Swiss sanctions, implementation and supervision of measures

Since 1 January 2003, the Federal Act on the Implementation of International Sanctions (the Embargo Act; the "EmbA") is the main legal basis for the implementation of sanctions measures in Switzerland.

The EmbA is a framework legislation that regulates general matters (aim, scope of authority, duty of disclosure, supervision of compliance, data protection, administrative and legal assistance, rights of appeal, criminal provisions). Coercive measures taken in relation to a particular State or regime are contained in specific ordinances based on the EmbA enacted by the Federal Council (the Swiss Government) in order to implement sanctions adopted by the United Nations Organization, the Organization for Security and Cooperation in Europe or by Switzerland's most significant trading partners (e.g. the EU) to ensure compliance with international law.

The EmbA does not specify the personal or territorial scope of sanctions. According to Swiss scholars, the principle of territoriality applies. In other words, individuals and legal entities that are located in Switzerland or conduct business from Switzerland must comply with the Swiss sanctions.

The State Secretariat for Economic Affairs ("SECO") is the Swiss authority in charge of the implementation of the coercive measures. SECO may be assisted by various State agencies (e.g. police forces, the Federal Customs Administration or the Federal Office for Migration).

SECO may exceptionally grant licenses and exemptions to permit activities that would otherwise breach sanctions, i.e. authorize payments from frozen accounts, transfers of frozen capital and release of frozen economic resources to prevent cases of hardship, honour existing contracts, honour claims under an existing judicial, administrative or arbitral measure or decision, etc.

In accordance with the Federal Act on Administrative Criminal Law (the "ACLA"), SECO also has the power to investigate, prosecute and try breaches of the EmbA or specific ordinances. A wide range of criminal penalties is possible depending on the type and gravity of the violation. Attempts, aiding and abetting are also subject to prosecution. Property and assets may be forfeited by SECO. It is noteworthy that the EmbA also provides for corporate liability by reference to the ACLA.

Finally, the Swiss Financial Market Supervisory Authority ("FINMA"), the Swiss financial regulator, can intervene in cases of violation of obligations arising from sanctions.

Overview of Swiss sanctions regarding the situation in Ukraine

After the invasion of Crimea in 2014, Switzerland implemented measures to mainly avoid that it be used as a platform to circumvent sanctions imposed by other States or the EU. On 28 February 2022, Switzerland adopted packages of sanctions imposed by the EU pursuant to the Russian invasion of Ukraine. These mainly concerned trade and financial sanctions. Following severe criticism regarding the efficiency of the measures, the Federal Council approved, on 4 March 2022, the full revision of the Ordinance, thus adopting the EU sanctions in force at that time.

As of this date, the following measures are in force under the Swiss sanctions' regime:

1. Trade sanctions:

• prohibition on the export of dual-use goods;
• prohibition on the export of goods intended to contribute to Russia's military and technological enhancement or development of the defence and security sector, as well services related thereto;
• prohibition on the import of firearms, ammunition, explosive materials, pyrotechnic devices and gunpowder;
• prohibition on the export of certain goods and services in the oil sector;
• prohibition on the export of certain goods and technology used in the aviation and space industry as well as services related thereto.

2. Financial sanctions:

• freezing and mandatory declaration of assets and economic resources owned or under the control of listed individuals and entities;
• prohibitions regarding securities, money market instruments as well as granting of loans;
• prohibition on accepting deposits of more than CHF 100'000 and mandatory declaration of existing deposits exceeding this amount;
• prohibition on transactions with the Central Bank of Russia;
• prohibition on the provision of public financing or financial assistance for trade with or investment in Russia;
• prohibition on the provision of specialized international messaging systems for financial transactions, in particular SWIFT.

3. Measures concerning designated territories:

• prohibition on the import of goods originating in Crimea, Sevastopol, Donetsk and Luhansk without a certificate of origin issued by the Ukrainian authorities;
• prohibition on the export of certain goods and provision of related services to the designated territories;
• prohibition on financing, investments and certain services in the designated territories.

4. Other measures include, in particular travel restrictions as well as prohibition to honour certain claims.

It is very likely that Switzerland will continue to look at developments in the EU and will align with them in due course.

Sanctions are amended and adapted on an ongoing basis, as are the various Annexes listing individuals and entities. It is therefore important to be mindful of the latest changes in order to avoid any liability.