A Swiss trading house has identified a prospective distributor in a third market. The distributor's parent company appears, on closer inspection, to be registered in a jurisdiction subject to SECO measures. The deal is commercially attractive. The compliance team wants to know: is this counterparty permissible? What does Swiss law actually require before the contract is signed?
Counterparty due diligence under SECO – Switzerland's State Secretariat for Economic Affairs – requires businesses to screen against the Swiss sanctions ordinances, which implement measures adopted by the UN Security Council and, where Switzerland has acted autonomously, by the Swiss Federal Council. As of August 2026, Swiss law imposes asset-freeze and dealing prohibitions on listed persons and entities. No minimum-ownership threshold is set in statute; practitioners apply the applicable control and beneficial-ownership analysis to determine whether an unlisted entity falls within scope.
This page explains how SECO counterparty due diligence works, where it diverges from OFAC, OFSI, and the EU regime, and how Calder & Vance assists cross-border businesses running the analysis.
What does SECO counterparty due diligence actually require?
SECO counterparty due diligence requires a business to confirm, before entering a transaction, that no counterparty, beneficial owner, or controlling person is designated under a Swiss sanctions ordinance or the UN Consolidated List as implemented by Switzerland. The obligation is not confined to formal contracting parties. It extends to the beneficial ownership chain and, in practice, to any party that will materially benefit from the transaction.
Swiss sanctions law operates through a series of ordinances issued by the Federal Council under the Embargo Act. Each ordinance is specific to a particular measures programme. The applicable ordinance determines which prohibitions apply – asset freezes, dealing prohibitions, visa restrictions, and, in certain measures programmes, trade and financial restrictions. A business active in Switzerland, or routing transactions through Switzerland, must identify which ordinance or ordinances are relevant before screening begins.
The practical steps are sequential. First, identify the applicable ordinance. Second, screen the counterparty against the SECO consolidated sanctions list and the UN Consolidated List. Third, map the beneficial ownership and control structure to identify any indirect exposure. Fourth, document the analysis. That documentation is the basis for any subsequent regulatory inquiry and is a marker of good faith in the event of a question from SECO.
In our experience, the second and third steps are where businesses encounter the most difficulty. SECO's list differs from the OFAC SDN List (OFAC's list of Specially Designated Nationals and blocked persons) and the EU consolidated list in its composition and in the identifiers it carries. A counterparty may be designated under the EU regime but not yet under Switzerland's autonomous measures, or vice versa. Running only a single-list screen against one regime and assuming cross-coverage is a material compliance gap.
How does the SECO ownership and control test compare with OFAC, OFSI, and the EU?
The SECO ordinances do not codify a bright-line ownership percentage equivalent to OFAC's 50 percent rule (OFAC's rule treating entities owned 50 percent or more by blocked persons as themselves blocked). Swiss practitioners apply a facts-and-circumstances analysis to determine whether a non-listed entity is owned or controlled by a listed person. That analysis draws on the beneficial-ownership registers, corporate documents, and contractual arrangements that govern the entity in question.
OFAC's rule is mechanical. An entity owned in the aggregate by blocked persons at or above the 50 percent threshold is itself blocked, regardless of the entity's own conduct. The aggregation applies across indirect layers. Under OFSI and the EU, a control test runs alongside the ownership test. An entity may be caught even where the listed person's formal ownership sits below any threshold, if that person exercises effective control over the entity's decisions.
SECO's approach is closer to the UK and EU model in relying on a control analysis rather than a single arithmetic trigger. The consequence is that Swiss due diligence requires a qualitative assessment of governance, voting rights, contractual control, and commercial influence – not merely a percentage calculation. For a business with counterparties structured across multiple holding layers, this demands a more granular ownership-and-control mapping than a purely mechanical threshold would.
Why does this matter to a cross-border business? Because a transaction may clear OFAC's threshold test while still being caught under SECO's control analysis, or the reverse. We regularly advise clients that the strictest applicable prohibition governs the transaction overall. A group with US, Swiss, and EU nexus faces the possibility that a counterparty permissible under one regime is impermissible under another. The due diligence programme must apply all relevant regimes, not only the most familiar one.
The position above covers the standard case. Your facts – the counterparty's ownership structure, the goods or services in question, the transaction route, the regimes in play – change the analysis. For an initial assessment of your exposure under SECO and the intersecting regimes, contact Calder & Vance at info@caldervance.com.
