A Swiss-domiciled trading house has just discovered that its long-standing commodity counterparty holds a minority stake controlled by an entity appearing on a SECO-administered sanctions list. The transaction is mid-execution. The compliance officer needs to know whether funds already transferred must be frozen, whether the remainder of the contract can be completed, and – critically – how the company exits the relationship without incurring further exposure under both Swiss rules and the parallel regimes of its trading partners. Every day of inaction narrows the options.
Winding down sanctioned exposure under SECO – the State Secretariat for Economic Affairs, Switzerland's sanctions administration authority – requires a structured, regime-specific exit sequence. SECO operates under the Swiss Embargo Act and issues binding ordinances for each sanctions programme. A wind-down that is lawful under SECO may still require parallel authorisation under OFAC, the EU Council regime, or OFSI, depending on where the counterparties, the payment routes, and the goods move. As of February 2026, businesses managing a SECO-supervised exit face obligations spanning asset-freeze compliance, reporting to SECO, and – where goods cross borders – separate export-licence clearance.
This page sets out the governing regime and authority, the step-by-step wind-down procedure, the cross-border complications that most frequently derail a clean exit, the risk flags that counsel looks for, and how Calder & Vance assists businesses through an orderly close-down of sanctioned exposure.
What is SECO's authority and legal basis for sanctions enforcement?
SECO administers Swiss sanctions under the Federal Act on the Enforcement of International Sanctions – commonly called the Embargo Act – which empowers the Swiss Federal Council to adopt ordinances implementing UN Security Council measures, autonomous Swiss measures, and, in practice, measures aligned with EU Council regulations where Switzerland decides to follow them. SECO is the operational authority: it maintains the relevant lists, processes authorisation requests, receives reports of frozen assets, and conducts enforcement.
The Swiss regime is autonomous. Switzerland is not a member of the EU and is not bound by EU Council decisions, but Swiss practice has historically tracked EU sanctions closely for financial-centre and trade-flow reasons. That alignment is not automatic. A transaction may be prohibited under an EU ordinance while Swiss law permits it – or vice versa. For a business with a Swiss booking entity or a Swiss correspondent bank, both positions must be verified independently.
SECO's enforcement posture has tightened in recent years. Swiss intermediaries – banks, asset managers, commodity traders, and payment processors – face supervisory scrutiny from FINMA in parallel to SECO's own enforcement capacity. Businesses winding down exposure should treat both agencies as relevant.
The key operative instruments are the ordinances SECO issues under the Embargo Act for each designated programme. These ordinances define the prohibited activities, the asset-freeze perimeter, the authorisation procedure, and the reporting obligations. Identifying the correct ordinance – and confirming whether it has been amended recently – is the starting point of any wind-down analysis.
How does a structured SECO wind-down work: the step-by-step procedure?
A lawful wind-down under SECO is not a single filing; it is a sequenced operational process. The starting point is a freeze, not a close-out. Once a counterparty or asset is determined to be within the SECO-prohibited perimeter, the immediate obligation is to freeze – to stop all payments, block all transfers, and suspend all deliveries that touch the sanctioned nexus.
After the freeze is in place, the business must notify SECO. The ordinances require holders of frozen assets to report to SECO promptly. Timing is short. Businesses should treat notification as a matter of days, not weeks, and should not wait for legal certainty before making contact with the authority – an initial protective notification can be supplemented once the legal analysis is complete.
The third phase is the authorisation assessment. Swiss ordinances, like their EU and UK counterparts, typically include licensing exceptions that permit certain transactions even within a frozen perimeter: unwinding a pre-existing contract, meeting an obligation that fell due before the listing event, paying employees, or covering humanitarian needs. The business must assess whether any applicable authorisation pathway is open, prepare the relevant application, and submit it to SECO before taking any further action in the counterparty relationship.
Parallel to the SECO authorisation, the business must map the cross-border dimension. A payment passing through a US dollar correspondent bank is subject to OFAC jurisdiction, regardless of where the counterparties are domiciled. A delivery of controlled goods moving through EU territory triggers EU dual-use export rules. In our experience, the most common cause of an otherwise-clean Swiss wind-down unravelling is the failure to identify these secondary touchpoints before the transaction is completed.
