On 29 March and 20 April 2023, Switzerland adopted new measures against Russia, following those recently adopted by the EU as part of a tenth sanction package. More industrial, high-tech and aviation goods are now banned for export to Russia, while Russian bitumen and related materials, synthetic rubber and carbon are subject to an import ban. There are new bans on the transit of dual-use and certain other items through Russia, and on allowing Russian nationals or residents to hold functions in governing bodies of owners or operators of critical infrastructures. Switzerland also designated around 140 new individuals and entities (including three additional Russian banks and the Wagner Group) on the asset freeze list. To ensure the effective application of the asset freeze, individuals and companies are now subject to broad reporting and information obligations, also covering pre-listing dealings. Other reporting obligations cover Russian Central Bank assets and private flights between Switzerland and Russia.
Export ban on more items contributing to Russia’s military capabilities and technological enhancement
The scope of products covered by export-related restrictions has been expanded as follows:
- The list of goods in Annex XXIII now covers among others: (i) pumps; (ii) industrial robots; (iii) ball bearings; (iv) flat-rolled products of iron or non-alloy steel; (v) heavy trucks and fork-lifts; and (vi) complete industrial plants (except plants for the production of food and drinks, pharmaceuticals, medicines and medical devices).2 Newly listed products are subject to a grandfathering exemption until 27 April 2023 for contracts related to certain restricted goods concluded before 29 March 2023.3 An additional derogation (subject to prior authorisation) is available for activities strictly necessary for the production of titanium products required in the aeronautic industry, for which no alternative supply is available;4
- The list of goods in Annex 23 now covers among others: (i) rare-earth metals and compounds; either in organic or inorganic form; and (ii) and thermographic cameras.5 There is no grandfathering exemption in relation to these goods; and
- The list of aviation-related goods in Annex 3 now covers among others: (i) turbojets; (ii) turbopropellers; and (iii) parts of turbojets or turbopropellers. For these newly listed products, a grandfathering exemption until 27 April 2023 applies for the execution of contracts concluded before 29 March 2023.
The latest package also introduced a new ban on transit of dual-use goods and technology, firearms, their parts and ammunition through the territory of Russia.8 The authorities may authorise the transit of dual-use items through Russia based on certain existing derogations (e.g. for ensuring cyber-security for technology).9
Ban on imports of Russian petroleum, bitumen, carbon and synthetic rubber
The scope of products covered by the import-related restrictions has been expanded to cover: (i) various petroleum products, including petroleum jelly; (ii) petroleum coke; (iii) bitumen and asphalt; (iv) bituminous mastics; (v) carbon; and (vi) synthetic rubber.10
For the newly listed products, a grandfathering exemption until 27 April 2023 applies for the execution of contracts concluded before 29 March 2023, except with respect to carbon and synthetic rubber for which a specific exemption applies until 24 June 2024, if falling below a specified quota.12
Exemptions for Australia, Canada, Japan, New Zealand, Norway, South Korea, the United Kingdom and the United States
The "Partner Countries", which is relevant for certain exemptions and derogations from the Swiss ban on professional services and the Swiss export bans, are now defined in the Ordinance and include Australia, Canada, Japan, New Zealand, Norway, South Korea, the United Kingdom and the United States. The list is not exhaustive.
In practice, this means Swiss businesses and individuals can, for example, provide otherwise restricted professional services (e.g. IT consultancy services, engineering services) for the "exclusive use" of Russian companies that are owned or controlled by a parent company established in these additional Partner Countries.