What is the procedure for conducting SECO due diligence on a counterparty?
A structured SECO counterparty due diligence procedure moves through five stages, each of which generates a defined output for the compliance file.
The first stage is scoping. Identify the applicable SECO ordinance or ordinances, determine the transaction type, and establish which parties – the counterparty, its parent, its beneficial owners, any agent or intermediary – fall within the screening perimeter. Scoping errors at this stage typically produce under-inclusive screening that misses designated persons in the ownership chain.
The second stage is list screening. Screen each in-scope party against the SECO consolidated list, the UN Consolidated List, and any other regime list relevant to the transaction's routing. Where the counterparty is an entity, screen the named individuals associated with it. Document each result, including the date, the list version, and the outcome.
The third stage is ownership and control mapping. Obtain and review the beneficial ownership register, the corporate constitutional documents, and any shareholder agreements. Identify any person holding a material ownership interest or exercising board-level or veto control. Run each identified person through the applicable list screen. Where the ownership structure is opaque or layered through jurisdictions with limited public registers, consider whether enhanced due diligence is required before the transaction proceeds.
The fourth stage is the prohibited-dealings assessment. Even where no listed person appears in the ownership or control structure, certain transactions may be prohibited by the applicable ordinance on the basis of the goods, services, or financial flows involved. A counterparty may be unlisted but the transaction itself restricted. The assessment at this stage is instrument-specific.
The fifth stage is documentation and sign-off. Assemble the screening records, the ownership map, the prohibited-dealings analysis, and any supporting materials. The sign-off records the outcome of the analysis and any residual risk. This file is the first document a regulator will request if a question arises.
What are the principal risk flags in SECO counterparty due diligence?
The principal risk flags fall into four categories, each of which warrants a heightened response in the due diligence process.
The first category is ownership opacity. Where a counterparty is registered in a jurisdiction with limited beneficial-ownership disclosure, the ownership chain cannot be reliably mapped from public sources alone. Requesting ownership documentation from the counterparty is the standard response. Where the counterparty declines to provide it, or provides documents that are internally inconsistent, that is itself a material risk indicator.
The second category is list divergence. As noted above, SECO, OFAC, OFSI, and the EU operate separate lists that do not track each other precisely. A counterparty may be listed under one regime before being listed under another. A due diligence programme that screens against only one list may miss an active designation. Multi-list screening, updated at each transaction or at regular intervals for ongoing relationships, is the standard of care.
The third category is jurisdictional complexity in the transaction route. A payment passing through a Swiss bank, even for a transaction with no other Swiss connection, may engage SECO's prohibitions on funds transfers to or from designated persons. Similarly, goods transiting through Switzerland may be subject to the applicable trade restrictions under the relevant ordinance. Routing decisions made without a sanctions assessment can inadvertently engage prohibitions that the substantive transaction parties did not anticipate.
The fourth category is sector exposure. Certain sectors – financial services, commodities, energy, defence-related goods, precious metals – attract heightened scrutiny under the SECO measures programmes. A business in these sectors should treat any counterparty with connections to a measures programme jurisdiction as requiring enhanced due diligence rather than standard screening, even where the initial list screen returns no match.
If a transaction has already been flagged, or a counterparty has been identified as potentially designated after the transaction has proceeded, an early review can preserve options that narrow with time. Contact Calder & Vance at info@caldervance.com for a confidential assessment.
How do SECO measures interact with OFAC, OFSI, and EU sanctions for cross-border businesses?
For a business operating across Swiss, US, UK, and EU jurisdictions, SECO counterparty due diligence sits within a wider multi-regime compliance obligation. The regimes overlap in scope but diverge in their lists, their prohibited-transaction categories, and their licensing mechanisms. The strictest applicable prohibition governs any given transaction.
The US regime, administered by OFAC under IEEPA and other statutory authorities, has significant extraterritorial reach. Secondary-sanctions risk – the risk that non-US persons dealing with designated persons or certain third-country parties may themselves face US measures – is relevant to Swiss businesses that use US dollar clearing, maintain US correspondent relationships, or have US-person employees involved in the transaction. Swiss law does not incorporate secondary sanctions, but a Swiss business's US nexus may activate them independently.
