A Swiss bank receives notice that a correspondent has flagged an account for review. The assets are frozen. The account-holder – a trading company with operations across several jurisdictions – cannot move funds, cannot settle outstanding invoices, and cannot pay staff. Every day of delay has a cost. The question is not whether the account is frozen; it is what can legally be done about it and how fast.
Frozen-account management under SECO requires a structured response: understand the legal basis for the freeze, assess any licensing route under the applicable Swiss sanctions ordinance, and engage the correct authority in the right sequence. The process is technical and time-sensitive. Errors in the initial response can close off options that would otherwise have remained open.
This page sets out the governing regime, the procedural sequence, the cross-regime dimensions that arise for most affected businesses, and the risk flags that most commonly delay or defeat a resolution. It is written for general counsel, compliance officers, and finance teams dealing with a live frozen-account situation under SECO.
What is the legal basis for a frozen account under SECO?
SECO – the State Secretariat for Economic Affairs – administers Switzerland's autonomous sanctions regime, implementing asset-freeze obligations through a series of ordinances that are enacted by the Federal Council. A frozen account under SECO is one in which funds are immobilised because the account-holder, or a person with a controlling interest in the account-holder, appears on a Swiss sanctions list or on the underlying UN Security Council Consolidated List that Swiss law incorporates by reference.
Switzerland's autonomous sanctions regime is distinct from the United Nations obligations Switzerland implements as a UN member. The Federal Council has, on multiple occasions, adopted autonomous measures aligned with EU Council positions. The practical consequence is that an account may be frozen under Swiss autonomous measures, under UN-derived obligations, or under both simultaneously. Identifying the exact legal basis matters because the licensing route, the competent authority within SECO, and the standards for any authorisation differ across those sources.
The freezing obligation falls on the financial institution holding the assets. Banks and securities firms are required to report identified frozen assets to SECO and to seek authorisation before releasing any funds – even for purposes that might seem routine, such as covering account fees or meeting a legally required payment. In our experience, financial institutions sometimes freeze assets more broadly than the ordinance strictly requires, because their internal compliance programmes err on the side of caution. That over-reach is itself a legal question the account-holder can raise.
Who has the authority to authorise a release or an exception?
SECO holds primary licensing authority for Switzerland's autonomous sanctions ordinances; the State Secretariat for Economic Affairs reviews applications for derogations and authorisations, and it liaises with the Federal Department of Finance where measures derive from UN Security Council decisions.
The division of competence is not always straightforward. Where a freeze derives from a UN Security Council resolution, the Swiss implementation ordinance incorporates the UN-level exceptions directly. Certain humanitarian payments and legally required payments may be permissible under those exceptions without a separate application, provided the conditions are met and the paying institution notifies SECO correctly. Where a freeze derives from autonomous Swiss measures, a formal licensing application to SECO is generally required.
This distinction drives the entire procedural strategy. Misidentifying the source of the freeze leads to an application filed with the wrong authority under the wrong legal standard, wasting time that the account-holder does not have. Does your legal team know which ordinance triggered the freeze and which derogation route that ordinance provides?
The position above covers the standard case. Your facts – the ownership structure, the nature of the assets, the specific ordinance in play, and the identity of the listed person – change the analysis materially. For a rapid assessment of the licensing route available in your situation, contact Calder & Vance at info@caldervance.com.
What is the procedure for managing a frozen account and seeking authorisation?
The procedural sequence under SECO begins with identification of the legal basis and moves through a formal licensing or derogation application, a period of SECO review, and – if the application succeeds – a conditional authorisation that the financial institution must implement correctly. Each stage has its own documentary and substantive requirements.
In practical terms, the sequence unfolds as follows.
- Confirm the freeze trigger. Obtain the financial institution's written basis for the freeze. Cross-reference the named person or entity against the current Swiss sanctions lists and the UN Consolidated List. Confirm whether the freeze is an exact-name match, a phonetic match, or an indirect freeze on an entity owned or controlled by a listed person.
- Map the ownership and control position. Swiss law, like EU law, applies an ownership and control test (the test for whether an unlisted entity is caught because a listed person owns or controls it). This is not a simple threshold rule. Control can be established through shareholding, through voting rights, through contractual means, or through other factors that give a listed person the ability to determine the decisions of the entity. Every layer of the ownership chain must be reviewed.
- Identify the applicable derogation or licence route. Swiss sanctions ordinances provide for a range of derogations: payments for basic needs, professional legal fees, payment of pre-existing contractual obligations, and humanitarian exceptions, among others. Each has conditions. Matching the client's fact pattern to the correct derogation head is the core legal task at this stage.
- Prepare and submit the application. Applications to SECO require a clear factual description of the requested transaction, the legal basis for the derogation, supporting documentation on ownership and the nature of the payment, and representations on the intended use of funds. Incomplete or poorly framed applications are commonly returned, causing delay.
- Manage the review and respond to queries. SECO may ask supplementary questions. Responses must be accurate, consistent with the original application, and provided promptly. In our experience, the quality of the response to an SECO query often determines whether the application succeeds in the initial round or is refused.
- Implement the authorisation correctly. An SECO authorisation is conditional. The financial institution must implement it within the scope of the conditions. Any disbursement beyond the authorised scope creates a fresh sanctions risk.
There is no universal statutory deadline for SECO to determine a licensing application under its autonomous sanctions ordinances. Processing times vary with the complexity of the matter, the completeness of the application, and the current caseload at SECO. A well-prepared application with clear documentation typically progresses faster than one that requires iterative supplementation. Verify the current processing position with SECO or with counsel before making representations about timing to account-holders.
How does the SECO position compare with OFAC, OFSI, and EU approaches?
