International Commodity Trading From Switzerland: Incorporation, Registration, and Payment Traffic for Swiss Businesses including Branch or Subsidiary of Foreign Group Company

Banking and Advisory Services to Swiss Trading Companies

Open Company in Switzerland (here)

Open a Swiss Bank Account (here)

Open a Company in UAE (here)

Open Bank Account in UAE (here)

Swiss Accounting Rules (here)

VAT Rules in Switzerland (here)

Compliance in Global Trade (here)

Incoterms 2020 (here)

Trust in Global Trade

Globalization has opened international markets to micro, small, and mid-sized enterprises (MSME), but cross-border trade has its own risks not encountered at home:

• Counterparty risks | Non-payment, delay in payment, insolvency, change in specifications
• Political risks | Sudden import or tariff barriers, war-like situations, notably between delivery and payment
• Sanction risks | Ranging from import duties to full naval blockades and exclusion from the Swift system
• Delivery risks | Determination of responsibility (and liability) for packing, loading, customs clearance
• Transportation risks ("no arrival, no sale") | Improper storage; delayed or non-availability of transport means; higher rent and demurrage charges; damage to goods during (un-)loading, weather exposure (heat, monsoon, snow, etc.); theft and pilferage; seizure and auction sale if the goods were not collected within the fixed deadlines; loss because a consignment, although landed, cannot be located under later arrived cargo
• FX risks | Adverse FX movements, foreign exchange controls (such as restrictions in outward remittances)
• Legal risks | Insufficient knowledge of, and risk of non-compliance with, local laws.

Commercial and transaction banks play a crucial role in mitigating those risks and facilitating international trade through (i) trade finance (LCs) (ii) trade settlement (payment clearing via the SWIFT system) and (iii) the provision of hedging tools (FX and commodity futures).

More importantly, banks act as the gatekeepers of the global financial system and play an important role in (iv) trade legitimization (via global compliance).

"Mutual trust between carriers, customs agencies, exporters, importers, and their banks’ compliance departments is the lifeblood of the global trading system".

Past enforcement actions and hefty fines (here) have convinced banks that a cursory approach to compliance no longer suffices. On the other hand, account closures and rising payment fees have demonstrated to global traders that they are expected to conduct a deeper, more systematic investigation of their business partners.

When is due diligence sufficient?

There is no law or regulation specifying the exact process for, or the sufficiency of, due diligence.

In a recent Q&A on the Circumvention of EU Sanctions (here) the European Commission merely hinted at what it considers as an adequate standard of due diligence: "There is no one-size-fits-all model of due diligence. It may depend - and be calibrated accordingly - on the business specificities and the related risk exposure. It is for each operator to develop, implement, and routinely update an EU sanctions compliance programme that reflects their individual business models, geographic and sectoral areas of operations and related risk assessment [...] Due diligence may in particular consist in screening of beneficiaries of funds or economic resources against sanctions lists & adverse media investigations. Adverse media investigations refer to searches on the internet and news [...] to find evidence that a contractual counterpart, even if not designated [...], is actually controlled by a designated persons".

In this section, we strive to lay out the tools for the kind of due diligence which inspires confidence and trust in global trade.

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References

Rupnarayan Bose (2020) Letters of Credit. Theory and Practice. Incoterms 2020 and Marine Insurance (Notion Press) (here)

John Mangan (2016) Global Logistics and Supply Chain Management (Wiley) (here)

International Chamber of Commerce (2019) Incoterms 2020 (here)

Services to Swiss and Global Trading Companies

Astrantia Consulting is a boutique commodity trading advisory firm specialized in complex cross-border transactions.

We enjoy a strong reputation for the efficient establishment, incorporation and management of Swiss businesses and foreign group companies in Switzerland and provide the following services:

• Establishment and registration of a Swiss company: setup of a back office in Switzerland (here)
• C-Level staffing: CEO, CFO, CRO, CTO
• Swiss accounting and VAT reporting (here)
• Regulatory compliance: high-level and day-to-day risk management in global trade (here)
• Liaison with banks: Swiss business account opening and daily monitoring and documentation of payment traffic (here)
• Think globally, act locally: We monitor the latest global tax developments and are in close contact with the cantonal tax authorities in Switzerland

We effectively resolve red-flag issues by gathering meaningful information and requesting further clarifications.

Consulting for Startups and Established Swiss Businesses

Astrantia Consulting advises Swiss and foreign companies and enterprises in the following areas:

• General consulting on the Swiss regulatory environment: tax, regulatory and immigration advice
• Due diligence in trade: KYC, vetting of business partners, risk assessment, background research, AML checks
• Swiss company, contract, and accounting law: theory and practice
• Competitive intelligence: Exotic country and market reports, best practice in business dealings
• Commodities research: Global energy, metals, agricultural markets
• Price hedging: via currency and commodity futures

We advise on trade infrastructure setups that fulfil relevant substance requirements and stand the test of global regulatory compliance, thereby contributing to a smooth flow of goods and data across borders.