Regulation > Commodities Act

Summary of Commodities Act, CA, of 1 April 2014

Overview of the Commodities Act and its Mechanics


Article 1 of the new legislation sets out four aims to which the law is intended to contribute: the reduction of the resource curse in commodity-rich developing countries; the mobilization of resources for development and poverty reduction in commodity-rich developing countries; the maintenance of Switzerland’s good reputation as a fair and responsible market in which to trade; and the guaranteed adherence to human rights law and international environmental law.

Article 2 sets out to which legal entities the law applies. In particular, the law applies to (a) companies that produce or trade in commodities and whose headquarters or parent company is situated in Switzerland, (b) financial institutions in the sense of the Anti-Money Laundering legislation (RS 955) that conduct activities related to physical trading of commodities from Switzerland, (c) subsidiaries and branches of either (a) or (b), (d) Swiss subsidiaries of foreign companies that are active in the physical trading of commodities, and (e) companies  that are not solely active in the commodity sector but for whom nevertheless the sale and purchase of raw commodities for third party use exceeds 5% of their total sales (each a “commodity company”). The final paragraph clarifies that only companies and not natural persons are able to carry out activities regulated by ROHMA.

Companies subject to the ROHMA regime that are active in the extractive industry are required to adhere to the International Code of Conduct for Private Security at Article 3.

Prohibitions and Activities Requiring Consent

Article 4 sets out the type of activities that commodity companies are prohibited from carrying out. These include dealing in any way with commodities that are: illegal (e.g. stolen); obtained illegally (e.g. through corruption or without a license); obtained in violation of human rights or environmental norms; obtained contrary to internationally applicable trade sanctions; or obtained without due compensation being made to the people from whose country the commodities derive. Companies caught by this act are also prohibited from using aggressive tax avoidance practices in any part of their business structures.

It is an offence under this act for companies either to lend their own names to other companies (“name-lending” practices), to operate under the names of other companies or to engage in any business with a company that is operating under a borrowed name. It is also an offence to carry out any of the regulated activities in connection with politically exposed persons or commodities of uncertain legitimacy or suspicious origin or to deal in commodities obtained from conflict zones, failed states or occupied territories without explicit authorization from ROHMA to do so.

Activities Requiring License

Article 5 sets out the types of activities which must not be carried out without a license from ROHMA. These activities include: mining (incl. surface, sub-surface, in situ leaching and other methods), refining, smelting, transporting/logistics of commodities, drilling (e.g. for oil), farming (mass), storing of commodities, extraction (e.g. gas), processing, trading in or distributing physical commodities.

License Application Procedure

The procedure for obtaining a license is described at article 6. Under this article, companies caught by the legislation are required to provide certain information to ROHMA in their license application, including details of the activities intended to be carried out by the company, the geographical location of the proposed activities, full details of all beneficial owners of business partners, full details of any license or other arrangement made or under negotiation with private or public entities in the host country, and complete copies of any human rights impact assessments or the appropriate due diligence reports. The extent of the due diligence reports required to accompany any given license application is determined by the type of activity for which the license is being sought and the size of the company. Any significant enlargement in the scope of activities carried out, or in the ownership either of the company or of the company’s business partners must be immediately notified to ROHMA, who will then advise within 30 days whether such activities or ownership structures are compatible with the existing license (in the case of activities) or acceptable (in the case of ownership).

Article 7 sets out the basic requirements which must be satisfied for ROHMA to grant a license. These include the requirement for good internal organization corresponding to the proposed activities; separate bodies for management, supervision and control; and the good reputation of all administrative and management personnel so as to ensure the proper conduct of the business operations.

Until ROHMA has notified the company either that the license application has been granted, or, where a license has already been issued, that the new circumstances remain compatible with ROHMA and with any existing license requirements, the company is required under Article 8 to refrain from commencing the activities detailed in the application. Once a company’s license has been approved, details of that license are published in the publicly-accessible ROHMA license database.

Duties on Companies and Due Diligence Requirements

The supervision of the activities of companies in the commodities sector is in part based on the principle of self-monitoring. According to this principle, it is the companies’ responsibility to be organized in such a way as to ensure that they comply with the legal provisions that regulate their activities. Article 9 empowers ROHMA to issue, by way of ordinances or circulars, binding internal organizational rules for companies in the sector.

Upon application for a license to commence an activity, and on an ongoing basis thereafter, companies are required to carry out various due diligence procedures. Article 10 sets out the requirements for supply chain due diligence which must be conducted to ensure that companies do not deal in any way with commodities that are: illegal (e.g. stolen or pillaged); obtained illegally (e.g. through corrupt practices, or without extractive licenses); obtained in violation of human rights norms  (e.g. mined using child labour); obtained in violation of environmental norms (e.g. unacceptably high sulphur emissions from smelting); obtained from conflict zones, failed states or occupied territories without explicit authorisation from ROHMA; obtained contrary to internationally applicable trade sanctions; or obtained without due compensation being made to the people from whose country the commodities derive (e.g. misappropriation of public assets).

Under article 11, companies must also conduct extensive due diligence to ensure they know who their business partners are. In general, companies active in the commodity sector must know exactly who their partners are, identifying the beneficial owners of the companies with which they enter into business relationships, and take all necessary measures to ensure proper business conduct.This duty requires companies to look beyond any information they are supplied by their business partner and to conduct their own independent cross-referencing checks where possible. Where companies identify the involvement of any politically exposed persons, details of such persons must first be communicated to ROHMA, who will determine within 30 days whether the company is permitted to conduct business with the identified individuals. Companies are also required to provide updated lists of their own beneficial owners to ROHMA for publication in the centralized database.