The fourth phase is the exit execution. Where SECO – and any relevant co-regulator – has confirmed that the proposed exit steps are authorised, the close-out can proceed. This typically involves unwinding open positions, transferring assets to a non-sanctioned successor, or completing a final delivery under a specific authorisation. Detailed records must be maintained for a period prescribed by the relevant ordinance and, where Swiss financial-services law applies, by FINMA guidance as well.
The final phase is the post-exit compliance review. A wind-down is not complete when the last transaction is booked. The business should conduct a retrospective trace of all payments, deliveries, and communications that touched the sanctioned exposure, verify that no residual obligations remain, and confirm that all frozen assets have been reported, held, or released in accordance with the authorisation received.
Where does SECO diverge from OFAC, OFSI, and the EU – and why does the difference matter?
Three differences frequently decide whether a wind-down succeeds or generates a new violation. The first is the scope of the asset-freeze perimeter. OFAC applies its 50 percent rule (the rule treating any entity owned 50 percent or more in the aggregate by blocked persons as itself blocked) as a bright-line mechanical test. SECO and the EU apply an ownership-and-control test that can capture entities with lower ownership stakes where the designated person exercises de facto control. For a mixed-ownership counterparty, the analysis under SECO may reach further than the OFAC screen alone suggests.
The second difference is the extraterritorial reach of US secondary sanctions. SECO's ordinances bind persons and entities subject to Swiss jurisdiction and goods moving through Swiss territory. OFAC's secondary-sanctions programmes extend to non-US persons engaging in significant transactions in designated sectors, regardless of whether any US nexus is present in the transaction itself. A Swiss business winding down an exposure that touches a US-designated sector must evaluate OFAC secondary-sanctions risk even if no payment passes through New York and no US person is involved. We regularly advise clients on exactly this mismatch.
The third difference is the licensing architecture. OFAC issues both specific licences (case-by-case authorisations for individual transactions) and general licences (standing authorisations for defined categories of activity). SECO operates primarily through case-by-case authorisations submitted to SECO's Sanctions Secretariat. The EU regime is similar to SECO – member-state competent authorities receive individual authorisation requests – but the substantive criteria and the processing timelines differ across jurisdictions. A wind-down that requires simultaneous SECO authorisation and an EU-member-state authorisation is not uncommon for a Swiss trading counterparty with goods transiting EU territory.
OFSI in the United Kingdom adds a further layer where sterling payments or UK-incorporated entities are involved. OFSI's licensing regime includes a specific provision for transactions that are necessary to wind down contracts entered into before a designation event – but the scope of that provision is not identical to its SECO or EU equivalents. Where OFSI's remit overlaps with SECO's, the stricter prohibition governs unless an authorisation is obtained from the relevant authority.
The practical consequence of these divergences is that a SECO-only analysis is almost never sufficient for a cross-border wind-down. Identifying all live jurisdictional touchpoints – banking routes, payment currencies, goods classifications, service providers' home jurisdictions – is the prerequisite for a defensible exit plan.
The position above covers the standard multi-regime structure. Your specific facts – the counterparty's ownership chain, the goods classifications involved, the payment routes in use – will change the analysis materially. To map your particular exposure and identify the authorisation pathway, contact Calder & Vance at info@caldervance.com.
What are the risk flags that counsel looks for in a SECO wind-down?
Not every wind-down presents the same profile. In our cross-border practice, a defined set of risk flags consistently elevates a matter from a routine close-out to a situation requiring early legal involvement and, in some cases, voluntary self-disclosure.
The first flag is late identification. The longer a business has continued transacting after the designation event – whether because the listing was missed in screening or because the business was notified late – the greater the exposure. Historical payments that pre-date the moment of knowledge do not automatically extinguish liability if the designation preceded them.
The second flag is a complex ownership chain. Where the sanctioned nexus sits two or three levels below the counterparty the business actually contracts with, the business may not have identified it at onboarding or at the time of the latest periodic review. In our experience, commodity-trading counterparties and special-purpose vehicles used in structured transactions are particularly prone to layered ownership that obscures a sanctioned ultimate beneficial owner.
The third flag is goods with dual-use characteristics. A wind-down involving physical goods that are classifiable as dual-use items under Swiss or EU dual-use rules requires a separate licensing analysis. The asset-freeze obligation under SECO's sanctions ordinance is distinct from the export-licence obligation under Swiss export-control law, and both may apply simultaneously. Completing the delivery without clearing both requirements generates two separate compliance failures.
