A Swiss-based trading company sources industrial components from three continents. Its contracts route through Singapore, Dubai, and a German subsidiary. One supplier's parent company has just appeared on a SECO-administered list. Does the prohibition catch the subsidiary's exports? Does it extend to the German entity? And what does the company owe SECO in terms of disclosure? These questions are not hypothetical – they arise in the ordinary course of cross-border trade, and the answers carry criminal and civil consequences under Swiss law.
Supply-chain sanctions mapping under SECO requires any person or entity subject to Swiss law to screen the full upstream and downstream chain against the SECO sanctions lists, not only the immediate counterparty. The governing instruments are the ordinances enacted under the Swiss Embargo Act, administered by the State Secretariat for Economic Affairs (SECO). As of January 2026, Switzerland has largely aligned its asset-freeze and trade measures with the relevant EU Council regulations, though divergences in scope and timing remain operationally significant.
This briefing sets out who administers the regime and on what legal basis, which prohibitions apply across the supply chain, how the ownership-and-control test operates, what reporting and record-keeping obligations attach, how SECO enforces the rules, and where the Swiss position diverges from the EU, UK, and US regimes.
Who administers Switzerland's sanctions regime and on what legal basis?
SECO administers Switzerland's economic sanctions and export-restrictions regime on the basis of the Embargo Act (Embargogesetz), the primary statutory instrument that authorises the Federal Council to enact ordinances imposing asset freezes, trade restrictions, and financial prohibitions against states, entities, and individuals. Each sanctions programme – directed at a particular state or cross-cutting threat – is implemented through a separate Federal Council ordinance. SECO monitors compliance, issues guidance, processes licence applications, and leads enforcement in coordination with cantonal prosecutors and federal criminal authorities.
Switzerland is not a member of the European Union, but it participates in parts of the international sanctions architecture as a matter of its own policy. SECO has historically followed EU restrictive measures closely, particularly asset-freeze programmes. The result is a regime that is structurally similar to the EU model but technically autonomous: the legal source is Swiss domestic law, the competent authority is SECO, and the jurisdictional triggers differ. A business that relies solely on EU compliance posture to satisfy Swiss requirements will almost certainly have gaps.
For cross-border supply chains, the practical point is that the Embargo Act applies to persons and entities subject to Swiss law. That includes Swiss-resident individuals and companies, Swiss-registered entities and their branches, and – critically – persons acting in or from Swiss territory regardless of nationality. Where a transaction passes through a Swiss correspondent bank or a Zurich commodity trading desk, the Swiss prohibitions are engaged even if neither the exporter nor the buyer is Swiss.
What does SECO prohibit, and how does the supply-chain obligation arise?
SECO ordinances impose three categories of prohibition that are directly relevant to supply-chain mapping: asset freezes against designated persons and entities, trade restrictions on specified goods, and financial-services prohibitions on dealings with designated counterparties. All three extend through the supply chain to any entity that is owned or controlled by a designated person.
The core supply-chain obligation is therefore a downstream consequence of the asset-freeze and trade-restriction rules. A business dealing with a non-listed counterparty is nonetheless prohibited if that counterparty is owned or controlled by a listed person. The business must map the ownership and control structure of every significant counterparty to determine whether the prohibition is engaged indirectly. The obligation is continuous: it does not arise only at contract inception. A designation issued while a supply relationship is ongoing triggers the freeze and prohibition immediately.
Trade restrictions under the SECO ordinances typically cover dual-use and military goods, energy-sector equipment, and luxury goods, depending on the programme. The scope of restricted goods mirrors the EU lists in many programmes, but the precise perimeter requires verification against the applicable Swiss ordinance, not the EU regulation. In our practice, the most common supply-chain error is assuming that EU export-control screening is sufficient for Swiss-law purposes. It is not.
What does mapping actually require? At a minimum, the business must identify each node in the supply chain – supplier, freight forwarder, financing bank, insurer, and end-user – run each against the SECO consolidated list, and verify the ownership chain of any entity with a Swiss-law nexus to one layer below the direct relationship. Where the value of the transaction is significant or the goods are controlled, mapping should extend further up the chain to original manufacturer and, downstream, to the ultimate consignee.
The position above covers the standard case. Your facts – the goods, the jurisdiction of each node, the structure of the ownership chain, the applicable SECO ordinance – change the analysis. For a first assessment of your supply-chain exposure under the Swiss regime, contact Calder & Vance at info@caldervance.com.
How does the SECO ownership-and-control test compare with the EU and UK rules?