For any business or financial institution with cross-border exposure, frozen-account management under SECO does not occur in isolation. A Swiss-frozen account often sits alongside assets that are simultaneously frozen or subject to reporting obligations under OFAC, OFSI, or an EU Council regulation.
The divergences across regimes are material and affect strategy.
OFAC (the US Office of Foreign Assets Control) applies a mechanical 50 percent or more ownership rule: any entity owned 50 percent or more in the aggregate by listed persons is itself treated as blocked, regardless of whether it appears on the SDN List (OFAC's list of Specially Designated Nationals and blocked persons). The rule is automatic and does not require a separate listing. The Swiss position on indirect capture is grounded in the ownership and control analysis described above, which is more flexible but also less predictable.
Under OFSI (the UK Office of Financial Sanctions Implementation), the ownership and control test parallels the EU approach in broad terms, but OFSI licensing operates under distinct statutory authority – SAMLA and the relevant thematic regulations – and with its own procedural requirements. OFSI has a mandatory reporting obligation: financial institutions and others that know or suspect they hold frozen assets must report to OFSI within a defined period. Switzerland's reporting obligations to SECO follow a different structure, and the two should not be conflated.
The EU framework for frozen-account management under the relevant Council regulations requires that competent national authorities in each member state authorise releases; SECO has no direct role in EU-side authorisations, and vice versa. Where the same assets are subject to both Swiss and EU freezes – a situation that arises regularly for Swiss financial institutions holding accounts of entities subject to autonomous measures aligned with EU Council positions – parallel applications to SECO and to the relevant EU member-state authority are necessary. Those applications must be consistent; an approval on one side that rests on representations inconsistent with the other creates legal exposure.
We regularly advise clients on exactly this multi-regime position. A business with assets frozen in Switzerland, accounts flagged in an EU jurisdiction, and a payment route running through a US correspondent bank faces three overlapping licensing exercises simultaneously. Failing to coordinate them is one of the most common and most costly errors we see.
If a transaction has already been flagged, or a filing has been refused, an early review can preserve options that narrow with time. Contact our team at info@caldervance.com to discuss the position.
What are the principal risk flags in frozen-account management?
The most significant risk in frozen-account management is not the initial freeze. It is the secondary violations that arise from mismanaging the response to it.
Four risk flags appear repeatedly in our practice.
First: unlicensed partial releases. A financial institution, under pressure from the account-holder, permits a payment it believes falls within a standing exception without confirming that the conditions for the exception are met. If the exception does not apply, the release is an unlicensed transaction. Both the institution and, in some cases, the account-holder can face consequences.
Second: incomplete ownership mapping. An account-holder argues that it is not owned or controlled by the listed person; the institution takes that representation at face value without independent verification. The ownership chain turns out to be more complex. SECO's finding of indirect capture then also raises the question of whether the institution's earlier conduct met its due-diligence standard.
Third: inconsistent representations across regimes. As noted in the cross-regime comparison above, a business that makes one set of ownership representations to SECO and a different set to an EU competent authority – even innocently, through different legal teams – creates a record that regulators can and do compare. Coordination across all active licensing exercises is not optional.
Fourth: failure to identify the correct legal basis promptly. Delay in identifying whether the freeze derives from a UN-derived obligation or from autonomous Swiss measures delays the licensing route. Time lost in the first days of a frozen-account situation can be difficult to recover.
There is a widespread assumption that Swiss banks will simply wait for SECO to resolve the matter and that the account-holder need only be patient. That is a myth worth correcting directly. SECO does not intervene autonomously on an account-holder's behalf; the account-holder or its legal representative must initiate the licensing or derogation process, provide the necessary documentation, and manage the process actively. Waiting is not a strategy.
How does Calder & Vance assist with frozen-account management under SECO?
Our work on a SECO frozen-account matter follows a defined sequence. We begin by confirming the legal basis for the freeze, reviewing the underlying ordinance or UN-derived measure, and mapping the ownership and control position across the full ownership chain. We then identify the applicable derogation or licensing route, prepare and submit the application to SECO, and manage SECO's queries through to a decision. Where the matter also involves OFAC, OFSI, or an EU competent authority, we co-ordinate the parallel licensing exercises and ensure that representations made to each authority are consistent.
In a recent matter, a financial services group with accounts held in Switzerland and assets also frozen in an EU jurisdiction engaged us after its internal compliance team identified conflicting advice from two separate national-law firms. We mapped the ownership chain across both regimes, identified a derogation available under the Swiss ordinance that had not been identified in the original analysis, prepared the SECO application with full supporting documentation, and co-ordinated with local counsel on the EU-side authorisation. The matter reached a resolution without further escalation.
Our practice assists clients across the full range of frozen-account management tasks:
- Identifying the legal basis for a freeze and the applicable exceptions under the relevant Swiss ordinance.
- Mapping ownership and control across all layers of the ownership structure.
- Preparing, submitting, and managing SECO licensing and derogation applications.
- Responding to SECO queries and supplementary information requests.
- Co-ordinating parallel applications to OFAC, OFSI, or EU national competent authorities.
- Advising financial institutions on their reporting obligations to SECO and their duty-of-care obligations to account-holders.
- Advising on voluntary self-disclosure in cases where an unlicensed release may have occurred.
We work with financial institutions, corporates, and individuals. Our instructions typically come at the moment the freeze is identified; earlier instruction, in most cases, produces better outcomes. We do not guarantee results; what we offer is a well-prepared application, managed professionally from first contact to decision.
Related practices
- Frozen-account management under BIS/EAR – licensing and authorisation for US export-control account restrictions.
- General-licence eligibility under EU sanctions – assessing which standing EU authorisations are available for your transaction.
- General-licence eligibility under OFAC – mapping OFAC general licences to the facts of a proposed or existing transaction.