Where companies intend to conduct business with companies who themselves are subject to ROHMA-equivalent regulation, as determined by reciprocal recognition agreements with foreign authorities, the extent of any due diligence processes in respect of those business partners covered under the equivalent regulation may be reduced accordingly.

Companies are required under article 12 to operate with transparency, and must publish details of all payments made to governments or public companies over CHF 100,000. These include payments for the acquisition of licenses, concessions, production sharing agreements, signature bonuses, royalties, taxes, loans, acquisitions, sales and all other form of transaction. Further, companies are required to provide ROHMA copies of all contracts and licenses (incl. off-takes, swaps etc.) made with governments or with public entities for publication in the publicly-accessible ROHMA database. Companies must also provide specific information about how the contract was obtained (e.g. whether there was a public call for tenders or other) and link each transaction to a specific contract.

Article 13 sets out the requirement for companies to appoint persons responsible for the oversight of the due diligence procedures, whose duties include publication of relevant policies (i.e. on supply chain, or engagement of private security firms) as well as ongoing review of the policies and procedures implemented. Such persons must also ensure the effectiveness of the anti-corruption measures.

The anti-corruption measures require companies, under article 14, to provide written confirmation that none of their employees (or even the company itself) have engaged or will engage in acts of bribery of foreign public officials or representatives of international organisations. They must also confirm that none of their employees have in the past five years been prosecuted, nor are they in the process of being so prosecuted for bribery. Companies must also ensure that their internal procedures are set up to effectively detect and prevent corruption. In addition, companies have a duty to ensure that they have confidential and robust whistleblowing procedures in place, and that details of these procedures are made known and easily accessible to all employees.

Companies’ Ongoing Duties

Article 15 states that the duty to carry out due diligence is ongoing, meaning that the company should repeat the exercises at relevant intervals or when specific risks arise in order to ensure that the company does not carry out any of the prohibited activities. Article 16 describes the warning procedure followed prior to the removal of a license.

Commodity laundering

Article 17 defines commodity laundering. Commodity laundering is understood as the introduction, whether intentional or by negligence, of “dirty commodities” into commercial channels. "Dirty commodities" means either commodities acquired illegally (i.e. stolen or obtained through corruption) or commodities that have been produced in violation of human rights standards, or whose sale is used to fund conflict or criminal organizations. A company is guilty of laundering commodities, whether intentionally or negligently, where it sells commodities that, had it reasonably applied its duty of care, it should have been able to identify as "dirty”. The offence is punishable by criminal prosecution. Where the offence is committed intentionally, it is punishable by up to five years in prison and a maximum fine of 5 million francs. Where it can be shown that the offence was committed negligently, the maximum prison sentence is two years.

Reporting obligations

Where companies subject to ROHMA become aware of possible breaches of the ROHMA regime committed by third parties (also subject to ROHMA), they are obliged under article 18 to communicate their suspicions to ROHMA as soon as possible. Violation of this reporting obligation is subject to criminal sanctions.


Articles 19 to 24 set out the sanctions for breach of this law.

All members of the board or persons in positions of management of companies that carry out any of the regulated activities without a license are liable to imprisonment of up to three years or a fine. This also applies where companies have commenced an activity following an application but prior to receiving a license. Where the accused can show that the breach was committed negligently, only a financial penalty is due.

All members of the board or persons in positions of management of companies that carry out any of the prohibited activities or any activity without the required consent under article 4, are liable to imprisonment of up to three years or a fine for failing, whether intentionally or negligently, to prevent the offence from being committed. In addition, ROHMA may revoke the company’s current license and/or liquidate the company and remove it from the commercial register.

Where a company has failed to carry out any of the duties imposed on it by this law, for example by failing to carry out any of the due diligence exercises to the extent required, or by failing to implement appropriate whistleblowing procedures, ROHMA will impose a fine on the company and notify it that it must immediately remedy the breach. Save in the case of serious or persistent breaches of duty, ROHMA will give the company a deadline by which to remedy the breach. Failure to remedy the breach within the allocated time may result in a further financial penalty and/or revocation of the license. Where serious or persistent breaches of duty have been committed, in addition to financial penalties on the company and revocation of the license, the company’s board members and management team may each be liable to imprisonment of up to three years.

Companies or natural persons that are suspected of breaching or that have breached this law or any related ordinances are placed on a watch-list and closely monitored (Article 25). Individuals who have committed serious or persistent breaches will be placed on a publicly-available black-list and are prohibited from carrying out any commodity-related activities in or from Switzerland, or from acting as director on any board of any Swiss company for a period of five years.

Companies that have committed particularly serious or persistent breaches may be forcibly wound up (Article 26).

Federal law applies under Article 27 and ROHMA is required to report any offences it becomes aware of to the Federal Prosecutor’s office under Article 28.

Final and Transitory Provisions

The final provisions allocate responsibility for enacting ordinances to regulate the due diligence processes, the licensing conditions, and the certification requirements and procedure for commodity-specific auditing.

The transitional provisions give companies active in the commodities sector until 31.12.2014 to apply for a license to continue their activity. The provisions also provide that companies active in soft commodities will be regulated from 2015 onwards.

Definitions are set out in the final section of the law. These include definitions of “politically exposed persons”, “commodity-laundering” etc.