On 3 March 2026, the Swiss Federal Supreme Court delivered a notable decision addressing the interplay between foreign sanctions regimes and Swiss law relating to the mandate of Swiss bank PostFinance to ensure access to basic payment services under Swiss public law. PostFinance acted as appellant in the proceeding before the Swiss Federal Supreme Court (the PostFinance Decision is available here; the respective press release published by the Swiss Federal Supreme Court is available here). The case arose from PostFinance’s refusal to open and, thereafter, maintain a business relationship with a Russian national residing in Switzerland who is subject to US and UK sanctions designations, but not listed under Swiss sanctions. Apart from considerations focusing on the statutory mandate of PostFinance, the Decision allows insights into the Swiss Federal Supreme Court’s understanding of the scope of application of foreign sanctions under Swiss law. This brief analysis focuses on these considerations.
- Background
The claimant in the first instance proceeding before the Commercial Court of the Canton of Bern acting as the defendant in the proceeding before the Swiss Federal Supreme Court (in the following the “Claimant”) is a Russian citizen with Swiss domicile. The Claimant was designated as a “Specially Designated National” (SDN) by the US Office of Foreign Assets Control (OFAC). As transpired already from the Decision of the Commercial of the Canton of Bern of 16 July 2025 (Decision HG 23 72, available here), the Claimant is designated under E.O. 14024 (in the Postfinance Decision, the respective section is omitted) on “Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation”, i.e. a very specific category of designation. He is further subject to financial sanctions imposed by the UK government. In contrast, the Claimant is not listed on any Swiss sanctions list (in particular not on Annex 8 of the Swiss Ordinance on Measures in Connection with the Situation in Ukraine [SR 946.231.176.72]; the “Swiss Ordinance”). In 2022, PostFinance had opened an account in Swiss Francs for the Claimant, but shortly thereafter closed the account again referring to US sanctions as its reason for terminating the business relationship.
The Claimant challenged PostFinance’s decision to terminate the business relationship, and the Commercial Court of the Canton of Bern ruled in his favor, ordering PostFinance to maintain the already opened account purely for domestic payment transactions within Switzerland – subject to certain limitations. PostFinance appealed to the Swiss Federal Supreme Court, leading to the Decision.
- The Key Sanctions Issue: Do Foreign Sanctions Justify Exclusion from (Statutory Basic) Swiss Banking Services?
From a sanctions perspective, the Decision discussed the key question whether a Swiss financial institution under the statutory duty to provide basic payment services (as is the case for PostFinance) is allowed to exclude a bank client from such services if the client is designated under foreign sanctions regimes only. As mentioned, the Claimant was designated by OFAC and subject to financial sanctions of the UK, but not listed under Swiss sanctions. This question relates to the statutory duty of PostFinance under the Swiss Postal Act (SR 783.0) and the Swiss Postal Ordinance (SR 783.01) to offer certain basic payment services in its capacity as a provider of public payment services, whereby certain narrowly defined exceptions apply. In summary, the provision of such services may be refused in cases (i) where this would conflict with applicable provisions of financial market, anti-money laundering or embargo legislation, (ii) where the compliance required would entail a disproportionate burden for the financial institution, or (iii) where the business relationship would expose the financial institution to serious and concrete legal or reputational risks.
- The Swiss Federal Supreme Court’s Considerations on Sanctions
In its considerations on sanctions, the Swiss Federal Supreme Court adopted a significantly restrained approach concerning the extraterritorial effects of foreign sanctions regimes on Swiss financial institutions subject to statutory obligations as in the case at hand. It first clarified that the mere fact that a bank client is subject to US and/or UK sanctions designation does not, in itself, establish a direct conflict with Swiss regulatory law. Rather, an exception to the obligation to provide basic banking services may only be justified where the provision of the service would violate rules which are directly applicable in Switzerland, such as Swiss or UN sanctions. Foreign sanctions regimes, even if comprehensive and rigorously enforced outside of Switzerland, do not automatically fall into this category (consideration 5.2.2). The Swiss Federal Supreme Court stressed that Swiss supervisory law requires financial institutions to identify, limit and monitor risks arising from foreign sanctions exposure (established by the Swiss Financial Market Supervisory Authority, FINMA, in its enforcement proceedings against BNP Paribas (Suisse) on 14 July 2014, see here). However, according to the Swiss Federal Supreme Court, Swiss supervisory law does not oblige PostFinance to implement US or UK sanctions autonomously in the absence of a corresponding Swiss or UN legal basis. Swiss law does not incorporate such foreign sanctions unless this is expressly mandated by domestic legislation or binding international obligations. Accordingly, in the absence of a prohibition under Swiss or directly applicable international law, US sanctions do not constitute a valid ground under the Swiss Postal Act to deny access to the basic domestic payment services at issue (consideration 5.2.2).
