Switzerland – Anti-circumvention measures extended to EU September sanctions

To prevent the circumvention of international sanctions relating to the situation in Ukraine, Switzerland will, with effect from 18H CET 12 November 2014, extend its anti-circumvention measures to apply to the sanctions that the EU introduced against Russia in September (pursuant to Council Regulation (EU) No 960/2014, amending Council Regulation (EU) No 833/2014). This has been effected by way of an amendment to the ordinance of 27 August 2014, as reported on Baker & McKenzie’s Sanctions Update. In its press release, the Swiss Federal Council warned that it “continues to monitor the situation in Ukraine closely and reserves the right to take further measures depending on how the situation develops.”

In the financial sector, the following are subject to prior authorisation from SECO, the competent Swiss authority:

• trade in new financial instruments with a maturity exceeding 30 days (previously, more than 90 days) issued by:

o five Russian banks (Sberbank, VTB Bank, Gazprombank, Vnesheconombank and Rosselkhozbank);
o (new) six entities (Rosneft, Transneft, Gazprom Neft, OPK Oboronprom, United Aircraft Corporation and Uralvagonzavod);
o banks and other entities outside Switzerland or the EU controlled by more than 50% by the aforementioned banks and entities; and
o entities acting in the name or at the direction of the aforementioned banks and entities; and

• the granting of loans with a maturity exceeding 30 days to these five banks and six entities.

Licences will be granted if, with the issue, the average nominal value of the financial instruments issued in the past 3 years is not exceeded, whereas temporary excesses in connection with refinancings are permitted.

Secondary trading in newly issued financial instruments from outside Switzerland and the EU with a maturity exceeding 30 days (previously, more than 90 days) is subject to a monthly notification requirement to SECO.

The list of persons and companies with whom financial intermediaries may not take up new business relations and for which existing business relations are subject to an immediate notification requirement to SECO has been extended with 24 new entries. The updated list can be accessed here.

With regard to special military goods and dual-use goods subject to licence, the provision of services or technical assistance to (new) nine Russian mixed defence companies is subject to notification. These are: JSC Sirius, OJSC Stankoinstrument, OAO JSC Chemcomposite, JSC Kalashnikov, JSC Tula Arms Plant, NPK Technologii Maschinostrojenija, OAO Wysokototschnye Kompleksi, OAO Almaz Antey and OAO NPO Bazalt.

Transactions for the aviation and aerospace sectors are exempt from this requirement. Certain drilling and platform services necessary for deep water oil exploration and production, arctic oil exploration and production and shale oil projects in Russia are subject to an immediate notification requirement to SECO.

For additional information, please contact Philippe Reich in our Zurich office.