G7 countries question Swiss sanctions ‘loopholes’

High-level pressure: the G7 brings together Canada, France, Germany, Italy, Japan, the UK, and the US. Keystone / Peter Kneffel

Swiss media have published details of a letter by G7 countries criticising “loopholes” which they say allow Russian assets to evade sanctions in Switzerland, and which represent a “reputational risk” for Switzerland.

A copy of the letter by G7 Ambassadors in Bern, dated April 5, was published on Friday by newspapersExternal link from the Tamedia group. The existence of the letter and the concerns raised in it were already revealed last week by the Handelszeitung.

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In the letter, the ambassadors question the fact that Switzerland froze around CHF7.5 billion ($8.3 billion) in Russian assets in 2022, whereas “independent sources estimate the total held in Switzerland could be significantly higher”.

They notably question Swiss privacy provisions, which they say “could be used to cover the tracks of financial shelters” as well as protecting the legal rights of private clients.

“We also have concerns that law enforcement officials are blocked from investigating illicit financial structures produced by attorneys most notably serving as financial intermediaries because of privacy protections,” the ambassadors write. They call on the Swiss government to clarify the distinction between “privacy protection for legal matters and those who use privacy to shield beneficial owners”.

As the Handelszeitung last week already made clear, the letter then also calls on Switzerland to join the G7’s REPO (Russian Elites, Proxies, and Oligarchs) taskforce, which coordinates the implementation of western sanctions due to the war in Ukraine.

Unwarranted criticism

Switzerland has consistently rejected criticism of its sanctions efforts.

Earlier this week, Helene Budliger-Artieda, the head of the State Secretariat for Economic Affairs (Seco) told the NZZ newspaper that the CHF7.5 billion frozen to date compared well with the €21.5 billion (CHF21.2 billion) frozen across the European Union.

+ Seco defends sanctions record

As for earlier claims by US Ambassador Scott Miller that Switzerland could block CHF50-100 billion more, Budliger-Artieda said that no country – not even the US – had provided detailed information that would warrant such further asset freezing.

Tamedia newspapers wrote on Friday that the G7 demands on Switzerland – including the question of REPO membership – are likely to be raised again next week when Swiss President Alain Berset travels to Berlin to meet German Chancellor Olaf Scholz.

Discussions with the US are also on the cards: on Thursday, Reuters reported that the US Treasury’s top sanctions official, Under Secretary Brian Nelson, would travel to Switzerland next week to discuss further moves to crack down on evasion of sanctions.