SWITZERLAND Law and Practice Contributed by: Philippe M. Reich, Kaspar Projer, Samantha Salsench and Anna Zellweger, Baker McKenzie Switzerland AG
• where compliance with such legislation would impose on PostFinance a disproportionately high burden; or • where there is a risk of serious legal or reputational harm. The central issue before the court was therefore whether any of these exceptions applied in the pre - sent case, thereby justifying PostFinance’s exclusion of the plaintiff from the provision of the relevant pay - ment services. Importantly, the court agreed with the lower court that a “conflict” with domestic or international legislation within the meaning of the first bullet point above can only arise from a prohibition on the business relation - ship imposed by legislation that is directly applicable in Switzerland (eg, Swiss or UN sanctions). Accord - ingly, the mere fact that a customer is subject to US sanctions does not, in itself, justify an exception to PostFinance’s universal service obligation (considera - tion 5.2.2). The court further rejected the argument that Swiss financial supervisory law effectively requires Swiss financial institutions to comply with foreign sanctions law. Rather, FINMA merely expects supervised insti - tutions to identify, mitigate and monitor the legal and compliance risks arising from foreign sanctions law (consideration 5.2.3). Additional compliance work deriving from the clas - sification of the plaintiff as high-risk does not auto - matically amount to a disproportionate burden within the meaning of the second bullet point above. The burden must be assessed against the level of compli - ance effort typically associated with other categories of customers who require enhanced monitoring (con - sideration 7.3). Finally, the court was not persuaded by PostFinance’s argument that maintaining the account exposed it to the risk of US sanctions – including secondary sanc - tions – and could adversely affect its reputation and relationships with correspondent banks. The court stressed that the plaintiff only sought a Swiss-franc account for domestic transactions relating to everyday expenses and there was no evidence that the account
would be used for transactions capable of triggering sanctions concerns (considerations 8.2.-8.3). The judgment provides important guidance on the relationship between PostFinance’s universal bank - ing service obligations and foreign sanctions regimes and therefore cannot be extrapolated to other finan - cial institutions. In essence, the court reaffirmed that PostFinance’s universal service obligation takes prec - edence unless it can demonstrate a concrete legal prohibition applicable in Switzerland, a genuinely dis - proportionate compliance burden, or a substantiated risk of serious legal or reputational harm. 3.2 Future Developments It is to be expected that the Swiss sanctions system, including the guidance for the implementation of sanctions, the involvement of the courts in sanctions matters and the enforcement of sanctions by SECO, will continue to become more robust and also more diversified in the future. In particular, it is expected that the enforcement landscape will further expand. In light of 1.4.3 Domestic and/or Supranational Meas- ures , Switzerland is expected to continue the current trend of implementing the sanctions regulations of the European Commission. There is no indication that this current trend should change, although the Swiss legislature is expected to continue implementing the European sanctions framework with certain “Swiss finishes” (as has been the case in the past: an exam - ple of such Swiss finish can notably be found in the notification obligation instead of a licensing require - ment concerning the provision of services or software under the services and software ban, Article 28e para - graph 9 of the Ukraine Ordinance).
4. Delisting Challenges 4.1 Process
Sanctions lists are updated based on the correspond - ing lists of the UN or, in the case of alignment with EU sanctions, the EU (see Article 1 paragraph 1 EmbA; see 1.4.3 Domestic and/or Supranational Measures). For example, in the case of EU sanctions against Venezuela, Switzerland has aligned with all EU sanc -
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