Letting go of the pressure?: Here’s why US withdraws sanctions official from Bern

Ambassador Scott Miller personally defended his own representative in the Ministry of Finance, as he explained in an interview with Handelszeitung at the beginning of the year. Among other things, he planned to initiate a new agreement with Switzerland in the banking and financial sector. The sanctions dispute has dominated relations between Bern and Washington since the spring.

«Clara Kim is an expert on this subject. “The US ambassador was able to do so much because he had this in the background,” says money laundering expert Mark Pieth.

US ambassador openly criticizes Switzerland

A graduate of Georgetown, the United States was the only country with a part-time sanctions commissioner in Switzerland. In most embassies, commercial and economic attachés are also responsible for the file. Clara Kim was responsible for Liechtenstein and Italy, as well as Switzerland. Sending the tax officer to Bern was seen as an indication of how serious the USA was on this issue.

The Biden government demands that Switzerland better enforce Russia sanctions. In recent months, the pressure on the Federal Council has increased:

• The US ambassador has repeatedly publicly attacked Seco under Secretary of State Helene Budliger Artieda for its laxity in seeking the oligarchs’ money.
• In April, G7 ambassadors and the EU wrote a critical letter to the Federal Council calling on Switzerland to join the oligarch currency task force Repo, investigate the role of lawyers in asset management and review the legal framework.
• Last autumn, the number of Swiss individuals and companies sanctioned under Russian sanctions increased rapidly. The US blacklist currently includes 24 individuals with Swiss citizenship or residence, as well as 16 Swiss companies.
• Washington sent additional officials to Switzerland several times. Among other things, top US enforcement official Brian Nelson visited banks and government agencies in April, and in July US Treasury Department representatives targeted the raw materials trading sector in Geneva.
• Switzerland’s supposedly lax approach to sanctions was also an issue raised at the Helsinki Commission hearing on “Russia’s assets in the Alps” in mid-July. The preliminary announcement said Switzerland was “the preferred place for Russian oligarchs and corrupt officials to hide their stolen money.” In addition, Switzerland “plays a key role in Russia’s circumvention of export controls aimed at ensuring that Russia cannot continue the war while building up its military.”

Switzerland has always rejected the criticism. But Seco, which is responsible for sanctions, not only expanded its sanctions department to 25 full-time positions, but also completely restructured it. Simon Plüss has been the top enforcement officer since 1 September. The main focus is on preventing fraudulent transactions.

Discussions about joining the repo task force also gained momentum. While the Federal Council is still opposed, leading figures from the SP, FDP, Centre, Greens and Green Liberals are open-minded. The new president of the bankers’ union, Roman Studer, and Economiesuisse’s file manager, Jan Atteslander, are also in favor of participation. In the middle of the week, the National Council will vote on the relevant motion.

So, has the Biden administration already achieved its goal and is there no longer a need for the sanctions authority in Switzerland? On the contrary. While the U.S. Embassy says the enforcement authority’s interactions with Swiss officials and banks have increased, the U.S. is still fundamentally unhappy with the outcome. Frankly, the financial and human effort was not worth it.

US wants stricter enforcement of sanctions

When asked, a US embassy spokesman said: “Despite increased interactions, it is difficult for the embassy to maintain a Treasury presence for the foreseeable future due to slower than expected progress and the lack of Swiss investigative powers.” Although foreign exchange has increased thanks to the financial attaché in Bern, there is still “a lot to do”.

The spokesman said Switzerland could further strengthen its enforcement position in case sanctions are violated. Steps to be taken for this include participation in repos, tightening the money laundering law and establishing a transparency registry.

The last two points are part of the reform of the Money Laundering Act that the Federal Council sent for consultation at the end of August.