Sanctions Compliance for Businesses in Switzerland: Screening, Re-Export Controls and Best-Efforts Obligations

Businesses operating in or through Switzerland face a layered sanctions compliance framework that combines Switzerland's own autonomous measures under the Embargo Act (EmbG) with parallel obligations arising from EU packages that Switzerland implements by sovereign decision. As of mid-2026, the EU's 20th sanctions package (adopted 23 April 2026) and the 21st package (Council Regulation (EU) 2026/1848, adopted 23 July 2026) have significantly expanded screening obligations, re-export controls, and best-efforts duties for intermediaries and financial institutions active in Switzerland. Understanding precisely which rules apply to your entity, your counterparties, and the goods or services you handle is the essential first step before any transaction involving a sanctioned jurisdiction.

Switzerland's Sanctions Framework: Not the EU, but Closely Aligned

Switzerland is not a member of the European Union and does not automatically adopt EU sanctions regulations. Instead, the Federal Council evaluates each EU package and adopts corresponding measures through ordinances under the EmbG. In practice, Switzerland has maintained a policy of close alignment with EU Russia-related sanctions since 2022, though the timing of Swiss implementation ordinances consistently lags behind the EU adoption dates.

This lag creates a compliance window that is frequently misunderstood by foreign clients. An EU-adopted measure does not bind a Swiss-incorporated entity the moment it enters force in Brussels. The relevant Swiss ordinance – typically published in the Amtliche Sammlung and entering force upon publication in the Federal Gazette – is the operative legal instrument. Transactions that would be prohibited under EU rules may remain technically permissible in Switzerland until the Swiss ordinance is in force, but this does not make them commercially or reputationally risk-free, particularly where EU-nexus banks or counterparties are involved.

For cross-border structures with both Swiss and EU legs, entities should map which regulation governs which part of the transaction, and whether any EU-person in the chain triggers direct EU regulation applicability. Our Switzerland sanctions and trade practice advises on precisely these multi-jurisdictional mapping questions.

Key Developments in 2026: What Swiss Businesses Need to Track

Several developments from 2026 are directly relevant to Swiss compliance programmes:

• EU 20th package (23 April 2026): Introduced a ban on transactions involving the digital rouble and the RUBx instrument, applicable from 24 May 2026 under EU law. Swiss entities should verify whether the Federal Council has adopted a corresponding ordinance and, if so, from which date.
• Russian LNG import restrictions: From 25 April 2026, most LNG contracts are covered by the EU import ban. Long-term contracts concluded before 17 June 2025 benefit from a transition period until 1 January 2027. Swiss gas and commodity trading firms relying on long-term LNG contracts must audit contract execution dates carefully and assess whether Swiss alignment measures replicate this distinction.
• EU 21st package (Council Regulation (EU) 2026/1848, 23 July 2026): Expands prohibitions in energy, financial services, and crypto-asset sectors. Swiss financial intermediaries – including those supervised by FINMA – should review whether existing AML/KYC procedures already capture the extended crypto perimeter, or whether updates to internal policies are required once the Swiss ordinance enters force.
• Divestment derogation: The derogation permitting Russia-exit transactions has been extended to 31 December 2026. Swiss entities managing the wind-down of Russian exposures should structure and document exit transactions to fall clearly within this window and retain evidence of the derogation's applicability.

If your business has exposure in any of these sectors, early legal review of your contract portfolio is advisable. To discuss your situation, contact us at info@ferrazwhitmore.com or visit our contacts page.

Sanctions Screening: Building a Defensible Programme

Sanctions screening in Switzerland is not prescribed by a single statute, but obligations arise from multiple sources: the EmbG ordinances themselves, FINMA supervisory expectations for financial intermediaries, and contractual obligations imposed by correspondent banks and trade finance providers.