The Swiss Federal Supreme Court further addressed PostFinance’s argument that maintaining the business relationship would have resulted in a disproportionate compliance burden. On the outset, the Swiss Federal Supreme Court acknowledged that dealing with a customer who is sanctioned abroad may require enhanced due diligence and additional monitoring efforts (consideration 7.1). However, it made it clear that a higher compliance effort, as compared to an average bank customer, is not sufficient to qualify as an “unreasonably high” burden. Rather, the bank relying on such argument must demonstrate that the specific compliance obligations in the individual case exceed the compliance efforts owed to an average customer within the specific group of clients (such as politically exposed persons, etc.). In the absence of concrete evidence, increased compliance costs remain part of the ordinary risk management responsibilities of a regulated financial institution (considerations 7.3 and 7.4).
Finally, the Swiss Federal Supreme Court considered PostFinance’s argument that the US designation of the Claimant, in itself, allowed for the discontinuation of the business relationship under the Swiss Postal Act. PostFinance had claimed that the opening and continuation of the business relationship in question exposed PostFinance to serious legal or reputational risks. The Swiss Federal Supreme Court, however, followed the position of the Commercial Court of the Canton of Bern which held that PostFinance failed to sufficiently demonstrate such alleged legal and reputational risks. In particular, the first instance considered the risk of US secondary sanctions not sufficiently substantiated in the specific circumstances of the case, especially given that the account was strictly limited to domestic transactions in Swiss francs. Without credible indications that maintaining the account would trigger enforcement action or lead to tangible reputational harm, the statutory threshold for an exception based on serious legal or reputational damage was not met. This position was upheld by the Swiss Federal Supreme Court (considerations 8.1 and 8.2).
In conclusion, the Swiss Federal Supreme Court followed the first instance insofar as none of the statutory grounds allowing an exception from PostFinance’s duty to provide basic payment services were satisfied in the present case (consideration 9).
- Implications for Swiss banks under statutory duties and sanctions compliance
The implications of the decision must be understood against the specific regulatory framework governing PostFinance. As a provider of public payment services, PostFinance is subject to a statutory duty to provide basic payment services, which significantly restricts its ability to refuse clients (consideration 4.3). Within this framework, the Swiss Federal Supreme Court clarified that foreign sanctions, in the absence of a corresponding Swiss or UN legal basis, do not constitute a sufficient ground to deny access to such services (consideration 5.2.2). In particular, the Court confirmed that neither relatively increased compliance efforts compared to an ordinary bank client nor abstract exposure to foreign sanctions enforcement are, in themselves, sufficient to justify an exception from this duty (considerations 7.3-7.4 and 8.1-8.3). However, it is important to note that these arguments, and the respective limitations as far as refusals of clients are concerned, only apply to the basic payment services as stipulated in the Swiss Postal Act. The holdings of the Swiss Federal Supreme Court are therefore limited twofold – to PostFinance as provider of public payment services, and to the provision of the basic payment services as defined in the Swiss Postal Act. As a result, the findings of the PostFinance Decision may not be transferred broadly to (other) Swiss financial institutions operating outside the public payment sector.
