregating indirect ownership stakes broadly track the EU position. For a business assessing the same counterparty under all four regimes simultaneously, this means the SECO and EU analyses are the closer pair – but they are not identical. Swiss ordinances may define scope exceptions, carve-outs, or humanitarian derogations differently from the corresponding EU regulation.
In our experience, the most common error in multi-regime risk assessments is running an OFAC-model arithmetic test and treating that as sufficient for SECO and EU purposes. The control limb requires a qualitative analysis of the relationship between the listed person and the target entity, and that analysis demands documentary evidence – shareholder agreements, board composition records, voting rights schedules – rather than just a list-screening result.
Sanctions risk assessment under the UAE regime – a parallel briefing on ownership and control across a further autonomous regime.
What are the reporting and record-keeping obligations under SECO?
Swiss sanctions ordinances impose obligations to freeze assets belonging to listed persons promptly and to report the existence of frozen assets to SECO without delay. The reporting obligation is active – it does not wait for SECO to inquire.
When a firm identifies that it holds or controls assets belonging to a listed person, or becomes aware that a counterparty is listed, it must notify SECO and freeze the relevant assets. The notification is made to SECO directly. Failure to notify, or delay in notification, can constitute a breach of the ordinance independently of any underlying sanctions violation.
Record-keeping obligations run alongside the active prohibitions. Firms subject to the regime are expected to maintain records sufficient to demonstrate compliance, including screening records, due diligence documentation, and any internal assessments of borderline cases. The applicable period for retention of records is generally aligned with the periods required under Swiss financial-market and anti-money laundering rules, which impose multi-year retention requirements. Verify the current position under the applicable ordinance before relying on any specific period.
The intersection with Swiss anti-money laundering obligations is significant. Firms subject to the Anti-Money Laundering Act carry parallel duties to identify beneficial owners, conduct enhanced due diligence on high-risk relationships, and report suspicious activity to the Money Laundering Reporting Office Switzerland. A sanctions risk assessment that discloses a potential violation must be assessed against both the SECO reporting obligation and the anti-money laundering reporting chain. In practice, these two tracks often run in parallel and require coordinated legal advice.
If a transaction has already been flagged, or a potential reporting obligation has been identified, early advice can preserve options that narrow with time. Contact Calder & Vance at info@caldervance.com for a confidential review.
How does SECO enforce the sanctions regime, and what are the risk flags?
SECO has enforcement authority over violations of Swiss sanctions ordinances, including the power to investigate, to refer criminal matters to the competent Swiss criminal authorities, and to publish enforcement findings. Criminal prosecution for intentional breach of the Embargo Act or the applicable ordinances is a real risk, not a theoretical one.
Enforcement risk is elevated by a set of recurring patterns that we see in cross-border matters:
- Layered ownership structures where the listed person is not the direct counterparty but controls or owns the contracting entity through one or more intermediate holding companies.
- Screening programmes calibrated only against OFAC and EU lists, with SECO's own consolidated list treated as a subset or equivalent.
- Transactions involving correspondent banking legs or clearing through Swiss financial infrastructure, where the counterparty at one remove has a sanctions exposure that a first-level screen does not surface.
- Commodity trades where the origin, routing, or destination of goods triggers a Swiss ordinance that is not captured by the contract description.
- Deferred or incomplete beneficial ownership analysis, particularly in structures involving trusts, foundations, or nominee arrangements common in private wealth management.
- Reliance on expired or inadequately updated screening data, where a listing has occurred since the last periodic review.
The interaction with the US regime is also a live enforcement concern. OFAC's secondary-sanctions posture – applying restrictive measures to non-US persons who conduct significant transactions with certain designated parties – can affect Swiss businesses operating entirely outside the United States. A Swiss firm that clears SECO's rules but nevertheless conducts a significant transaction with a person designated under a US programme can face OFAC consequences. The applicable threshold for secondary-sanctions risk is qualitative and programme-specific; it requires a separate analysis from the SECO ordinance assessment.
Trade finance and BIS/EAR export controls – how US export-control rules interact with sanctions obligations in cross-border transactions.
Cross-border dimensions: where SECO and the major regimes diverge
For a business operating across Switzerland, the EU, the United Kingdom, and the United States, managing four autonomous sanctions regimes simultaneously requires a structured, differentiated approach. The regimes share common objectives but differ in scope, lists, exemption architecture, and enforcement posture.
Switzerland and the EU present the closest alignment in terms of designation targets and ordinance content, but divergence points are material. Swiss ordinances may include carve-outs for specific sectors – humanitarian goods, certain financial services, or food and medicine – that differ in scope from the corresponding EU derogation. Timing also differs: the EU may designate a person under a Council regulation before Switzerland adopts a parallel ordinance, or vice versa. A business relying on parallel tracking without checking the Swiss ordinance text directly can find itself inside a Swiss prohibition that its EU compliance analysis did not flag.
The UK, post its departure from the EU, maintains its own Consolidated List through OFSI. UK designations broadly track EU and Swiss measures for many programmes, but divergence has grown. The ownership test under OFSI uses both ownership and control criteria, consistent with the SECO approach, but the specific implementing regulations differ and the licensing routes are entirely separate. A licence from OFSI confers no authority to act under a SECO prohibition, and a SECO derogation does not authorise a payment through a UK correspondent bank.
The United States sits furthest from the Swiss position in procedural terms. OFAC operates a mechanical 50 percent ownership test without a control limb, applies primary prohibitions to US persons and US-nexus transactions, and maintains a secondary-sanctions posture with extraterritorial reach that can affect Swiss businesses under certain programmes. Where a transaction has a US-dollar leg, touches a US person or a US financial institution, or involves goods or technology of US origin, OFAC analysis must run in parallel with SECO. That parallel analysis cannot be collapsed into a single workflow.
In our practice, we regularly advise Swiss-based businesses and their cross-border counterparties on how to structure a multi-regime risk assessment that gives each regime its own lane without duplicating effort unnecessarily. The methodology is transferable – the conclusions are not.
When to involve sanctions counsel and how Calder & Vance assists
Many businesses engage sanctions counsel only after a screening hit or an enforcement inquiry. The better practice is to involve counsel earlier: when entering a new market with a known sanctions dimension, when a counterparty's ownership structure is opaque, when an existing compliance programme has not been reviewed against the current Swiss ordinances, or when a transaction requires a SECO derogation or licence.
A common assumption among mid-sized businesses is that a sanctions risk assessment is a screening exercise that a compliance team can run without specialist support. That understates the analysis required in any case with ownership complexity, cross-border structure, or potential secondary-sanctions exposure. Screening is the entry point. The risk assessment is the analysis that follows a hit – or that proactively surfaces the risk before a hit occurs.
For matters involving Switzerland, Calder & Vance can assess eligibility for a SECO derogation, prepare and submit the relevant application, and manage SECO's queries through the process. Where a transaction requires parallel clearance under EU, UK, and US rules, we coordinate the analysis across those regimes and identify the points of divergence that require separate treatment. Where a potential breach has been identified, we scope the apparent violation, advise on voluntary disclosure, and prepare the substantive defence.
Related practices
- Sanctions compliance audit and testing – audit methodology, screening gap analysis, and programme redesign across major regimes.
- Sanctions risk assessment under the UAE regime – comparative briefing for businesses operating across autonomous regimes.