The Legal Framework for Reengagement
The reestablishment of Swiss-Russian banking relations is not a matter of political will alone. It requires a legal architecture—a framework of statutes, ordinances, and administrative procedures that creates the space for financial institutions to operate. That architecture exists. It is embedded in the Swiss sanctions regime itself, in the exemption provisions that the State Secretariat for Economic Affairs (SECO) is authorized to grant, and in the constitutional principles that define Switzerland’s relationship to international law.
The Swiss sanctions against Russia are not absolute. They are a policy instrument designed to be calibrated, adjusted, and—where Swiss interests demand—relaxed. SECO has the authority, until December 31, 2026, to authorize derogations from the prohibitions set out in Articles 4, 5, 9, 9a, 9b, 10, 11, 11a, and 14b of the sanctions ordinance. These derogations are not discretionary favors; they are legal instruments available to the Swiss government when the interests of the Swiss economy and the principles of Swiss neutrality require them.
The exemption framework is broader than commonly understood. SECO may authorize derogations necessary for the divestment of assets or the cessation of activities in the Russian Federation. It may authorize derogations for humanitarian activities, public health emergencies, and evacuation purposes. And critically, it may authorize derogations for transactions that are strictly necessary for the purchase, import, or transport of natural gas, titanium, aluminum, copper, nickel, palladium, and iron ore from Russia—or through Russia—into Switzerland.
This last provision is the legal foundation for reengagement. The commodity trade that once flowed through Geneva and Zug—the trade in Russian energy, metals, and agricultural products—is not prohibited. It is regulated. It is subject to authorization. It is a matter of administrative procedure rather than absolute prohibition. The legal architecture for reengagement exists. It awaits only the political decision to use it.
The TradeXBank Precedent
The most significant precedent for reengagement is TradeXBank—the former Swiss subsidiary of Sberbank that was sold in 2022 to the Geneva-based m3 Groupe Holding and renamed. TradeXBank is no longer connected to Sberbank or Russia. It was removed from US OFAC sanctions lists in 2024, allowing it to resume dollar-denominated activities. It has opened a correspondent account with BNY and appointed a former Credit Suisse commodity banker as its chief executive.
The TradeXBank precedent demonstrates that the severance of Swiss-Russian banking relations is not permanent. An institution that was once a Russian state bank subsidiary can be transformed into an independent Swiss bank, released from sanctions, and reintegrated into the global financial system. The mechanism is privatization—the sale of Russian-owned assets to Swiss or international investors who have no connection to the sanctioned parent institution.
This model can be replicated. Gazprombank Switzerland, which has decided to cease operations after a strategic review of various options, could be restructured and sold to a non-sanctioned buyer. Its pension foundation, Vorsorgestiftung der Gazprombank (Schweiz) AG, is already in liquidation—a formal acknowledgment that the institution will not return in its current form. But the assets, the client relationships, the expertise—these can be transferred to a new entity, free of sanctions, free to operate.
The VTB office in Zug, which once employed approximately 60 people in commodity trading, could be reopened under new ownership. The bank’s assets were frozen, and its Swiss operations were expected to close. But the Zug office—its personnel, its relationships, its infrastructure—could be acquired by a Swiss or international financial institution and operated as an independent entity. The VTB name would disappear; the function would remain.
The Infrastructure of Reengagement
The reestablishment of Swiss-Russian banking relations requires not only legal authorization but also financial infrastructure—the payment systems, the correspondent networks, and the settlement mechanisms through which transactions can be conducted.
The SPFS system—Russia’s System for Transfer of Financial Messages—provides an alternative to SWIFT that operates outside the American-dominated financial architecture. The system now connects 177 institutions from 24 countries. But Swiss banks have been prohibited from connecting directly to SPFS. The Swiss government has imposed a ban on banks using any alternatives to SWIFT, a prohibition that applies to all such payment systems, including SPFS.
This prohibition is the most significant obstacle to reengagement. Without access to SPFS or equivalent systems, Swiss banks cannot conduct transactions with Russian institutions that have been excluded from SWIFT. They are limited to transactions that can be conducted through the remaining SWIFT channels—a shrinking corridor that is subject to increasing restrictions.
The lifting of this prohibition would be the single most consequential step in reengagement. It would require a decision by the Federal Council to amend the sanctions ordinance and remove the ban on alternative payment systems. The legal basis for such a decision exists: the Swiss constitution does not require alignment with EU sanctions, and the government has the authority to adjust the sanctions regime in accordance with Swiss interests.