The fourth flag is a US-dollar payment leg. Even a transaction that is authorised under SECO and the EU can be blocked if the US-dollar clearing leg is intercepted by a US correspondent bank applying OFAC rules. Businesses that have already transferred funds and are awaiting a return payment should verify whether the return leg will clear without OFAC interference before the wind-down is considered complete.
The fifth flag is concurrent criminal exposure. Switzerland's Embargo Act provides for both administrative and criminal sanctions. Where the apparent breach is serious in scope, long in duration, or involves senior management knowledge, the analysis must include the criminal dimension and may require coordination with Swiss criminal-law specialists.
If a transaction has already been flagged by a correspondent bank, a payment has been blocked, or an inquiry has been received from SECO or FINMA, early review can preserve options that narrow sharply with time. Contact us at info@caldervance.com for a confidential assessment.
A common misconception: is alignment with EU sanctions enough?
A persistent assumption among businesses with both Swiss and EU operations is that a transaction cleared against the EU sanctions list is automatically cleared for Switzerland. This is not correct, and acting on that assumption has caused wind-down plans to fail.
Switzerland's Federal Council adopts its own ordinances on its own timetable. The substance of Swiss ordinances often closely parallels EU measures, but the adoption timing, the list of designated persons, and the specific prohibitions can diverge. A person listed by the EU Council may not yet appear in the current Swiss ordinance. A prohibition that applies in the EU from the date of a Council regulation may not take effect in Switzerland until the Federal Council issues or amends the relevant ordinance.
The reverse is also true. A person or entity that has been delisted under an EU regime may remain listed under a Swiss ordinance that has not yet been updated. Businesses that monitor only the EU Consolidated List – or only OFAC's SDN List – and assume Swiss compliance follows automatically are operating without a complete screen.
In our practice, we advise clients to maintain a live Swiss ordinance watch as a separate compliance track, not as a derivative of EU monitoring. This applies equally to businesses that have historically processed their Swiss transactions through EU-regulated subsidiaries: the legal obligation under Swiss law falls on the person subject to Swiss jurisdiction, and a contractual delegation to an EU entity does not discharge it.
How does Calder & Vance assist with a SECO wind-down?
Calder & Vance advises businesses requiring a structured exit from sanctioned exposure under SECO across the full lifecycle of the matter – from initial exposure mapping through to post-exit confirmation. Our cross-border mandate means the Swiss analysis is always run alongside the relevant OFAC, EU, and OFSI positions.
In a recent matter, a financial-services intermediary domiciled in Switzerland identified that a counterparty's ultimate beneficial owner had been placed on a Swiss ordinance list. The firm had continued processing payments for several weeks following the listing. We assessed the scope of the apparent breach, mapped the relevant OFAC and EU positions on the same ownership chain, advised on the Swiss reporting obligation, and prepared the authorisation submission to SECO for the limited remaining obligations the client needed to close out. The matter was resolved without escalation to enforcement proceedings.
Our assistance in a SECO wind-down typically covers:
- Ownership and control mapping across the sanctioned perimeter under SECO, EU, and OFAC tests simultaneously
- Identification and prioritisation of the freeze obligations that attach immediately
- Preparation of the SECO notification and, where warranted, parallel notifications to other competent authorities
- Assessment of the available authorisation pathways under each applicable ordinance or programme
- Drafting and submission of authorisation applications to SECO and coordination with co-regulators where required
- Guidance on the payment-route risks, including US correspondent-bank exposure and the interaction with OFSI where sterling or UK-incorporated entities are involved
- Post-exit record-keeping and retrospective compliance review
- Voluntary self-disclosure assessment where a historical breach is identified during the wind-down process
We operate on a fixed-fee basis for defined scopes. An initial review of the exposure and an indicative authorisation-route opinion is available from a defined fee. We aim to provide a substantive first response within one business day of receiving the relevant documentation.
Related practices
- Correspondent banking and de-risking under OFAC – screening, de-risking decisions, and correspondent-bank exposure management
- Winding down sanctioned exposure under the Singapore regime – structured exit from exposure under MAS-administered sanctions
- Correspondent banking, de-risking, and the BIS EAR versus EU dual-use rules – comparative analysis of US and EU export-control exposure in trade finance