In an era where international sanctions cast a wide net, individuals and entities often find themselves ensnared by banking restrictions not directly aimed at them. This intricate web of financial controls, particularly involving Swiss, EU, and US sanctions, poses unique challenges for Russian nationals and others who, despite not being the target of these sanctions, suffer from frozen assets and banking constraints.

This article delves deeper into the complexities surrounding such scenarios, offering a granular exploration of case studies and a roadmap for navigating these turbulent waters.

Sanctions are aimed at influencing behavior by restricting financial and economic transactions. However, the fallout from these sanctions often affects those not originally targeted, leading to unintended consequences like the freezing of bank accounts not subject to Swiss, EU, and US sanctions.

Case Study Insights

1. Russian Nationals with Frozen Assets

Russian nationals residing outside the EU/EEA/Switzerland find themselves in a predicament when Swiss, EU, or Liechtenstein banks freeze their assets, notwithstanding their non-sanctioned status. The root of this issue lies in the EU Regulation 833/2014, which sets forth specific limitations on bank accounts for Russian nationals without an EU/Swiss/EEA residence permit. Notably, it prohibits banks from accepting new deposits over EUR 100,000 from Russian nationals or entities, a measure aimed at curtailing financial flows in light of geopolitical tensions.

However, for those who had funds exceeding this threshold before the regulations took effect in February 2022, such deposits are “grandfathered,” meaning the account holders retain these funds and are allowed to withdraw them or contain their existing state.

Actionable Steps:

✓ Obtain a Legal Opinion. This document should articulate the nuances of EU/Swiss regulations, asserting the legality of the account holder’s position.

✓ Engage with SECO/EU Authorities. While potentially time-consuming, this step involves formally applying to relevant authorities for account unblocking.

✓ Claim to Swiss/EU court. As a final measure, affected individuals may consider filing a lawsuit in Swiss/EU courts to contest the account restrictions.

2. Implications of Family Ties to Sanctioned Individuals

In another scenario, a Russian national, not personally under sanctions but related to someone designated in the US (e.g., on the OFAC SDN list), faces account freezing by Swiss/EU banks. This situation underscores the global reach and complex implications of US sanctions. Only persons who are designated and appear on the SDN list are subject to blocking sanctions. Moreover, these sanctions primarily target US persons and assets, limiting their direct applicability to foreign bank accounts not involving US jurisdictional elements such as dollar-clearing or US-based asset management.

Actionable Steps:

✓ Dual Legal Opinions. It is advisable to secure legal opinions from both local (EU/Swiss) and US attorneys, clarifying the non-applicability of US sanctions to the individual’s circumstances.

✓ OFAC Engagement. Absence of U.S. jurisdiction, OFAC will not issue any “license” or confirmation authorizing any movement of the assets that are outside of its authority.

✓ Claim to Swiss/EU court with a focus on applying relevant US laws, can offer a pathway to resolving the freeze.

3. Unblocking Russian Securities

The sale of Russian securities to third parties, such as Eurobonds issued by Russian entities under Swiss/EU sanctions, presents a nuanced challenge. Regulations like EU 269/2014 freeze the assets of sanctioned entities, yet transactions involving their securities should proceed unimpeded. Moreover, the Russian Government and Russian companies implemented programs under which allow them to redeem their securities directly, and pay dividends and interest.​

Actionable Steps:

✓ Obtain a Legal Opinion. This document should articulate the nuances of EU/Swiss regulations, asserting the legality of the security holder’s position.

✓ Notarized Ownership Proof. Secure a notarized confirmation of securities ownership from the holding bank, affirming legal possession.

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For a deeper dive into these issues and expert strategies for navigating the sanctions maze, we invite you to watch the recording of our WebWorkshop: “International Sanctions: Challenges for Business & Banks in Switzerland and Worldwide”. This session offers invaluable insights, detailed case analyses, and practical guidance for businesses and banks operating in Switzerland and beyond.

WATCH THE WEBWORKSHOP RECORDING

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Arm yourself with knowledge and take proactive steps towards resolving your financial challenges.

Why LINDEMANNLAW?

✓ LINDEMANNLAW assists clients in de-freezing of their assets in Swiss and EU banks and helps banks with their sanctions complianceю

✓ At LINDEMANNLAW we have experience with EU, Swiss and US broad variety of sanctions matters as we employ EU, Swiss and US lawyers.

✓ LINDEMANNLAW has experience with removals from EU, Swiss and US sanctions lists as we employ EU, Swiss and US lawyers.

✓ We have Russian-speaking lawyers in our team who work on sanctions cases and work with Russian-speaking clients for more than 12 years.

✓ We have a specialized litigation team.

✓ Alongside with human expertise, LINDEMANNLAW utilizes custom-tailored AI technology.

For more information, please feel free to contact us and we will be happy to help you.