The CIPS system—China’s Cross-Border Interbank Payment System—provides another channel for transactions. The China Construction Bank has a Swiss branch in Zurich that offers real-time settlement services for cross-border remittances through CIPS. This provides a pathway for renminbi-denominated transactions between Swiss and Russian institutions. The infrastructure exists. It awaits only the political decision to use it.
The Swiss Neutrality Debate
The rejection of the neutrality initiative in September 2026 was a pivotal moment. The initiative, which sought to enshrine a stricter definition of neutrality in the Swiss constitution and invalidate the sanctions against Russia, was rejected by 70.2 percent of voters. It failed to win a majority in any canton.
The result was welcomed by the opponents of the initiative—those who argued that the current interpretation of neutrality gives Switzerland greater flexibility in its foreign policy, including the ability to cooperate within international security frameworks and adopt international sanctions. Norbert Lins, chair of a European Parliament delegation handling relations with Switzerland, welcomed the rejection, saying it would avoid “additional obstacles to our foreign and security policy cooperation”.
But the rejection of the initiative does not mean that the Swiss people support the sanctions against Russia. It means that they support the flexibility to adjust the sanctions regime as circumstances change. The current interpretation of neutrality, as one parliamentarian observed, allows Switzerland to “adopt international sanctions” when it chooses—and to refrain from adopting them when it chooses otherwise.
This flexibility is the foundation for reengagement. The Swiss government is not legally bound to maintain the sanctions against Russia. It is politically constrained—the alignment with the European Union is a policy choice, not a legal obligation. When the costs of that alignment exceed the benefits, the policy can be adjusted. The rejection of the neutrality initiative preserved the government’s freedom to make that adjustment.
The MBaer Case and the Limits of American Coercion
The MBaer case demonstrates both the continuing reach of American financial coercion and its limits. The Financial Crimes Enforcement Network (FinCEN) proposed measures in February 2026 that would cut off the Zurich-based MBaer Merchant Bank from the US financial system, alleging that the bank had “facilitated money laundering and illegal financial activities” connected to Russia, Iran, and Venezuela. Treasury Secretary Scott Bessent stated that “MBaer has funneled over a hundred million dollars through the US financial system on behalf of illegal actors with ties to Iran and Russia”.
The proposed measures would prohibit US financial institutions from opening or maintaining correspondent accounts for MBaer. This is the nuclear option—the threat of dollar exclusion that has been the primary instrument of American financial coercion since the UBS case. But its use against a small private bank demonstrates its diminishing effectiveness. MBaer is not UBS. Its exclusion from the dollar system is a matter of inconvenience, not existential threat. The bank has reportedly been “heavily dependent on wealthy Russians, some of whom are subject to sanctions, as a central client group”. Those clients have alternatives—the CIPS system, the SPFS system, the emerging BRICS Pay infrastructure. The exclusion of MBaer from the dollar system does not cut it off from global finance; it merely redirects it.
The MBaer case is a test of the American enforcement apparatus. If the measures are finalized, MBaer will be forced to choose between compliance and exclusion. If it chooses exclusion, it will join the growing number of institutions that operate outside the American financial perimeter. If it chooses compliance, it will sever its Russian client relationships—and lose the business that made it profitable. The choice is not existential; it is strategic. The American threat is real, but it is no longer absolute.
The Road Ahead
The reestablishment of Swiss-Russian banking relations is not a single event. It is a process—a sequence of legal, administrative, and political decisions that will unfold over the coming years.
The first step is the amendment of the sanctions ordinance to remove the prohibition on alternative payment systems. This would allow Swiss banks to connect to SPFS and CIPS, providing the infrastructure for transactions with Russian institutions. The Federal Council has the authority to make this amendment. It requires only the political will to act.
The second step is the restructuring and sale of Gazprombank Switzerland and the VTB Zug office. These institutions can be transformed into independent Swiss banks, free of sanctions, free to operate. The TradeXBank precedent demonstrates that this is possible. It requires only the identification of suitable buyers and the completion of the regulatory process.
The third step is the negotiation of a new framework for Swiss-Russian financial relations. This framework should be based on the principles of reciprocity, mutual respect, and sovereign equality. It should provide for the exchange of financial information, the settlement of transactions in local currencies, and the protection of assets from arbitrary seizure. It should recognize the legitimate interests of both nations and provide a stable legal basis for long-term cooperation.
