Switzerland adopts new sanctions in line with the EU’s fifth package

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Authored by our Global Sanctions Team

On April 13 and 27, 2022, Switzerland adopted new measures against Russia further expanding its sanctions. These measures are in line with the EU's fifth wave of sanctions adopted on April 8, 2022 with the notable exception of the transport bans. The latest set of sanctions entered into force at 18:00 p.m. CET on April 27, 2022. Switzerland has also adopted further financial measures against Belarus.

 

Additions to asset freeze list and new exception for divestments by Swiss sanctioned persons

In line with its previous sanctions packages, Switzerland imposed additional asset freeze restrictions on a number of individuals and entities (listed in Annex 8) on April 13, 2022. More specifically, it designated over 200 individuals, including various businesspersons, such as Oleg Deripaska and Farkhad Akhmedov, and a number of family members of businesspersons and President Putin, and certain officials. Switzerland also designated 18 entities, among which four Russian banks, i.e., VTB Bank, Sovcombank, Novikombank, and Otkritie Bank, as well as various companies active in the defence, electronics, shipbuilding and transport sectors.

With respect to the newly sanctioned banks (Otkritie Bank, Novikombank, Sovcombank and VTB Bank), the Swiss State Secretariat for Economic Affairs (the "SECO") may authorize the release and making available of funds and economic resources necessary for a termination by October 28, 2022, of operations, contracts, or other agreements, including correspondent banking relations, concluded with these banks before April 27, 2022. Similar authorizations were already possible for Bank Rossiya, PROMSVYAZBANK and VEB.RF for a termination by August 24, 2022 of operations, contract and other agreements concluded before February 23, 2022.

Switzerland also introduced a new derogation from the asset freeze restrictions, allowing the SECO to authorize the sale and transfer by October 28, 2022 of property rights held by designated parties to an entity based in Switzerland or in a State of the European Economic Area, under the condition that the proceeds of such sales remain frozen.

 

Ban on import of coal and certain solid fossil fuels

Switzerland imposed a ban on the purchase, import, transit and transport of coal and other solid fossil fuels (as listed in Annex 22) if originating in Russia or exported from Russia. The ban also applies to related technical, brokering and other services, as well as financing and financial assistance. Contracts concluded before April 28, 2022 (and ancillary contracts necessary for their execution) may still be executed until August 29, 2022, in which case there is no requirement for authorization or notification.

In addition, a wind-down period has been introduced for the existing ban on direct and indirect participation in any transaction with listed Stated Owned Entities (SOEs) and certain affiliates, which includes (i) a bank, company or entity established outside of Switzerland and controlled by more than 50% by the listed SOEs, or (ii) a company or entity acting on behalf or at the direction of the listed SOEs. This wind-down period applies until August 29, 2022 for the execution of contracts for the purchase, import or transport to Switzerland or to EEA member states of coal and other solid fossil fuels.

 

Ban on export of jet fuel and fuel additives

The sale, delivery, export, transit and transport of jet fuel and fuel additives (as listed in Annex 19) to Russia or destined to be used in Russia , as well as related services, are forbidden. The sale, delivery, export, transit and transport of the same products to Ukraine or destined to be used in Ukraine is subject to authorization by the SECO, which will not be granted if the goods or services are totally or partially for military purposes.

 

Ban on imports of a wide range of industrial goods

The purchase, import, transit or transport of a wide range of goods deemed to generate significant revenues for Russia (as listed in Annex 20) originating in, or exported from, Russia are forbidden, as well as related services. This new import ban covers, inter alia, certain fertilisers, wood, cement, glass products, rubber tires, various chemicals, silver, aluminium, seafood and liquor. Under a wind-down clause, pre-April 28, 2022 contracts can be executed until July 29, 2022 (with no need for notification/prior authorization). This ban does not apply to import volume quotas of potassium chloride or fertilizers containing potassium; the validity duration for such quotas is from July 29 of a given year to July 28 of the following year.

 

Ban on exports of a wide range of industrial goods

The sale, delivery, export, transit and transport of a wide range of goods deemed to enhance the Russian industry (as listed in Annex 23) to Russia or destined to be used in Russia, as well as related services are forbidden.

This ban includes more than 500 products, including numerous chemicals and chemical preparations, paint/inks, rubber products, wood and paper products, textile-related items, building materials, glass products, iron/steel/copper/aluminium items, various tools, numerous kinds of machinery, motors and electronic/electrical appliances, heavy duty and special purpose vehicles, seats for aircraft/motor vehicles, surveying equipment, and many more.

However, contracts concluded before April 28, 2022 can be executed until July 29, 2022 (without the need for notification or prior authorization), and the ban does not apply to goods and services necessary to the official activities of Swiss diplomatic or consular representations or its partners in Russia or international organizations benefiting from immunity. The SECO may also authorize derogations for humanitarian purposes.

Existing annexes were also extended, such that the categories of goods and technology subject to export bans include further military and dual-use items, various high-tech items (Annex 1) and goods and technology suited for use in oil refining and liquefaction of natural gas (Annex 4).