New ban on Russian nationals/residents in government bodies of critical infrastructure companies
As from 27 April 2023, it will be prohibited to allow Russian nationals and residents to exercise any function in the governing bodies of owners or operators of critical infrastructures. The concept of “critical infrastructure” is defined in the Federal Information Security Act,15 which will fully enter into force in September 202316 and relates to "the supply of drinking water and energy, information, communication and transport infrastructure, as well as other facilities, processes and systems essential to the functioning of the economy and the well-being of the population."17
The new prohibition does not apply in respect of Russian nationals and residents who hold EEA, United Kingdom, or Swiss citizenship.18
New derogations on professional services to enable Russian divestments or wind-downs, and for maritime safety
In order to facilitate divestment from the Russian market by Swiss operators, Switzerland has introduced a new temporary derogation (subject to prior authorisation) from the Swiss ban on certain professional services (e.g. IT consultancy, accounting, auditing services). More specifically, Swiss operators can obtain an authorisation to continue providing such restricted professional services until 31 December 2023, when this is strictly necessary for the divestment from Russia or the wind-down of business activities in Russia.19 Importantly, such restricted services must be provided for the exclusive benefit of the persons resulting from the divestment, and cannot be provided to military end-users (or have a military end-use in Russia) or to the Russian government.20
This new derogation supplements the existing derogation in relation to activities (e.g. product supplies) that are prohibited by export and import restrictions where such activities are strictly necessary for the divestment from Russia or wind-down of business activities in Russia, which expires on 30 September 2023.21
In addition, the existing derogation for transactions that are strictly necessary for the divestment and wind-down of activities involving the listed Russian State Owned Entities (SOEs) that are subject to a transaction ban is extended by three months and now applies until 31 December 2023.22
For maritime safety, Switzerland has introduced a new exemption from the prohibition on technical assistance under any Swiss export or import bans to allow the provision of pilot services to vessels in innocent passage.23 In addition, an exemption from the transaction ban on SOEs also applies in respect of the provision of pilot services to such vessels in innocent passage.24
Additions to the asset freeze list
On 2 and 29 March 2023, Switzerland has added around 140 individuals and entities on the Swiss asset freeze list in relation to Russia, focusing on banks, defence-related companies, media figures and government officials. Noteworthy designations include:
- Alfa-Bank JSC;
- Rosbank PJSC;
- Tinkoff Bank JSC;
- National Wealth Fund of the Russian Federation, which is a reserve fund controlled by the Russian Ministry of Finance;
- Russian National Reinsurance Company JSC;
- SUN Ship Management (D) Ltd., which is part of PAO Sovcomflot, Russia’s largest shipping company;
- Atomflot, which maintains Russia's icebreaker fleet that serves the Northern Sea Route; and
- "Commercial Vehicles – GAZ Group" LLC, Russia’s main producer of commercial vehicles.
On 14 April, the EU sanctioned the Wagner Group for its "active participation in Russia's military aggression against Ukraine" and Russian news agency RIA FAN for its “dissemination of pro-government propaganda and disinformation”. Following the EU, Switzerland added the Wagner Group and news agency RIA FAN to Switzerland’s list of sanctions against Russia, thereby reinforcing the impact of the EU's measures. The changes take effect from 6pm on 20 April 2023.25
Switzerland adopted new derogations (subject to prior authorisation) from the asset freeze restrictions for the following activities:
- Transactions related to Alfa-Bank JSC, Rosbank PJSC, Tinkoff Bank JSC, and "Commercial Vehicles – GAZ Group" LLC if necessary for the termination by 26 August 2023, of operations, contracts, or other agreements, including correspondent banking relations, concluded with the same entities before 29 March 2023;26
- Transactions related to Alfa-Bank JSC for the disbursement of funds by the Jewish Claims Conference to beneficiaries in the Russian Federation by 26 November 2023; 27 and
- Transactions related to the National Settlement Depository (NSD) if necessary for the disposal or the transfer by 24 July 2023 by a Swiss or EEA Member State entity of securities currently or previously controlled by VTB Bank, subject to conditions.28
The existing derogation for the sale and transfer by a designated party of its proprietary rights in an EU entity is extended until 30 June 2023.29 The existing derogation from the asset freeze restrictions on certain designated Russian banks in relation to the purchase, import or transport of agricultural and food products, including wheat and fertilisers, has been extended to Alfa-Bank JSC, Rosbank PJSC, and Tinkoff Bank JSC.30
Importantly, Switzerland has implemented a new exception to the asset freeze, whereby SECO may, exceptionally, authorise the release of certain frozen assets or economic resources or the making available of certain assets or economic resources to a sanctioned individual or entity listed in Annex 8, where the safeguarding of the interests of the country so requires.31 This new exception was prompted by a need to prevent shares in two Swiss companies, Sulzer and medmix AG, from coming into the possession of two sanctioned Russian banks. Indeed, as a result of US sanctions imposed on Viktor Vekselberg in 2018 and Switzerland’s sanctioning of the two Russian banks in question, Tiwel Holding AG (majority shareholder of Sulzer and medmix) was no longer able to service its loan with the Russian banks - a loan for which Tiwel’s shares in Sulzer and medmix are held as collateral.
