Switzerland Issues Compliance Warning for Machine Tool Exporters

Switzerland is asking exporters to strengthen their compliance procedures to protect against sanctions evaders that are increasingly looking to buy Swiss-origin machine tools, the country said in new guidance published this week.

Switzerland’s State Secretariat for Economic Affairs said Swiss machine tools have been shipped by non-sanctioned third countries to restricted end users, and those risks have recently increased because “illegitimate actors are employing increasingly sophisticated procurement tactics.” The agency said it’s recommending “that export-oriented companies invest in strengthening their compliance systems and processes.”

The guidance outlines several due diligence steps that Swiss exporters should be taking both before and after the export, including checking the “plausibility of an order”; verifying the customer’s background and ownership; and asking the customer to allow the company to take “technical security measures,” such as “location verification” and “legal safeguards.” The guidance also offers a list of red flags that may signal that a company is involved in sanctions evasion, including:

• they hide the actual end user or falsify end-user certificates
• they don’t have the “usual technical standards or the usual business background to operate” the machines
• intermediaries are used for no “apparent reason”
• they demand “unusual and excessive confidentiality” about the destination
• they waive any training, service or warranty associated with the product, or if they insist that the training take place in Switzerland
• they're willing to pay much more than the market price.