 

Russian bodies banned from receiving Swiss programme funding

Switzerland introduced a ban on providing direct or indirect financial or non-financial support or any other benefit under a Swiss national programme to any legal person, company or entity established in Russia with more than 50 % public ownership or public control. The provision foresees certain limited exceptions, for instance for humanitarian or diplomatic purposes or phytosanitary and veterinary programmes. Also, contracts concluded before April 28, 2022 can be executed until July 29, 2022 (without the need for notification or prior authorization).

 

Ban on servicing trusts for Russian beneficiaries

It is now prohibited to register, provide a registered office, business or administrative address as management services to a trust or any similar legal arrangement if the settlor or the beneficiary is a Russian national or natural person residing in Russia, a company established in Russia, a legal person that is directly or indirectly owned by more than 50% or controlled by a sanctioned Russian natural or legal person, or a natural or legal person acting on behalf, or at the direction of, a sanctioned Russian natural or legal person. It is also prohibited to act as, or arrange for another person to act as, a trustee, nominee shareholder, director, secretary or a similar position, for a subject trust or similar legal arrangement. There is a wind-down period until May 29, 2022 for the termination of contracts concluded before April 28, 2022 or ancillary contracts necessary for the execution of such contracts.

Certain exceptions apply, most notably when the settlor or beneficiary is also a Swiss or European Economic Area (EEA) national or temporary or permanent resident in Switzerland or in an EEA member state, e.g. dual Swiss-Russian nationals.

 

Various sanctions expansions

Air traffic

Russian planes are prohibited from landing in, taking off from an airport in or flying over Switzerland. Emergency landings and flights for humanitarian purposes are authorized.

Ban on exports of goods destined for the liquefaction of natural gas

In addition to the ban on exports of certain goods intended for petroleum refining, the sale, delivery, export and transit of goods intended for liquefaction of natural gas (as listed in Annex 4) to Russia or destined to be used in Russia, as well as related services are now forbidden. The SECO may, after having consulted the competent authorities, authorize such activities if they are necessary for the urgent prevention or mitigation of an event likely to have a serious and significant impact on human health and safety or the environment. In urgent and justified cases, such activities may be undertaken without prior authorization provided that the exporter informs the SECO within 5 business days following the sale, export or transit and state the reasons that justify such activities without prior authorization. Also, contracts concluded before March 5, 2022 can be executed until June 3, 2022 (without the need for notification or prior authorization).

Ban on providing crypto-currency services

Persons and institutions providing crypto-asset wallet, account or custody services on a professional basis are prohibited from providing such services to Russian nationals or residents, or to legal persons, companies or entities established in the Russian Federation, if the total value of the crypto-assets of the natural or legal person, company or entity exceeds CHF 10,000 per portfolio, account or custody service provider. Certain exceptions apply, notably to Swiss nationals, nationals of the EEA or to those with a temporary or permanent residence permit in Switzerland or an EEA country.

Extension of the ban on sale of transferable securities and of banknotes

The prohibition to sell transferable securities to any Russian national, natural person residing in Russia, or bank, company or entity established in Russia in Swiss francs or euros as well as the prohibition to sell, deliver, export, or transport banknotes denominated in Swiss francs has been extended to any official currency of an EU member state.

 

Further sanctions exceptions

Specific military goods

The prohibition to sell, deliver, export, transit or transport specific military goods (as listed in Annex 3 of the Ordinance on the Control of Goods), as well as related services, does not apply to those goods and services which are requested to Switzerland for assistance by the Organization for the Prohibition of Chemical Weapons.

Goods destined for aviation and space industry

In the context of the performance of an aerial leasing contract concluded before March 5, 2022, the SECO may authorize derogations to the prohibition to sell, deliver, export or transport goods related to the aviation and space industry listed in Annex 3 to individuals or entities in Russia or destined to be used in Russia, as well as related services, financing and financial assistance. This applies if it is necessary to guarantee the reimbursement of the lease to a moral person, company or entity established in Switzerland or in the EEA which is not concerned by the ordinance of 4 March 2022 on measures in connection with the situation in Ukraine (as revised on April 27, 2022), and no other economical resource is provided to the Russian party except for the transfer of ownership of the aircraft after full reimbursement of the lease.

Luxury goods

The SECO may authorize derogations to the prohibition to supply or export luxury goods listed in Annex 18 to any person, company or entity in Russia or for use in Russia for cultural goods which are lent in the framework of an official cultural cooperation with the Federation of Russia.

 

New financial sanctions against Belarus

Ban on providing specialized messaging services (SWIFT)

It is forbidden to provide specialized financial messaging services, used to exchange financial data, to banks listed in Annex 15 (Belagroprombank, Bank Dabrabyt and Development Bank of the Republic of Belarus) or to any bank, company or entity established in Belarus, which is controlled by more than 50% by one of the listed banks. This restriction came into force on March 27, 2022.

Ban on listing and providing services on trading venues for transferable securities

It is prohibited to list and provide services on trading venues for the transferable securities of any bank, company or entity established in Belarus and more than 50% owned by the Belarusian state. This restriction came into force on April 12, 2022.

Extension of the ban on sale of transferable securities and of banknotes

The prohibition to sell transferable securities to any Belarusian national, natural person residing in Belarus, or bank, company or entity established in Belarus in Swiss francs or euros issued after April 12, 2022 as well as the prohibition to sell, deliver, transfer or export banknotes denominated in Swiss francs is extended to any official currency of an EU member state. This restriction came into force on April 27, 2022.

 

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