A defensible screening programme for a Swiss-based business typically involves the following elements:

• Entity and beneficial-ownership screening: All counterparties, including ultimate beneficial owners beyond standard Handelsregister entries, should be screened against current Swiss and EU designations lists. The Federal Council's consolidated list and SECO's published designations are the primary Swiss references.
• Transaction screening: Payments, goods descriptions, HS codes, and shipping routes require screening, not merely counterparty names. Goods subject to dual-use or strategic-goods controls under the Güterkontrollgesetz (GKG) require export licence assessment in parallel.
• Negative-news and ownership analysis: Where a counterparty is not itself designated but has ownership links to a designated person exceeding the applicable ownership thresholds, Swiss ordinances generally require the same treatment as a direct designation. Automated screening without human review of ownership chains routinely misses these cases.
• Record retention: Documentation of each screening decision – including the list version consulted, the date, the analyst, and the rationale – creates the audit trail necessary for any regulatory enquiry or internal investigation.

Re-Export Controls and Anti-Circumvention Obligations

Re-export controls have become one of the most technically demanding areas of Swiss sanctions compliance. Switzerland's geographic position and its role as a hub for commodity trading, logistics, and financial services mean that Swiss entities are frequently implicated in supply chains that, deliberately or inadvertently, route goods toward sanctioned destinations.

Both the Swiss EmbG framework and the EU packages (applicable where an EU-connected entity is involved) contain explicit anti-circumvention provisions. Under EU law, these prohibit knowingly and intentionally participating in activities whose object or effect is to circumvent EU prohibitions. Swiss-law equivalents apply where goods or financial flows transit Swiss-incorporated entities.

Practically, this means:

• End-user declarations and end-use monitoring are required for controlled goods, with Swiss exporters responsible for verifying that declared end users are genuine and that no onward transfer to a sanctioned destination is intended.
• The Staatssekretariat für Wirtschaft (SECO) is the competent Swiss authority for export control licences under the GKG. Licence applications must be filed before export; retroactive authorisation is not available.
• Common high-risk indicators include: routing through jurisdictions identified in EU annexes as circumvention risks; counterparties newly incorporated without clear business history; payment structures involving third-country financial intermediaries; and order quantities that are implausible for the stated end-use.
• Swiss commodity traders and logistics firms with global operations should ensure that contractual warranties, audit rights, and termination provisions address re-export risk explicitly.

For businesses with exposure in parallel EU jurisdictions, it is worth noting that similar re-export and circumvention frameworks operate in Portugal and other Member States. Our Portugal sanctions and trade practice can assist where cross-border EU and Swiss elements intersect.

Best-Efforts Obligations for Swiss Intermediaries

A particularly significant development across the recent EU packages has been the formalisation of best-efforts obligations for intermediaries – notably banks, law firms, accountants, and corporate service providers. Under these provisions, covered entities are required to use their best efforts to ensure that their clients comply with sanctions, not merely to refrain from direct violations themselves.

For Swiss-based intermediaries, the practical scope of this obligation depends on whether the relevant Swiss ordinance has replicated the EU-level best-efforts language. Where it has, the following steps are generally regarded as minimum adequate practice:

• Implementing contractual representations and warranties in engagement letters or service agreements requiring clients to confirm sanctions compliance.
• Conducting enhanced due diligence on clients or transactions with elevated risk profiles, including requests for underlying transaction documents where appropriate.
• Maintaining written procedures for escalation and, where applicable, refusal of instructions that cannot be reconciled with sanctions obligations.
• Documenting the steps taken and the reasoning applied, so that best-efforts compliance is demonstrable rather than merely asserted.

FINMA-supervised entities face an additional layer: FINMA's supervisory expectations regarding financial crime risk management effectively operationalise best-efforts standards for banks and securities firms. Non-financial intermediaries – trading companies, professional service providers, management holding structures – should not assume that the absence of FINMA supervision means they are outside the best-efforts regime; the EmbG ordinances and the anti-circumvention provisions may apply independently.

A further development to monitor is the expanding EU guidance on intermediaries in third countries, including materials published in connection with the 21st package's specific provisions on intermediaries and Central Asian routing. Swiss entities with supply chain links through Kazakhstan and comparable jurisdictions should review this guidance carefully.

