Officials from the Office of Foreign Assets Control regularly travel to Switzerland for meetings. The Swiss authorities are not always informed about these bilateral meetings
“Swiss banks occasionally tell me about personal visits from employees of the powerful Office of Foreign Asset Control (OFAC). To do this, the Americans travel informally to Switzerland and hold bilateral discussions with those responsible in the bank offices,” says an observer who wishes to remain anonymous.
OFAC is a division of the US Treasury Department. Their offices are on the same street, just a few minutes’ walk from the White House in Washington DC. It is a small authority, an estimated 170 employees work here. But its mission is big: OFAC enforces the sanctions that America imposes on states, companies and individuals worldwide.
To achieve this, it freezes the foreign assets of dictators and, since March 2022, those of oligarchs and their family members who are close to Russian President Vladimir Putin. OFAC’s goal: to completely cut off the sanctioned states, companies and individuals from the American financial system. In reality that means: from the financial system of the western world.
Although American sanctions have no legal validity on Swiss soil, all internationally operating companies must actually adhere to them. As soon as payments in US dollars or transactions with or in the USA are affected somewhere, the USA believes that their legal system takes effect. Companies that violate US government sanctions are also fined millions by OFAC.
Four letters of terror
All of this is done at your own discretion, without the judgment of a court. OFAC employees apparently don’t even have to disclose the documents that prove the violations. The “Welt” once described OFAC as “the four letters of terror”. The article quoted a former national security adviser to President George W. Bush. “OFAC is largely unknown, but it is one of the most powerful American government agencies,” he wrote in a book. What OFAC does is always surrounded by myths.
As the administrative agency responsible for implementing sanctions, OFAC is in close contact with its counterparts in other countries. In Switzerland this is primarily the State Secretariat for Economic Affairs (Seco). However, respondents now confirmed that, in addition to official contacts, there are always direct contacts between OFAC and individual Swiss banks. And that OFAC representatives also travel to Switzerland for bilateral meetings with the banks.
“That’s right,” confirms the representative of a large international bank. Such conversations take place on different levels, he explains. There are the classic “Europe trips” in which an OFAC delegation travels to Switzerland and sometimes other countries and meets with authorities and sometimes with companies. In addition, there are always “informal working meetings” directly on site at individual Swiss banks.
Very “meaningful meetings”
According to those interviewed, these meetings are about OFAC’s thrust, how it interprets the rules, what it has in its sights and what its political goals are, and questions about the specific handling of the sanctions rules. Sanctions are inherently a very complex matter, and lawyers often do not agree on their interpretation. These meetings are “very useful,” they say in unison. As a bank, you get a much better understanding of what makes the authority tick and what view it has on individual topics.
In the last two years, the Russia sanctions have been at the forefront of these working meetings. Between 2019 and 2023, Andrea Gacki led OFAC. The veteran of the US Treasury Department is considered the architect of the US sanctions against Russia. In 2023 she was appointed to head the Financial Crimes Enforcement Network (Fincen), which combats illegal use of the financial system; since then, OFAC has been headed by Bradley Smith.
Not all Swiss banks have direct contact with the powerful American authority. Internationally operating banks that are also active in asset management are primarily affected by the Russia sanctions. These are likely to be banks like UBS, Credit Suisse, Julius Baer, EFG and a few others. Nobody wants to take an official position here. The cantonal and regional banks that were asked unanimously declared that they knew nothing about such meetings.
Problematic or useful?
These informal meetings are often arranged bilaterally between a bank and OFAC. Authorities such as Seco or the financial market regulator Finma are not always informed about this. How problematic is it that one of the most powerful authorities in the world meets Swiss banks on Swiss soil – and no official body knows about it?
Only the Americans allow themselves to do that. No other country would do that.
Seco does not want to take a specific position; it points to the very good cooperation with all partners, including the USA. And that “banks are free to take measures for risk and reputational reasons that go beyond the minimum legal requirements in Switzerland and to shape their business practices in accordance with international sanctions.”
Finma, which refers to Article 42c of the Financial Market Supervision Act and the fact that banks are allowed to independently maintain contacts with foreign authorities under certain conditions, is behaving like this. However, officials say that it generally makes sense and is useful for companies to communicate directly with the responsible sanctioning authorities within the legal framework.
Only the Americans dare to do that
With regard to OFAC’s informal working meetings with Swiss banks, it has been reported that lower-ranking academic staff usually attended. In the case of more sensitive issues, if a bank requests it or if high-ranking OFAC personnel arrive, Seco is also informed, says one respondent.
But of course you could be bothered by that, admits the representative of one authority: “The Americans want to assert their interests. They look at what they need and then go straight to the companies without telling us anything. No other country dares to do that.”
However, the Americans are allies when it comes to Russia sanctions. If sensitive situations arise, for example if OFAC demands access to dossiers or confidential data, a bank would have to inform Finma or Seco immediately. In the last two years, he said, he had never heard anything remotely negative.