Nevertheless, the PostFinance Decision provides interesting insights into the Swiss Federal Supreme Court’s understanding on how risks arising out of foreign sanctions are to be assessed under Swiss law. Specifically, while foreign sanctions regimes may influence bank-internal risk assessments and may trigger enhanced compliance efforts, they are not considered directly applicable (consideration 5.2.2 and 5.2.3). In this regard, the Swiss Federal Supreme Court follows a rather narrow understanding of territoriality, thereby ignoring that Swiss financial institutions – including PostFinance – are required to comply with foreign law, including foreign sanctions, if they operate in the respective jurisdictions, in particular from a supervisory perspective.
The decision further underscores the importance of the specific services at issue. The fact that the account was strictly limited to routine domestic payment transactions in Swiss francs within aforementioned basic payment services category played a central role in the Swiss Federal Supreme Court’s assessment of sanctions risks (consideration 8.2). This suggests that, where services can be effectively ring-fenced and limited in scope, sanctions-related risks can be mitigated to a degree that does not justify a full refusal of the business relationship within the statutory duty framework. With respect to Swiss financial institutions outside of such framework, the PostFinance Decision could be interpreted as indicating that, from a pure Swiss law perspective as now interpreted by the Swiss Federal Supreme Court, sanctions mitigating measures such as ring-fencing may allow Swiss banks to provide certain basic services (such as domestic payments in Swiss Francs) without violating foreign sanctions. Whether or not Swiss banks are interested in providing such services to clients subject to US designation remains highly doubtful though in experience and practice, also considering that even PostFinance operating under its statutory obligations decided to terminate the business relationship.
- Conclusion
The PostFinance Decision is closely tied to PostFinance’s specific public mandate and statutory duty and should not be read as calling into question the broader (legal and factual) discretion of Swiss financial institutions, including the discretion of PostFinance outside the core area of basic payment services, to manage their sanctions exposure in accordance with their risk profile and legal and regulatory obligations under Swiss and foreign laws. However, the Decision demonstrates a rather narrow understanding by the Federal Supreme Court of the application of (foreign) sanctions in Switzerland as a reason to refuse a business relationship. According to the Swiss Federal Supreme Court, only Swiss and UN sanctions (as well as foreign sanctions expressly considered mandatory in Switzerland) are directly applicable. In this regard, the Swiss Federal Supreme Court disregards that Swiss financial institutions are usually (also) active in non-Swiss markets and must therefore comply with the legal and regulatory framework in such markets. Also, Swiss banks are usually required to comply with foreign sanctions under direct instruction by Swiss authorities such as the Swiss Financial Market Supervisory Authority (see above) and the State Secretariat for Economic Affairs (SECO). In this regard, particular reference is also made to FINMA Circular 2023/1 of 7 December 2022 on operational risks and resilience – banks, which entered into force on 1 January 2024 (available here). According to its Section IV.F., financial institutions are required to ensure compliance with applicable requirements “through appropriate organizational measures” (para. 98). Moreover, we believe that the Swiss Federal Supreme Court underestimates the compliance related efforts arising from clients subject to US (or UK) sanctions designation. Even if compared within the group of politically exposed persons as bank clients, the compliance costs for such clients should be considered “unreasonably high”.
Lastly, the PostFinance Decision should not be seen as a gate to onboard sanctioned parties. Even within the framework described above, the effective scope of such basis services is in our view conceptually akin to the exemption provided, e.g., in Article 15 para. 5ter let. b of the Swiss Ordinance, the so-called hardship clause, which is understood to enable payments to cover basic needs of sanctioned parties, such as for rent, taxes, legal or medical cost. It is thus noteworthy that the Decision of the Commercial Court specifically limited PostFinance’s obligation under the relationship with the Claimant (cf. Ruling 1) – which was upheld by the Swiss Federal Supreme Court – to transactions of a maximum of CHF 15,000 in total per month. This cap, in our view, reflects the intention expressed in aforementioned provision of the Swiss Ordinance to allow certain essential transactions. Insofar, the PostFinance Decision and the Decision of the Commercial Court of the Canton of Bern underlying the same, may be interpreted as simply allowing the fulfillment of basic needs which would also be permitted towards persons listed in Annex 8 of the Swiss Ordinance by way of exemption.