The EU regime, administered through Council regulations, applies to EU persons and to transactions with an EU connection. Where a Swiss business has EU subsidiaries, EU-resident employees, or transactions denominated in euros clearing through EU systems, the EU prohibitions apply alongside SECO's. The EU and Swiss lists often track UN designations and, in many measures programmes, run in parallel. But autonomous EU designations adopted without a corresponding UN resolution do not automatically appear on the SECO list. Checking both is not optional.
The UK regime, administered by OFSI under SAMLA and the relevant thematic regulations, applies its own ownership and control (the UK test for whether a non-listed entity is caught through a listed person) analysis. For a Swiss business with UK counterparties, UK banking relationships, or goods exported through UK ports, OFSI's position on the counterparty is a separate and required analytical step.
In our cross-border practice, we frequently see businesses treat SECO compliance as an add-on to a primary OFAC or EU analysis. That approach is insufficient. Each regime has its own list maintenance cycle, its own prohibited-transaction categories, and its own licensing and exemption structure. A transaction cleared under OFAC may require a separate assessment and, in some cases, a licence under the applicable SECO ordinance.
What common misconceptions arise in SECO due diligence?
A persistent misconception is that Swiss neutrality reduces the practical scope of SECO's sanctions measures. It does not. Switzerland implements all UN Security Council mandatory measures under Chapter VII, and its Federal Council has adopted a substantial programme of autonomous measures that align closely – though not identically – with EU positions. The measures in force cover asset freezes, dealing prohibitions, financial restrictions, and, in certain programmes, trade and sector-specific controls.
A second misconception is that standard anti-money-laundering screening satisfies the SECO due diligence obligation. AML screening and sanctions screening are related but distinct obligations. An AML programme screens for politically exposed persons, adverse media, and indicators of criminal conduct. It does not reliably screen for all SECO-designated persons, particularly where designations are recent or where the listed person's name appears in an AML database under a variant transliteration. Sanctions screening must be conducted against the current SECO list directly.
A third misconception is that a one-time screen at the start of a relationship is sufficient for an ongoing commercial relationship. SECO lists are updated dynamically. A counterparty that cleared screening at onboarding may be designated during the life of the relationship. Periodic rescreening – and transaction-level screening for higher-risk relationships – is the appropriate standard. The frequency should be calibrated to the risk profile of the counterparty and the sector.
How does Calder & Vance assist with SECO counterparty due diligence?
Calder & Vance provides dedicated compliance counsel for businesses conducting counterparty due diligence under SECO's sanctions ordinances. Our work is structured around the five-stage procedure described above, adapted to the specific transaction type, sector, and cross-regime profile of each client.
In a recent matter, a commodities trading business sought counsel on a prospective supply arrangement where the counterparty's indirect ownership chain included a person appearing on a third-jurisdiction designation list. The counterparty was not on the SECO or OFAC lists at the time of screening. We assessed the ownership and control structure under the applicable SECO analysis, mapped the cross-regime exposure, and advised on the documentation and monitoring programme appropriate to the residual risk. The transaction proceeded after the client implemented the recommended controls.
For SECO counterparty due diligence, we: screen the counterparty and ownership chain against the SECO consolidated list, the UN Consolidated List, and any other regime list relevant to the transaction; map the beneficial ownership and control structure and apply the applicable facts-and-circumstances analysis; assess whether the transaction itself falls within any prohibited-dealings category under the relevant ordinance; prepare a compliance memorandum documenting the analysis and outcome; and advise on ongoing monitoring obligations for the relationship.
Where a transaction has a US, UK, or EU dimension, we integrate the OFAC, OFSI, and EU analysis into a single cross-regime assessment. We engage local counsel in the relevant jurisdiction where additional national-law analysis is required.
Our practice covers the full range of SECO-related compliance work, from initial onboarding screens to programme design, periodic testing, and enforcement response. We offer fixed-fee entry points for defined due diligence mandates, so that the cost of the analysis is known before the instruction is placed.
Related practices
- Compliance audit and testing – Australia – sanctions programme testing and gap analysis under Australia's autonomous regime
- Counterparty due diligence – Singapore – cross-border screening and ownership analysis under Singapore's sanctions regime
- Counterparty due diligence – UAE – sanctions screening and compliance counsel under the UAE framework