Swiss vs UK & US Sanctions Against Russia – Clarification from the Swiss Supreme Court in Its Decision Dated March 3, 2026 (4A_454/2025)

Background and Parties

This case involves PostFinance AG (Appellant), the Swiss entity responsible for providing nationwide universal payment transaction services, and A. (Respondent), a Russian citizen domiciled in Switzerland since 2005. A. holds a residence permit and is married to a Swiss citizen. He was designated as a “Specially Designated National” (SDN) by the U.S. Office of Foreign Assets Control (OFAC) and subjected to UK financial sanctions. Conversely, A. is not subject to any Swiss sanctions.

Procedural History

In November 2022, A. applied to PostFinance to open an account. PostFinance opened the account on December 2, 2022, but terminated the relationship just six days later, citing A.’s U.S. sanctions designation and invoking an exception from its universal service mandate.

A. sued before the Commercial Court of the Canton of Bern, requesting that PostFinance be ordered to maintain the business relationship. The Commercial Court ruled in A.’s favour on July 16, 2025, finding that PostFinance failed to demonstrate any valid exception to its universal service obligation and thus ordered PostFinance to maintain the account opened purely for domestic payment transactions within Switzerland.

PostFinance appealed to the Swiss Supreme Court (“SSC”).

Key Legal Issues

1. Universal Service Obligation.

Under Swiss law, PostFinance bears a statutory obligation to provide domestic payment transaction services to all natural and legal persons domiciled in Switzerland.

The law permits exceptions – i.e., situations in which maintaining the account would itself constitute a violation of directly applicable law – only where:

a) applicable financial market, AML, or embargo provisions contradict the service; or

b) compliance causes disproportionately high costs; or

 c) the business relationship would expose the financial institution to serious legal and reputational damages.

2. No Contradiction with Applicable Law.

The SSC held that only provisions directly applicable in Switzerland can constitute a “contradiction” justifying refusal of service. Accordingly, U.S. sanctions law alone, which is not directly applicable in Switzerland — however extensive its extraterritorial claims — does not suffice to establish an actual legal prohibition of the business relationship.

Swiss regulatory requirements merely impose enhanced monitoring and due diligence obligations on PostFinance, but not a prohibition of the relationship. The SSC also found no basis for a prohibited business relationship under Swiss AML law or embargo legislation, since A. is not sanctioned in Switzerland.

Enhanced due diligence measures are precisely the tools that allow the institution to manage the elevated risk while continuing to serve the customer — they do not amount to a prohibition. These measures include more intensive “know your customer” procedures at onboarding and ongoing monitoring.

In other words, PostFinance will have to assess the risks flowing from US and UK sanctions designations and then take appropriate measures to manage those risks. However, PostFinance should not treat a US sanctions designation as though it were a Swiss legal prohibition and refuse the client outright.

3. No Serious Legal or Reputational Damages.

The SSC found that PostFinance did not prove a serious risk of U.S. primary or secondary sanctions, noting that a domestic CHF postal account for ordinary expenses (property costs, cleaning, medical, taxes) would hardly attract U.S. enforcement attention.

PostFinance also failed to demonstrate endangered correspondent bank relationships or concrete reputational harm. The mere fact of A.’s foreign sanctions designation, without more, does not automatically establish serious threatened damages.

Conclusion

The SSC dismissed the appeal. The decision states that PostFinance must maintain the business relationship with A. and continue operating his domestic account for payment transactions.

This decision is notable for addressing the interplay between Swiss and foreign sanctions regimes. In short, foreign sanctions regimes may influence bank-internal risk assessments and may trigger enhanced compliance efforts, but they are not considered directly applicable in Switzerland.

PostFinance is not “any bank”, as it is subject to a statutory duty to provide basic payment services. This decision by the SSC may therefore not be directly applicable to other Swiss financial institutions operating outside the public payment sector. Indeed, such financial institutions, to the extent that they operate in different jurisdictions, cannot ignore the legal and regulatory framework in those jurisdictions. A further clarification by the SSC would be welcome.