The SECO ownership-and-control test follows the EU model: a prohibition on dealings with a designated person extends to entities that the designated person owns or controls. Control is assessed in substance, not only by ownership percentage. This is the critical divergence from the US OFAC position.
Under OFAC's 50 percent rule (OFAC's rule treating entities owned 50 percent or more by blocked persons as themselves blocked), the trigger is a mechanical ownership threshold. Own 50 percent or more in the aggregate and the entity is blocked, regardless of how control is in fact exercised. The test is bright-line and does not look behind the numbers.
SECO and the EU apply a broader inquiry. A designated person who holds less than fifty percent of a company may nonetheless "control" it through board appointments, veto rights, contractual arrangements, or financial dependency. An entity over which a designated person exercises effective control is caught by the prohibition even if the designated person's shareholding is, say, thirty percent. In our cross-border practice, this distinction produces the most frequent divergence between a company's US-compliant screening and its Swiss/EU exposure: a target that passes the OFAC 50 percent test may still be prohibited under the applicable Swiss ordinance.
The UK OFSI rules adopt an equally broad control test under the Sanctions and Anti-Money Laundering Act (SAMLA), the primary UK statute. OFSI's guidance identifies a non-exhaustive list of indicators: board composition, voting arrangements, financial control, and the ability to appoint or remove senior officers. Switzerland's approach, as reflected in SECO guidance, is consistent with this functional approach to control. Businesses operating across these three regimes should therefore apply the broadest test – the EU/Swiss/UK control analysis – to any entity where the OFAC ownership calculation would otherwise provide comfort.
One further cross-border dimension: where a supply-chain partner is itself subject to US law, OFAC's rules may apply in parallel to the same transaction. The stricter prohibition governs. A Swiss exporter with a US group parent, a US-dollar settlement, or a US-person employee involved in approving the shipment must map to both the SECO test and the OFAC test simultaneously. Relying on one regime's sign-off does not satisfy the other.
What reporting and record-keeping obligations does SECO impose?
Persons subject to Swiss law who identify a SECO-listed asset in their control, custody, or possession must report that asset to SECO without delay. The obligation covers financial assets, economic resources, and property of any kind connected to a designated person. Reporting is mandatory; it is not an option available only to regulated financial institutions. Any person – a trading company, a commodity warehouse, a logistics provider – who holds or discovers a blocked asset must report it.
The report must describe the asset, identify the designated person to whom it relates, and state how the asset came into the reporting party's possession. SECO provides guidance on the required format. Until SECO issues further instructions, the asset must remain frozen. No action to deal in, transfer, or make available the asset is permitted after the point at which the reporting obligation arises.
Record-keeping obligations under the Swiss regime require businesses to retain documentation of their due-diligence steps, screening outputs, ownership-chain analysis, and any licensing correspondence. The applicable retention period tracks the general commercial-law standard under Swiss law. Businesses with EU operations will be familiar with the EU five-year standard for sanctions-related records; the Swiss obligation is aligned in principle, though the precise period under the applicable ordinance should be verified. In any enforcement inquiry, the completeness and contemporaneity of records are the primary indicators of a good-faith compliance effort.
A practical point on timing: the SECO consolidated list is updated frequently. Supply-chain mapping is not a one-time exercise conducted at contract entry. It must be repeated at regular intervals and triggered by any designation event that touches the relevant programme. Continuous monitoring is the operating standard; annual rescreening is not sufficient for high-risk supply chains.
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 for a confidential assessment.
How does SECO enforce the regime against supply-chain violations?
SECO enforcement involves administrative and criminal tracks. Administrative action – directions to freeze, forfeiture of assets, compliance orders – sits with SECO as the competent authority. Criminal prosecution for deliberate or negligent breach of the ordinances is handled by the federal criminal authorities and cantonal prosecutors under the Embargo Act. The two tracks run in parallel and are not mutually exclusive.
What distinguishes Swiss enforcement from the OFAC and OFSI models is the explicit role of criminal law for supply-chain violations. OFAC and OFSI can and do impose civil monetary penalties administratively, without a criminal prosecution. Under the Swiss regime, the criminal track is the principal enforcement mechanism for substantive breaches. Negligent violation – the failure to apply adequate supply-chain controls that allows a prohibited dealing to occur – is a criminal offence, not merely a regulatory failing. A compliance team that has never read the Embargo Act carefully often discovers this distinction only when it is too late.
Aggravating factors in Swiss enforcement proceedings include the value and volume of the prohibited dealings, whether the violation was deliberate or reckless, and whether the business cooperated with SECO after the issue came to light. Voluntary disclosure to SECO of a potential breach, supported by a full account of the facts and the remedial steps taken, is treated as a mitigating circumstance. In our experience, early voluntary engagement with SECO – before the authority identifies the breach independently – consistently produces better outcomes than waiting for an inquiry to arrive.
