On 16 May 2024, SECO published the updated version of its Auslegungshilfe Sanktionsmassnahmen (“interpretation guideline for sanctions measures”; “FAQs“), which includes additional guidance on the following five topics: (i) proof of the non-Russian origin of imported diamonds and diamond products in relation to the prohibition of Art. 14e of the Ordinance of 4 March 2022 on measures in connection with the situation in Ukraine (“Ordinance“); (ii) the mandatory format for fulfilling the reporting obligation for existing deposits under Art. 21 of the Ordinance; (iii) clarification of the need to close existing crypto wallets and crypto accounts under Art. 20 para. 2 of the Ordinance; (iv) harmonization of the terminology of FAQ 2.8.1 with Art. 23 and Art. 1 let. g of the Ordinance with regard to the terms “shares” and “securities”; and (v) the mandatory format for fulfilling the reporting obligation for services and software under Art. 28e para. 6 in conjunction with para. 7 of the Ordinance.
- Clarification with regard to Art. 14e of the Ordinance
Section 2.4.2 of the FAQs contains further clarification on the prohibition on importing diamonds and products containing diamonds of Russian origin under Art. 14e para. 8 of the Ordinance. To prove the non-Russian origin of imported diamonds and products containing diamonds, the FAQs establish that suitable proof of origin must be provided. Now, in the updated FAQs, SECO stipulates for the first time that the proof of origin must be submitted as a document (document code L147) in the “Documents” section of the customs declaration. The document must be submitted to the Swiss Federal Office for Customs and Border Security (BAZG) upon request, together with the other accompanying customs documents. For diamonds listed in Annex 27a of the Ordinance, point 1, weighing less than 1.0 carat per diamond, no proof is required until 31 August 2024. However, the document code L147 must be declared and the wording “without proof, less than 1 carat” must be added.
Previous versions of the FAQs stated that the exportation (or reexportation) of these goods was not subject to any restrictions in Switzerland, regardless of the country of export or re-export. In the latest amendment to the FAQs, SECO clarifies that restrictions do apply if the country of export or re-export is not an EEA or G7 country. Accordingly, there are no restrictions under Swiss sanctions laws on the (re)exportation of these goods from Switzerland to EEA or G7 countries.
- Clarification with regard to Art. 21 of the Ordinance
Art. 21 of the Ordinance provides that persons and entities that accept deposits and grant loans on a professional basis are obliged to submit to SECO every 12 months updated information on the amounts of the existing deposits exceeding CHF 100,000 from Russian nationals, natural persons resident in the Russian Federation and banks, companies or organizations established in the Russian Federation.
Until now, the reporting obligation could be carried out by email or by post to SECO. In addition, there were no requirements regarding the format, and there was no form for this reporting.
The latest amendment to the FAQs provides that the reporting obligation must be fulfilled either by PrivaSphere Secure Messaging or by email to sanctions@seco.admin.ch, using the standard form (Excel) published by SECO on 16 May 2024 (see (v) below).
- Clarification with regard to Art. 20 para. 2 of the Ordinance
Art. 20 para. 2 of the Ordinance prohibits providing professional services in connection with crypto wallets, crypto accounts or the custody of crypto-based assets to Russian nationals, residents of the Russian Federation and entities established in the Russian Federation.
The FAQs state clearly that services may no longer be provided, and existing accounts or wallets must be closed. Furthermore, it is not sufficient to merely block crypto-based assets. Existing credit balances must be either returned to the Russian customers or converted into fiat currency or other non-sanctioned assets.
- Clarification with regard to Art. 23 of the Ordinance
Art. 23 of the Ordinance refers to the prohibition on the sale of securities (Effekten) to any Russian national, any natural person residing in the Russian Federation, or any bank, company or entity established in the Russian Federation. The term “securities” is defined in Art. 1 let. g of the Ordinance as a broader term than “shares”.
Previously, FAQ 2.8.1 used the term “Aktien” (shares) instead of “Effekten” (securities). The latest amendment to the FAQs harmonizes the terminology in accordance with Art. 23 and Art. 1 let. g, to include other classes of securities in its scope.
