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Switzerland Implements Financial Sanctions: A Guide to Compliance and Licenses

The Swiss government has implemented financial sanctions to restrict transactions with individuals and entities deemed to be a threat to national security or international peace. In this article, we will explore the circumstances under which an individual or entity may become subject to asset freeze provisions in Switzerland, as well as the restrictions that apply under the country’s economic and financial sanctions regime.

Who is Subject to Asset Freeze Provisions?

According to the Federal Council, a person or entity may be subject to asset freeze provisions if they are considered a formal or de facto agent of a state subject to sanctions in Switzerland. The list of sanctioned individuals and entities is maintained by the State Secretariat for Economic Affairs (SECO) and can be found on its website.

Additionally, the Foreign Illicit Assets Act (FIAA) also allows for asset freeze provisions to be implemented against politically exposed persons (PEPs) or their close associates. This is aimed at preventing the withdrawal of illicitly acquired assets that have entered the Swiss financial centre.

Key Measures Under Financial Sanctions

Financial sanctions in Switzerland typically involve three key measures:

  • The freezing of assets and economic resources
  • The prohibition of making available funds to targeted individuals or entities
  • The obligation to report frozen assets

Exceptions and Licences

The Federal Council may stipulate exceptions to these asset freeze provisions to support humanitarian activities or safeguard Swiss interests. Additionally, the authority designated in the applicable ordinance may exceptionally authorise payments from frozen accounts, transfers of frozen capital, and the release of frozen economic resources to prevent cases of hardship or honour existing contracts.

Licence Application Process

The competent sanctions authorities in Switzerland are empowered to issue licences to permit activities that would otherwise violate economic and financial sanctions. The SECO may exceptionally grant a licence to authorise payments from frozen accounts, transfers of frozen capital, and the release of frozen economic resources for humanitarian purposes or to honour existing contracts.

The application process involves consulting with the competent offices of the Federal Department for Foreign Affairs (FDFA) and the Federal Department of Finance, as well as notifying the UN Security Council. The timeline for granting a licence varies depending on the complexity of the matter, but it can take up to over a year.

Reporting Requirements

Reporting requirements apply to businesses that hold assets frozen under sanctions. Anyone directly or indirectly affected by coercive measures must provide required information and documentation to the supervisory authorities appointed by the Federal Council. Additionally, persons or institutions holding or managing assets of individuals subject to asset freeze provisions must report these assets immediately to the Money Laundering Reporting Office Switzerland (MROS).

Conclusion

Financial sanctions in Switzerland aim to restrict transactions with individuals and entities deemed a threat to national security or international peace. Understanding the circumstances under which an individual or entity may become subject to asset freeze provisions, as well as the restrictions that apply under the country’s economic and financial sanctions regime, is essential for businesses operating in Switzerland to ensure compliance and avoid potential legal consequences.

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