The Swiss Federal Council recently adopted reports on two EU directives: the first report concerns measures around the recovery and confiscation of illicitly acquired assets (“First Report”), the second report deals with measures around the violations of restrictive measures (“Second Report”) (find the official press release here). Both reports compare the existing EU directives, both adopted and published on 24 April 2024, with current Swiss law.
Asset recovery and confiscation
The First Report analyses the differences between the EU’s Asset Recovery Directive (2024/1260) (“EU Asset Recovery Directive”) and Swiss law. The EU Asset Recovery Directive sets minimum standards for tracing, identifying, securing, managing, and confiscating assets linked to criminal activities within the EU. It aims to harmonize asset recovery rules across EU Member States to enhance financial investigations and cross-border cooperation. The Swiss legal framework, while similar in many respects, differs in certain significant areas.
The First Report identified the following key differences:
- Authorities: The EU Asset Recovery Directive provides for centralized authorities for the tracing, freezing and management of assets (Asset Recovery Offices and Asset Management Offices). This contrasts with Switzerland’s decentralized approach involving multiple federal and cantonal authorities. At the police level, the competencies of the Asset Recovery Offices of the EU Member States are more comprehensive.
- “Extended” confiscation: The EU Asset Recovery Directive provides for the possibility of ‘extended’ confiscation. If a person has been convicted of a serious criminal offense, it must also be possible to confiscate assets that are not connected to this offense. To do so, the court in question must be convinced that the assets originate from criminal conduct.. In Switzerland, such confiscation is only provided for in connection with terrorist or criminal organizations (Art. 72 Swiss Criminal Code).
- Use of confiscated assets: The EU Asset Recovery Directive provides that confiscated assets may be used for social or public interest purposes. It also provides that assets confiscated in connection with EU sanctions violations can be used to support third countries affected by situations in which the EU has imposed sanctions, in particular in the event of a war of aggression. These possible uses are only provided for selectively in Swiss law and partially on a cantonal level.
- Strategic framework and overview of frozen assets and procedures: The EU Asset Recovery Directive requires EU Member States to establish a national asset recovery strategy relating to the identification, freezing, confiscation and use of the proceeds of (serious) crimes to which the Directive applies. It also obliges the EU Member States to ensure an overview of frozen assets and national proceedings. Although Switzerland has a strategy for the freezing, confiscation and repatriation of potentate assets (see Strategy “Asset Recovery” published in 2014), this is limited to assets of foreign politically exposed persons (PEPs). Switzerland does not have a more comprehensive strategy or an obligation to keep statistics.
Prosecution and punishment of violations of restrictive measures
The Second Report compares the EU Directive on the definition of offenses and penalties for violations of restrictive measures (EU 2024/1226) (“EU Violations Directive”) with Swiss law, specifically the Embargo Act, the Federal Act on Administrative Criminal Law (“ACLA”), and the Swiss Criminal Code. The EU Violations Directive aims to harmonize the prosecution and penalties for violations of restrictive measures across EU Member States. The analysis reveals that while both the EU and Swiss legal frameworks allow for the prosecution and punishment of sanctions violations, there are notable differences in three main areas:
- Penalties against individuals: Behaviour violating restrictive measures is punishable under both the EU Violations Directive and Swiss law. However, the consequences for violations vary due to the differences between Swiss criminal law and the respective criminal laws of the individual EU Member States. Moreover, the EU Violations Directive introduces accompanying measures (e.g. a ban on running for public office) that go beyond the legal framework in Swiss law. On the other hand, the SCC provides for the possibility of expelling foreign nationals who have violated restrictive measures, whereby such measure is not included in the EU Violations Directive.
- Violations committed by companies and respective penalties: Other than the EU Violations Directive, Swiss law does not, in principle, establish any direct criminal liability of companies as far as sanctions violations are concerned. This means that first and foremost the natural persons violating restrictive measures bear responsibility – and thus criminal liability – for it. Under Swiss sanctions jurisdiction, a criminal liability targeting companies may solely result out of Art. 7 ACLA and only within the narrow scope set by this provision, leading to a maximum fine of CHF 5,000.
In contrast, under EU sanctions, companies violating restrictive measures can be held criminally liable significantly. According to the EU Violations Directive, a fine of up to 5 percent of the company’s total global turnover or up to EUR 40 million can be imposed, depending on the severity of the violation. Confiscation in the event of violations of restrictive measures: Swiss law and the EU Violations Directive both provide for certain options for the confiscation of assets. In Switzerland, however, these possibilities are much more limited, especially as far as the confiscation of assets following a breach of restrictive measures is concerned. Furthermore, the EU Violations Directive, unlike the Swiss legal framework, permits the confiscation of assets or economic resources that are themselves subject to restrictive measures if a person or organization has committed a criminal offence in order to circumvent the corresponding measures in connection with these assets. In Switzerland, there is no legal basis that would allow confiscation under these conditions if the assets or economic resources were not acquired through a criminal offense and are therefore not considered illicit until proven otherwise.