Common Errors by Foreign Businesses Entering Switzerland

Foreign clients establishing or acquiring Swiss entities frequently underestimate the following compliance risks:

• Assuming Swiss neutrality confers exemption: Switzerland's political neutrality has no bearing on the legal application of the EmbG or the commercial risk of dealing with sanctioned parties through Swiss structures.
• Treating Handelsregister filings as sufficient KYC: Swiss commercial register entries confirm corporate existence, not beneficial ownership or compliance status. Full UBO identification remains obligatory.
• Overlooking Swiss-specific goods controls: Goods that are not on EU dual-use lists may nonetheless require Swiss export licences under the GKG, and vice versa. Parallel assessment of both frameworks is necessary for controlled-goods exporters.
• Misapplying debt enforcement and freeze rules: Swiss civil enforcement under the SchKG (Bundesgesetz über Schuldbetreibung und Konkurs) does not override asset freeze obligations under EmbG ordinances. Creditors seeking to enforce against frozen assets must obtain a specific derogation; standard SchKG procedures do not constitute authorisation.
• Neglecting group-level policy updates: Where a foreign parent updates its global sanctions policy in response to EU developments, Swiss subsidiaries and branches may need to implement local ordinance versions of the same policy. Group-wide roll-outs that reference EU regulation numbers without adaptation to Swiss law create gaps.

Procedure and Timeline: What to Expect

There is no single licensing or clearance procedure applicable to all sanctions questions in Switzerland. The relevant authority – SECO for export controls and sanctions designations, FINMA for financial intermediaries, cantonal authorities in specific circumstances – depends on the nature of the issue. As a practical matter, the procedural pathway for common questions typically looks as follows:

• Export licence applications (SECO / GKG): Processing times depend on the goods category and the destination. Applications should be submitted well in advance of any planned export. SECO may request supplementary information on end-use, which can extend the timeline further.
• Derogation requests under sanctions ordinances: Where a transaction is in principle prohibited but a derogation (such as the Russia-exit derogation valid until 31 December 2026) may apply, a formal request to SECO is required. The strength of the application depends on the quality and completeness of the supporting documentation provided.
• Voluntary disclosure: Where a potential breach is identified internally, Swiss practice – influenced in part by the approach adopted by the Bundesgericht in analogous financial crime contexts – tends to treat timely, well-documented voluntary disclosure as a mitigating factor in any enforcement assessment. Early legal advice on the disclosure decision is strongly advisable.

Given the pace of sanctions developments in 2026 and the potential cost of enforcement, compliance reviews conducted proactively are generally more cost-effective than reactive remediation. If you would like to discuss a specific transaction, export licence question, or internal audit, our team is available at info@ferrazwhitmore.com or through our contacts page.

Decision Checklist for Swiss Entities

The following checklist does not substitute for legal advice on a specific situation, but it reflects the questions that any compliance review for a Swiss-based entity should address:

• Has the relevant Swiss ordinance implementing the latest EU package entered force, and from what date?
• Are any counterparties, beneficial owners, or intermediate entities designated under Swiss or EU lists?
• Do the goods, technology, or services involved require a SECO export licence under the GKG?
• Is there any routing, intermediary, or end-use indicator suggesting circumvention risk?
• Does the transaction involve digital assets, LNG, or energy products subject to the 2026 restrictions?
• If a Russia-exit transaction, has the divestment derogation (valid to 31 December 2026) been properly documented?
• Do contractual documents include adequate representations, warranties, and termination rights in relation to sanctions?
• Have all screening decisions been recorded with sufficient detail to demonstrate a best-efforts compliance posture?
• Has the Swiss subsidiary's local compliance policy been updated to reflect the Swiss ordinance text rather than the EU regulation text?

If any of these questions cannot be answered with confidence, a structured compliance review is advisable before the transaction proceeds. Our team in Switzerland and Portugal works with international businesses on exactly these issues. Reach out at info@ferrazwhitmore.com or visit our contacts page to arrange an initial conversation.

Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.