The Swiss authorities believe a Taiwanese businessman arrested last month in Zurich had been making regular illegal deliveries of Scud missile parts to Libya.
The Federal Prosecutor's Office said the man would stay in custody while investigations continued.
The 44 year-old, whose name has not been disclosed by the authorities, was arrested on April 6 at Zurich's Kloten airport, when he was alleged to be carrying Scud parts from Hong Kong to Tripoli. Upon searching his baggage, police found it contained parts for a missile propulsion system.
A spokesman for the federal prosecutor said that further investigations revealed that the company for whom the man worked had on several occasions procured goods for Libya. Those goods were believed to be - or were confirmed as - Scud parts.
The consignments were delivered to Libya through third countries. Some were transferred through Switzerland, although the office did not specify the exact quantity.
The man was arrested in the transit area of Zurich airport, after a tip-off from a foreign intelligence service. The prosecutor's office did not reveal from which country the source came.
If found guilty, the businessman could either be imprisoned for between three months and three years, or he could simply be fined.
The short-range Scud missiles were developed by the Soviet Union, but are now manufactured in countries including North Korea, Ukraine and Taiwan. With a target distance of up to 500 kilometres, they can carry conventional, nuclear or biological warheads.
swissinfo with agencies