Broad reporting and information obligations
All individuals and companies under Swiss jurisdiction must now notify SECO without delay of all transactions carried out by an individual or entity listed in Annex 8 in the two weeks preceding their listing.32
Russian Central Bank
Under the new reporting obligation, Swiss businesses and individuals, including the Swiss Central Bank, are obliged to report on held or controlled assets and reserves of the Russian Central Bank. These reports should be submitted SECO.33 Such information shall be notified:
- Before 12 April 2023 and thereafter on a quarterly basis; or
- Immediately, when they have determined that the controlled assets and reserves of the Russian Central Bank have suffered an extraordinary and unforeseen loss or damage.
Non-scheduled flights between Russia and Switzerland
Aircraft operators of non-scheduled flights between Russia and Switzerland, operated directly or via a third country, must notify all relevant flight information to the Federal Office of Civil Aviation (FOCA) at least 48 hours in advance.34
1 See here for previous White & Case client alerts relating to sanctions.
2 Revised Article 11a(5) of the Ordinance and new Annex 23, Part 3.
3 Revised Article 35(10)(d) of the Ordinance.
4 Revised Article 11a(5)(b) of the Ordinance.
5 Revised Annex 23.
6 Article 9 of the Ordinance, revised Annex 3, Part 4.
7 New Article 35(20bis)(d), (e) and (f) of the Ordinance.
8 New Article 4(1bis) of the Ordinance.
9 New Article 6(2bis) of the Ordinance and Article 6(2)(h) of the Ordinance.
10 Revised Article 11a of the Ordinance, New Annex 20, Part 3.
11 New Article 35(23)(c) and (d) of the Ordinance.
12 New Annex 2, Part 2.
13 Article 1(f) of the Ordinance.
14 Article 28f of the Ordinance, entering into force on 27 April 2023.
15 Federal Information Security Act (ISA; RS 128).
16 The full text of the new Information Security Act of September 2023 is available here: FF 2020 9665.
17 Article 5(c) of the Information Security Act of September 2023.
18 Article 28f(2) of the Ordinance, entering into force on 27 April 2023.
19 New Article 30c of the Ordinance.
20 New Article 30c(2) of the Ordinance.
21 New Article 30a of the Ordinance.
22 New Article 30b of the Ordinance.
23 Revised Article 14e of the Ordinance; Article 19 of the United Nations Convention on the Law of the Sea defines innocent passage as not prejudicial to the peace, good order or security of the coastal State.
24 New Article 24a(2)(h) of the Ordinance.
25 See Press Release from the Swiss Federal Council of 20 April 2023: Ukraine: Switzerland sanctions Wagner Group.
26 New Article 15(9quinquies)(a) of the Ordinance.
27 New Article 15(9quinquies)(b) of the Ordinance.
28 New Article 15(8ter) of the Ordinance.
29 New Article 15(5bis) of the Ordinance.
30 New Article 15(9) of the Ordinance.
31 New Article 15(5ter) of the Ordinance.
32 New Article 16(1bis) of the Ordinance.
33 New Article 24(3) of the Ordinance.
34 New Article 29a(4) of the Ordinance.
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