Author: Lawyer Enrico Germano

The interpretation of this article, which lists the bans on trusts as of 27 April 2022, is offered by the State Secretariat for Economic Affairs (SECO), which operates under the direction of the Federal Department of Economic Affairs, i.e., the Swiss Ministry of Economic Affairs. Although this interpretation by the Swiss authorities is not legally binding, it does provide sufficiently clear answers and/or guidance to the questions regarding prohibitions on trusts . Finally, it should be noted that the Swiss authorities are endeavouring to align the implementation of the new Article 28d of the Ordinance, as well as the other new articles, as closely as possible with the implementation practice in force in the European Union (EU).

  1. Scope of application of the rule

First, as regards the material scope of application of the rule, it should be pointed out that, pursuant to para. 1, Art. 28d of the Ordinance applies to all structures designated as trusts or similar legal institutions. According to the interpretation offered by SECO, legal institutions are to be regarded as similar if they have a structure or function similar to that of a trust, as is the case, for instance, with the creation of a fiduciary relationship between the trustee and the beneficiary. 

The rule does not distinguish as to the form of the trust; in fact, the prohibition laid down in Section 28d of the Ordinance always applies if the trustor or beneficiary is subject to the prohibition, whatever the type of trust. It follows that, for instance in the case of a discretionary trust, if the beneficiary subject to the order is replaced by a person not subject to the order, the previously prohibited trust would again be permitted, provided of course that the trustor is not himself subject to the prohibition.

Moreover, it is not relevant for the application of the rule whether such structures were founded before or after its entry into force; in fact, the aforementioned article applies indiscriminately to any trust or similar structure that has the characteristics indicated by the rule.

Regarding the territorial scope of application of Art. 28d, SECO specifies that all natural and legal persons established in Switzerland are obliged to comply with the Ordinance, regardless of the registered office of the trust and the parties involved.

  1. Art. 28d para. 1 of the Ordinance

Pursuant to paragraph 1, the registration of a trust or other similar legal institution or the provision of a registered office, business, or administrative address or management services is prohibited where the trustor or beneficiary is an entity, whether natural or legal person, with ties to the Russian Federation. In particular, these are (a) a Russian national or a natural person residing in the Russian Federation, (b) a legal person, enterprise or entity established in the Russian Federation, (c) a legal person, company or entity that is more than 50% owned, directly or indirectly, by a natural person, legal person, company, or entity referred to in letters (a) and (b), (d) a legal person, enterprise or entity controlled by a natural person, legal person, enterprise or entity referred to in letters (a) to (c) and finally (e) a legal person, firm or entity acting on behalf of or at the direction of a natural person, legal person, firm, or entity referred to in letters (a) to (d). 

Pursuant to Art. 28d para. 1, it is necessary to clarify that the link with the Russian Federation attributable to the trustor or the beneficiary, which justifies the application of the prohibition envisaged, exists only if a Russian national is currently acting as trustor or beneficiary of the trust. In fact, if the structure had been founded in the past by Russian persons within the meaning of Article 28d para. 1, but they no longer have any influence, because for example they are deceased in the meantime, and there are no Russian persons among the beneficiaries, the prohibition in Article 28d of the Ordinance does not apply. Again, for the provisions of Article 28d to apply, it is sufficient that only one person referred to in Article 28d para. 1 is subject to the Ordinance.

1 Under the Ordinance, providing a location means making an address in Switzerland available to the trust; providing a business or administrative address, on the other hand, means providing an address in Switzerland that is directly attributable to the trust or that can be associated with the trust.

2 Pursuant to Art. 28d para. 1, it is prohibited to provide management services. The definition of management services embraced by the Ordinance in question includes, for example, accounting services, whereas the more common banking and payment services, such as the provision of a bank account, the execution of payments, or currency exchange services, are not prohibited, since these services are not covered by the definition of management services in the Ordinance.  

3 The concept of control within the meaning of the Ordinance has no unambiguous definition; it must be understood and assessed on a case-by-case basis. The decisive factor is therefore whether the person, natural or legal, is under the actual control of one of the persons listed under (a), (b) or (c).