SECO coordinates with EU counterparts and, through Switzerland's financial-intelligence framework, with FINMA for matters involving financial institutions. A supply-chain breach that engages both the SECO ordinances and an EU regulation may therefore attract parallel enforcement attention from Swiss and EU authorities. Cross-border businesses should design their incident-response protocols with this possibility in mind.
What are the principal risk flags in Swiss supply-chain mapping practice?
Several recurring patterns produce Swiss supply-chain sanctions exposure. The first is reliance on a single-screen-at-onboarding approach. New-counterparty screening is necessary but not sufficient. Any designation issued after contract inception creates immediate exposure if the business is not monitoring the SECO list continuously.
The second is treating the EU-aligned Swiss ordinances as identical to the EU regulations. They are not. The Swiss ordinance may cover a narrower or broader category of goods, may name different entities, and may have a different effective date. Mapping to the EU list and assuming equivalence is a structural compliance error.
The third is limiting ownership analysis to the direct counterparty. In supply chains with multiple tiers, a designated person may appear two or three levels above the direct supplier or two or three levels below the direct buyer. The SECO control test requires analysis to a depth that most automated screening tools do not reach without configuration. Have you verified that your screening system is calibrated for the SECO control analysis, or only for direct-match screening?
The fourth risk flag is currency of beneficial-ownership data. The supply chain may include entities in jurisdictions with limited or delayed beneficial-ownership disclosure. SECO mapping requires the business to obtain and verify ownership information, not merely accept what is filed in a public registry. Where a counterparty is unable or unwilling to provide ownership data, that refusal is itself a risk indicator requiring escalation.
A common assumption – and a costly one – is that a Swiss entity established before the relevant ordinance was enacted has a grandfathering protection. It does not. The Embargo Act's prohibitions apply from the date of the designation; there is no pre-existing-relationship exemption. Equally, the belief that minor or low-value transactions below a threshold escape the regime is not supported by the Swiss rules: unlike some EU instruments that set de minimis thresholds for certain obligations, the core SECO asset-freeze and trade prohibitions apply regardless of value.
In a recent matter, a commodity trading business with a Swiss entity in its group structure had conducted counterparty screening at the EU-law standard. When a designation was issued under a SECO ordinance that had not yet been replicated in the corresponding EU regulation, the Swiss entity's ongoing obligations were triggered while the EU entities remained outside the prohibition. We assisted the business in mapping the exposure under the Swiss ordinance, identifying which dealings required an immediate freeze, and preparing a voluntary report to SECO. The matter was resolved through cooperation, and the disclosure record was built into the ongoing compliance programme.
When should a business seek counsel for Swiss supply-chain mapping?
Counsel should be sought at the design stage of any supply chain that includes a Swiss-law nexus and touches goods or financial relationships connected to an active SECO sanctions programme. Earlier involvement produces more durable compliance architecture. Retrofit analysis – conducted after contracts are signed and flows are running – is more expensive and more limited in what it can achieve.
Specific triggers for immediate external review include: a screening hit against any node in the chain; a counterparty's refusal to provide ownership documentation; a designation issued against a person with a known connection to the supply chain; a SECO inquiry or request for information; a refusal by a bank to process a related payment; and any merger, acquisition, or restructuring that changes the ownership profile of a supply-chain participant.
The interaction between the SECO regime and the EU, UK, and US regimes means that a single supply-chain event can engage multiple sets of obligations simultaneously. OFAC may require a specific-licence application; SECO may require an immediate voluntary report; the EU may prohibit any dealing without a prior authorisation from the relevant member-state authority. Each of these sits on a different timeline and involves a different authority. Coordinating the response across regimes requires counsel who can work across all three in parallel – not three separate national-law reviews conducted in sequence.
The myth that small or mid-size businesses are effectively below the enforcement radar of SECO is not borne out in practice. SECO has made clear through its enforcement posture that size is not a mitigating factor where the violation is deliberate or where basic supply-chain controls were absent. The relevant question is not whether a business is large enough to attract scrutiny; it is whether its controls are adequate for the risk profile of its trade.
Related practices
- Correspondent banking and de-risking under OFAC – sanctions risk and diligence for cross-border financial relationships
- Trade and transaction screening under EU sanctions – screening obligations and ownership analysis under EU Council regulations
- Trade transaction screening under EU sanctions – extended analysis – deeper treatment of EU screening methodology and cross-regime comparison