Switzerland to Start Criminal Investigation Against the Russian Violations

Switzerland’s attorney-general has commenced a criminal investigation into alleged breaches of its Russia sanctions by an undisclosed company, signaling a readiness to prosecute entities engaging in business dealings with Moscow.

The company purportedly violated Swiss regulations by utilizing overseas subsidiaries, according to the attorney-general’s office, which declined to disclose the identity of the company or the sector involved.

This action against the Swiss-based entity marks a significant development in sanctions enforcement within Switzerland, a nation renowned for its banking confidentiality and commodity trading, having never before publicly acknowledged launching a criminal inquiry into trade with Russia.

Following a request from the State Secretariat for Economic Affairs (Seco), the government body responsible for enforcing sanctions, the attorney-general assumed jurisdiction over the case and initiated criminal proceedings.

The Swiss sanctions, enacted in response to Vladimir Putin’s full-scale invasion of Ukraine in 2022, mirror measures implemented by other Western nations.

While Seco oversees the monitoring of sanctions violations, the attorney-general can commence criminal proceedings “if the seriousness of the offense warrants it,” stated Linda von Burg, a spokesperson for the attorney-general.

Seco also requested the prosecutor to initiate criminal proceedings against a second company for similar violations, but the attorney-general declined, determining that it did not constitute “a case of special significance.”

“The Federal Prosecutor’s Office has assumed responsibility for one of these proceedings and declined to take over the second,” von Burg confirmed.

Patrick Eberhardt, an international trade and trade finance partner at the law firm Eversheds Sutherland in Geneva, described the decision as a “turning point” in sanctions enforcement in Switzerland.

“Swiss authorities are indicating to the market that they will not tolerate circumvention through subsidiaries in locations like Dubai,” he remarked. “Furthermore, by referring the matter to the federal prosecutor, Seco is signaling its intention to pursue substantial penalties, possibly even prison sentences.”

Seco informed the FT that it is currently probing “several cases” of suspected sanctions breaches by foreign subsidiaries of Swiss companies, refraining from disclosing the parties involved due to ongoing proceedings.

In total, Seco has initiated 49 administrative proceedings concerning potential violations of Russia-related sanctions.

Numerous Swiss commodity traders have utilized foreign subsidiaries in the United Arab Emirates to facilitate continued trade with Russia since the conflict’s onset, as reported by the FT.

Under Swiss regulations, “legally independent” subsidiaries of Swiss companies abroad or Swiss citizens residing outside the country are exempt from sanctions compliance unless prosecutors identify additional “points of contact” with Switzerland, such as payments or directives originating from the country.

Josh Alba
Josh Alba
Josh Alba stands at the forefront of contemporary business journalism, his words weaving narratives that illuminate the intricate workings of the corporate world. With a keen eye for detail and a penchant for uncovering the underlying stories behind financial trends, Josh has established himself as a trusted authority in business writing. Drawing from his wealth of experience and relentless pursuit of truth, Josh delivers insights that resonate with readers across industries.
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