Swiss sanctions against Russia – Implementation of the EU 12th Sanctions Package

Introduction

On 31 January 2024, the Swiss Federal Council adopted further sanctions against Russia with a view to mirroring the latest measures imposed by the EU in December 2023. The corresponding amendments to the Ordinance on measures in connection with the situation in Ukraine ("UKRO") entered into force on 1 February 2024.

An unofficial English translation of UKRO as of 31 January 2024 and a redline against the version of 21 December 2023 are available, respectively here and here 

Also, on 1 February 2024, the State Secretariat for Economic Affairs (SECO) published an amended version of its clarifications in the form of "frequently asked questions" (FAQ) document, inter alia to include frequently asked questions in relation to Articles 12b and 14e UKRO.

An unofficial English translation of the FAQ and a redline against the version of 21 December 2023 are available, respectively here and here.

Key elements

The new measures include in particular the following:

• Ban on Russian diamonds (Article 14e UKRO): A phased ban on the purchase and import of Russian diamonds, reflecting a commitment made at the G7 summit on 6 December 2023, aims to cut off a significant revenue stream for Russia.
• Import restrictions (Annexe 1, Article 5 UKRO): New bans on the import of pig iron and LPG (liquefied petroleum gas) from Russia, along with expanded restrictions on goods that could bolster Russia's military and technological capabilities or enhance its industrial sector. This includes prohibitions on the export and sale of chemicals, lithium batteries, certain motors for unmanned aerial vehicles, and machine tools and machinery parts to Russia.
• Oil price cap (Articles 12b and 12c UKRO): Measures include enhanced enforcement of the oil price cap for Russian crude oil and petroleum products, and new reporting and authorization requirements to prevent circumvention of the oil price cap.
• Financial sector restrictions (Article 20 (2^bis) UKRO): Measures also include a ban on Russian nationals and residents from controlling Swiss companies providing crypto-asset services, in order to limit the circumvention of the prohibition on the provision of crypto-asset wallet, account or custody services (new Article 20 (2^bis) UKRO, which will enter into force on 2 March 2024).[1]
• Service sector restrictions (Article 28e UKRO): A prohibition on providing software for enterprise management and industrial design and manufacture to Russian companies, with exceptions for Russian subsidiaries of Swiss companies.
• Further examination: The Federal Council has decided to withhold the implementation of a notification requirement for fund transfers out of the EU by companies controlled by Russians or entities established in Russia. Instead, the Federal Department of Economic Affairs, Education and Research (EAER), in collaboration with the Federal Department of Finance, will conduct a thorough examination to assess the potential implementation of such a requirement in Switzerland.

Further, key updates to the SECO's FAQ document include compliance guidelines for the oil price cap (section 2.1 FAQ), phased bans on importing diamonds from the Russian Federation with specific documentation requirements for proving origin (section 2.4 FAQ), and the conditions under which exceptions for frozen assets may be granted by SECO under Article 15 (5^ter) (c) UKRO (section 2.5.3 FAQ).

[1]     Unofficial English translation: "Russian nationals and natural persons resident in the Russian Federation are prohibited from directly or indirectly acquiring a legal person, entity or establishment established or incorporated under Swiss law or the law of an EEA member state and providing the services referred to in para. 2, to take direct or indirect control of them, or to hold a new position in their governing bodies."

Reminder: renewal of asset declarations and transactional reporting requirement

All financial institutions who previously reported assets or economic resources belonging to a sanctioned person listed in Annex 8 must now provide two types of updates to SECO:

• Renewal of asset declarations: Update the total value of all assets frozen under Article 15 UKRO as of 31 December 2023, with a submission deadline of 16 February 2024.

• Transactional reporting for Annex 8: For entries existing before 1st December 2023, compliance with the additional transaction reporting requirement is due by 29 March 2024.

Future developments

Sanctions are amended and adapted on an ongoing basis. Given the importance of the topic and the potentially serious legal and reputational consequences of a breach, it is essential to keep abreast of the latest measures and any guidance issued by the Swiss government. We are monitoring these developments closely.

At this juncture, the introduced restrictions raise a number of interpretation and implementation questions. Some of those questions are expected to be clarified based on EU sanctions guidance and FAQs, if any, whereas other issues will require formal confirmation from SECO. We are working with our clients to clarify the expectations of competent authorities and to find practical solutions for an efficient operational implementation of the sanctions framework.

Useful links

Given the fluid nature of the sanctions, we enclose some relevant resources which we trust will be of assistance for monitoring the developments:

Given the fluid nature of the sanctions, we enclose some relevant resources which we trust will be of assistance for monitoring the developments:

Swiss Sanctions

UKRO, as amended on 31 January 2024

• Official publication:
  • UKRO German version
  • UKRO French version
  • Unofficial English translation
  • Redline against the version of 21 December 2023 (English)

SECO FAQ, as amended on 1 February 2024

• Official publication:
  • German version
  • French version
  • Unofficial  English translation
  • Redline against the version of 21 December 2023 (English)

EU Sanctions

• Consolidated texts of sanctions regulations
  • Consolidated text of Regulation (EU) No 833/2014 (Russia)
  • Consolidated text of Regulation (EU) No 269/2014 (Ukraine territorial integrity)
• Compilation of frequently asked questions regarding EU sanctions available here: link.

Please do not hesitate to contact us if you have any further questions on this subject.

You may reach out to your usual contact at our firm or direct any sanction-specific queries to our dedicated task force at sanctions@clutterlenzstaehelin.com.