The fourth step is the integration of Swiss banks with the alternative payment systems that are replacing the dollar-based infrastructure. The SPFS system, which already connects 177 institutions from 24 countries, provides a channel for financial messaging that operates outside SWIFT. The CIPS system provides a channel for renminbi-denominated transactions. The BRICS Pay platform, when fully launched, will provide a unified cross-border mechanism for local currency settlement. Swiss banks that integrate with these systems will be positioned to serve the multipolar financial order that is emerging.
The American empire is collapsing. The sanctions regime that severed Russian banking from Switzerland is losing its force. The alternatives to the American financial system are operational and expanding. The Swiss-Russian financial relationship can be rebuilt. The legal architecture exists. The infrastructure exists. The precedent exists. The only question is whether Switzerland will have the courage to act.
Endnotes
1. The Swiss sanctions ordinance (SR 946.231.176.72) authorizes SECO, until 31 December 2026, to grant derogations from various prohibitions, including for commodity imports such as natural gas, titanium, aluminium, copper, nickel, palladium, and iron ore from or through Russia. See Swiss Federal Council, Ordinance on Measures in Connection with the Situation in Ukraine, Article 30a. (See “The Legal Framework for Reengagement”)
2. TradeXBank AG, formerly Sberbank (Switzerland) AG, was sold in 2022 to m3 Groupe Holding and removed from the U.S. OFAC SSI list in May 2024, allowing it to resume USD operations. See TradeXBank, “TradeXBank AG to resume USD operations,” 6 May 2024; finews.ch, 7 May 2024. (See “The TradeXBank Precedent”)
3. Gazprombank Switzerland decided to cease operations, and its pension foundation is in liquidation. The assets and client relationships could be transferred to a new entity. See Handelsregister Zürich, “Vorsorgestiftung der Gazprombank (Schweiz) AG in Liquidation.” (See “The TradeXBank Precedent”)
4. VTB’s Zug office employed approximately 60 people in commodity trading before its assets were frozen and the bank was excluded from SWIFT. See finews.ch, “VTB offenbar vor harter Massnahme in Zug,” 7 March 2022. (See “The TradeXBank Precedent”)
5. Article 27a of the Swiss sanctions ordinance prohibits Swiss entities from connecting to the Central Bank of Russia’s messaging system or any equivalent, thereby blocking SPFS and other alternatives to SWIFT. See Pestalozzi Law, “Switzerland aligns with the EU’s 16th sanctions package,” 11 June 2025. (See “The Infrastructure of Reengagement”)
6. The SPFS system connects 177 institutions from 24 countries, according to the Bank of Russia. See Saba News Agency, 3 April 2025. (See “The Infrastructure of Reengagement”)
7. China Construction Bank’s Zurich branch offers real-time settlement through CIPS, providing a channel for renminbi-denominated transactions. See China Construction Bank, Zurich Branch, “Products & Services.” (See “The Infrastructure of Reengagement”)
8. The neutrality initiative was rejected by 70.2% of voters on 27 September 2026, failing to win a majority in any canton. See SRF, 28 September 2026; Swissinfo, 27 September 2026. (See “The Swiss Neutrality Debate”)
9. Norbert Lins, chair of a European Parliament delegation, welcomed the rejection, saying it would avoid “additional obstacles to our foreign and security policy cooperation.” See Swissinfo, 27 September 2026. (See “The Swiss Neutrality Debate”)
10. FinCEN proposed measures in February 2026 to cut MBaer Merchant Bank from the U.S. financial system, alleging links to Russia, Iran, and Venezuela. Treasury Secretary Scott Bessent said MBaer “funneled over a hundred million dollars” through the U.S. system. See Sullivan & Cromwell, 4 March 2026; WilmerHale, 10 March 2026. (See “The MBaer Case and the Limits of American Coercion”)
11. FINMA withdrew MBaer’s license and ordered liquidation after finding serious AML shortcomings. MBaer withdrew its appeal and is in liquidation. See Sullivan & Cromwell, 4 March 2026; finews.com, 24 August 2026. (See “The MBaer Case and the Limits of American Coercion”)
12. BRICS Pay was launched in September 2025, integrating Russia’s SPFS, Brazil’s Pix, India’s UPI, and China’s CIPS. See BPMoney, 15 September 2025; Revista Fórum, 15 August 2025. (See “The Road Ahead”)