Swiss Federal Supreme Court Milestone Ruling Clarifies Confiscation Methodology In Case Of Commingled Licit And Illicit Assets (7B_65/2023, 5 December 2025)

In a recent decision 7B_65/2023 dated 5 December 2025 (intended for publication as a leading case), the Federal Supreme Court ("FSC") resolved a long-standing controversy regarding the confiscation of assets of criminal origin that were commingled with licit assets before subsequent transfers occurred.

In the case at hand, the Office of the Attorney General of Switzerland ("OAG") opened a criminal investigation in 2011 for suspected money laundering in connection with funds originating from an alleged fraud and bribery of foreign officials. In short, the Russian Treasury was allegedly defrauded of various undue tax reimbursements, which were swiftly transferred between multiple bank accounts across many different countries, while being commingled with licit assets. Company B received two incoming transfers to its Swiss bank account after such commingling.

When the OAG discontinued the proceedings in 2021, it had to determine the amount to be disgorged from Company B. To do so, it applied the proportionality method, considering that the first transfer was contaminated by 17% and the second one by 2%. The OAG set the amount to be disgorged based on these proportions, ordered the confiscation of the available account balance and a compensatory claim for the no longer available portion.

Company B appealed the OAG's order to the Federal Criminal Court ("FCC") and subsequently to the FSC, challenging, among others, how the amount to be disgorged had been calculated. According to Company B, the OAG should not have applied the proportionality method but rather the sedimentation theory.

Indeed, where assets of illicit origin are commingled with licit assets and subsequent transfers occur, the question arises as to whether the transfers are made from (i) illicit assets, (ii) both illicit and licit assets proportionally, or (iii) licit assets. Several theories were discussed among scholars, and the FSC had left the question so far undecided.

In the present case, the FSC resolved this long-standing controversy and held that the so-called sedimentation theory should be applied, according to which illicit assets are deemed spent last (they build a kind of sediment at the bottom of the account). As long as the account balance exceeds the illicit assets transferred therein, such illicit assets can be confiscated. Where the account balance is smaller than the illicit assets, any available account balance can be confiscated, and the remaining part must be disgorged via a compensatory claim.

In support of its decision, the FSC argued that the proportionality method would contaminate large parts of the economy and was therefore not appropriate.

The FSC, however, added an important corrective related to money laundering. Where someone intentionally disposes of illicit assets in a typical money laundering fashion, the assets transferred shall be deemed contaminated in full regardless of the available account balance.

The FSC thus cancelled the decision of the FCC and referred the case back to it. The FCC was ordered to assess whether the incoming transfers resulted from typical money laundering acts and, if this is not the case, to apply the sedimentation theory to calculate the potential compensatory claim.

This FSC decision is welcomed as it clarifies the long-standing question of how to treat comingled licit and illicit assets and subsequent transfers. However, the FSC's corrective regarding typical money laundering acts will likely lead to other uncertainties, particularly in the definition of what is deemed "typical" money laundering in such context and in determining the intention of the persons involved. To establish the intention to launder, courts will indeed likely have to rely on external factors, as suggested by the FSC, such as the immediate onward transfer of the exact same amount following an inflow of illicit assets.

In our view, the corrective actually functions as the rule and relegates the sedimentation theory to the status of an exception: to determine if an outgoing transfer is contaminated, one must first assess whether the transferor disposed of the illicit assets with the intention to launder them. The sedimentation theory only applies when such intention cannot be established.

FSC decision 7B_65/2023 of 5 December 2025

FCC decision BB.2021.193-197 of 7 February 2023

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