SWITZERLAND Trends and Developments Contributed by: Philippe Reich, Meera Rolaz, Kaspar Projer, Samantha Salsench and Anna Zellweger, Baker McKenzie Switzerland AG
and indications which either support the “ring-fencing character” of the Russian entity or erode the same. These elements (as well as their absence) must be considered and assessed on the basis of the factual circumstances of the specific case and with the sup - port of an experienced Swiss sanctions practitioner. With the element of ring-fencing gaining more impor - tance and, thus, efforts to increase the independence of Russian subsidiaries from Swiss influence as well as to avoid “Western” sanctions jurisdiction in gen - eral, SECO puts an emphasis on the identification of sanctions circumventions and aims to prevent Swiss companies from committing them. The circumvention of sanctions – and related prosecution – maintains one of SECO’s key priorities on its enforcement agenda. SECO has, however, not issued a legal definition of what is considered a circumvention of sanctions, in general, or a circumvention of the various restrictions included in the Ukraine Ordinance, in particular, unlike the EU. However, in Swiss sanctions practice, a circumvention of sanctions (or an attempt to circumvent sanctions) may be considered as follows: • the (re-)structuring of a business relationship or a specific transaction (eg, involving the sale of cer - tain items, the provision of certain services, etc); • whereby this business relationship or specific transaction currently violates sanctions applicable to the relationship or transaction; and • whereby the (re-)structuring is aimed at the avoid - ance of sanctions jurisdiction in the country or countries affected or, more generally, at the con - cealment of such relationship or transaction. Whether or not a circumvention of sanctions is pre - sent, and thus whether SECO may identify a sanctions violation, must be assessed in consideration of all elements of the individual case. The authors suggest involving sanctions experts at an early stage to dis - cuss the implications of the transactions concerned and the implementation of mitigating measures (if at all possible).
In daily practice, the following elements or circum - stances have been identified, which may indicate an attempt to circumvent (Swiss) sanctions or, at least, should lead to an enhanced sanctions compliance assessment. • When confronted with sanctions considerations (eg, existing sanctions restrictions affecting a specific transaction or business relationship), a counterparty offers to restructure the transaction thereby avoiding (i) a Swiss nexus, or (ii) a nexus to the Russian Federation. • Counterparties located in countries neighbouring the Russian Federation, in particular the “-stan” countries, in the UAE or in Balkan countries with strong ties to companies located in the Russian Federation (eg, they are partially owned by a Rus - sian company, they have subsidiaries in Russia, etc) and/or a strong business presence in the Rus - sian Federation. • Transactions where the goods in question falling under the Annexes of the Ukraine Ordinance must be delivered to one of the aforementioned jurisdic - tions – this may indicate that the goods are there - upon forwarded to the Russian Federation. • Counterparties who, shortly before or after Febru - ary/March 2022, have restructured themselves in order to avoid connections to the Russian Federa - tion. Further reference is made to the leaflet published by SECO on “ Red Flags zu den Sanktionen im Zusammenhang mit der Situation in der Ukraine”. Although this docu - ment does not specifically touch on the circumven - tion of Swiss sanctions, it provides helpful guidance on red flags in the context of sanctions, in particular with regard to exports and SECO’s increased focus on these. In an effort to further combat circumvention of sanc - tions, in its 14th sanctions package, the EU introduced an obligation for EU persons to “undertake their best efforts” to ensure that their owned or controlled sub - sidiaries in third countries do not engage in activities that “undermine” the EU Russia Sanctions (notably, to prevent the supply of restricted goods, technol -
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