- Clarification regarding Art. 28e para. 6 in conjunction with para. 7 of the Ordinance
Article 28e of the Ordinance governs the prohibitions relating to (certain) services and software. According to Art. 28e para. 2 let. a of the Ordinance and, thus, under the so-called group exception, the prohibitions set out in paras. 1 – 1quarter do not apply to services and software falling under Art. 28e of the Ordinance, which are provided for the exclusive use of legal entities, companies or organizations established in the Russian Federation owned or controlled solely or jointly by legal entities, companies or organizations incorporated or registered under Swiss law, the law of a member state of the EEA or the law of a Partner (cf. Art. 1 let. f of the Ordinance). This provision contains what is commonly referred to as the “group exception” (i.e., restricted services and software may be provided to Russian subsidiaries of “Western” group companies).
Under this group exception and according to Art. 28e para. 6 in conjunction with para. 7 of the Ordinance, the legal entities, companies or organizations providing the services under the group exception must notify SECO before 31 July 2024 and, thereupon, every six months thereafter with regard to the services or software that they provide or make available under the exception (Art. 28e para. 2 let. a of the Ordinance). According to Art. 28e para. 7 of the Ordinance, the notifications must include the names of the beneficiaries and information on the type and value of the services or software concerned.
Now, with the amended FAQs, SECO has published the much-anticipated template form for issuing notifications under the group exception (“Form“). Under Section 2.12.3 of the FAQs, SECO holds that the notifications under the group exception must be made exclusively electronically (e.g. via Privasphere or via file transfer to the email address sanctions@seco.admin.ch) and using the standard Form (Excel) published by SECO on 16 May 2024, which is available here. With this statement, SECO clarifies that the notification under Art. 28e para. 6 of the Ordinance must be carried out in one of Switzerland’s official languages (i.e., German, Italian or French), as the Form was only published in these languages. Additionally, with the newly published FAQs, SECO makes clear that submissions under Art. 28e para. 6 of the Ordinance that do not follow the submission template and do not include the requested information will not be accepted by SECO, and the respective software and services provided under the group exception will thus lack the required notification resulting in a violation of Swiss sanctions laws.
Turning to the Form published, the following elements are noteworthy. Overall, the Form reflects the pragmatic approach taken by Swiss authorities as far as the provision of certain services and software in the context of group companies is concerned. Particularly, the Form does not expect the submitting entity to provide a detailed description of the particular service or software provided, but offers drop-down options, one of which must be chosen. For example, based on the Form published, SECO does not expect a lengthy clarification of the service itself, but instead requires applicants to choose the legal provision and the category the respective service or software falls under (i.e., services in the field of architecture, tax consulting, advertising, etc.; Enterprise Resource Planning (ERP) software, Customer Relationship Management (CRM) software, etc.). We believe, however, that applicants may provide further details voluntarily using the “comments” section in the Form. Further information to be provided (again, by using certain drop-down options, where applicable) includes the place of service provision (Switzerland or the Russian Federation, whereby Switzerland is considered the place of service provision if the employees providing the services are employed by a group company domiciled in Switzerland), the value of the software/service in question and the name of the beneficiary or recipient of the service or software. Finally, the Form contains the option to clarify whether the service/software is provided within the group (konzernintern) or outside of that setting (konzernextern).
To conclude, the newly published additional guidance under Art. 28e paras. 6 and 7 of the Ordinance, as well as the Form required to carry out the regular notifications under that provision, now enables the Swiss companies affected to fulfill their obligations under this title within the deadline set in the Form expected by SECO. However, there are still several unclear elements as far as the notification process is concerned, which require further clarification by SECO. For example, it remains unclear whether the enterprise notifying (Meldendes Unternehmen) must be understood, in each case, as the business entity or unit that provides the software or the service itself (leading to the issuance of, as the case may be, dozens of notifications within one group company, which many MNCs advised against in the consultation on the draft of the Form) or whether the respective group entity may file a notification on behalf of its subsidiaries, representative offices and other business units providing the services and software within the context of Art. 28e para. 2 let. a of the Ordinance. It is also still unclear whether services or software falling under the same category may be combined within one item under the Form (i.e., one “line of notification”) or whether each individual service/software must be listed in the Form separately. Finally, it remains undefined whether SECO may request, in individual cases, proof regarding the value of the services and software in question, which must be specified in the Form. The determination of the value may also pose a challenge to companies notifying under Art. 28e paras. 6 and 7 of the Ordinance. In this case, however, SECO’s pragmatic and goal-oriented approach, which has already been observed in the past, is expected to apply again.
