Lindemann Law

Russian sanctions compliance: Lessons learned on EU and Swiss regulations

Switzerland has frozen a staggering CHF 7.4 billion in assets belonging to Russian individuals. Furthermore, both EU and Swiss banks have effectively blocked billions of assets of Russian passport holders, even if they hold additional European citizenship or residence permits and are not on the sanctions list. The United States has also taken significant actions, designating numerous Russian individuals and imposing secondary sanctions on EU and Swiss banks.

Since February 2022, businesses face the challenge of continually changing sanctions regarding Russia from over 50 countries, including the European Union, Liechtenstein, and Switzerland. These sanctions have made it increasingly complex to ensure compliance.

1. Sanctions are a moving target: What does it mean for investors, banks and service providers?

EU and Swiss banks, investors, service providers, and counterparties may unwittingly run afoul of sanctions due to the Russian nexus. Careful analysis of client and counterparty structures is essential for EU and Swiss companies to detect the presence of sanctioned Russian entities or individuals. Notably, the 11th sanctions package has introduced criminal liability for sanctions evasion in both the EU and Switzerland.

For expert assistance in conducting due diligence and evaluating sanctions risks, turn to LINDEMANNLAW, your sanctions specialist.

2. Is it possible to obtain a legal opinion and/or confirmations from sanctions authorities?

The mere presence of Russian entities or individuals in a client’s structure or a transaction does not automatically trigger negative consequences for EU and Swiss entities. Depending on the circumstances, a legal opinion from an EU or Swiss law firm that analyses the structure can be a valuable resource for managing sanctions risks.

Additionally, companies and banks can reduce the risk of sanctions violations by obtaining confirmations from local sanctions authorities like SECO, OFAC, Luxembourg Ministry of Finance, Cyprus Ministry of Foreign Affairs, and other EU sanctions authorities.

We have a proven track record of providing legal opinions and facilitating confirmations from sanctions authorities to minimize sanctions risk exposure.

3. What are the restrictions for lawyers in sanctions compliance?

EU and Swiss lawyers face restrictions on providing legal services to  entities in Russia, with exceptions for  individuals. However, these restrictions do not apply when legal services are necessary for the right of defence in judicial  proceedings or to ensure access to judicial, administrative, or arbitral proceedings.

Moreover, the 11th sanctions package introduces provisions for local sanctions authorities to authorize legal services that are necessary to remove the control of a designated natural person or entity, whose funds or economic resources have been frozen over the assets of a non-listed EU or Swiss entity.

4. Is it possible for EU and Swiss companies controlled by a listed person to de-freeze their assets?

The 11th sanctions package allows EU authorities and SECO to authorize the release of certain frozen funds or economic resources of designated persons to remove  their control over the assets of non-listed EU or Swiss entities. Compliance with EU and Swiss sanctions regulations require that such removal be accomplished through the establishment, certificationor evaluation ofe a firewall. Legal services for this purpose may be authorized.

We provide guidance on sanctions compliance and works with sanctions authorities to implement structural changes that remove a listed person’s control over assets held by EU or Swiss non-listed entities.

5. How can you unlock your de-facto frozen assets?

While sanctions have been imposed by over 50 countries, including the US, UK, EU, Switzerland, and Liechtenstein, approximately 130 countries have not participated in any economic sanctions against Russia. Many EU and Swiss banks, in an effort to ensure compliance, have been over-compliant by de-risking clients with Russian connections, restricting assets, and terminating otherwise lawful dealings with Russian clients.

We specialise in assisting non-listed clients in the de-blocking of their assets in Swiss and EU banks, facilitating the transfer of assets to banks in other jurisdictions such as Dubai, Hong Kong, and the US.

6. How can you secure your payments from Russian securities or from depository receipt with a Russian underlying security?

Investors have encountered challenges in selling securities of Russian issuers and collecting dividends or interest payments. The 11th sanctions package allows EU and Swiss sanctions authorities to authorize the conversion of depositary receipts with Russian underlying securities for the purpose of selling the underlying securities, under certain conditions.

We facilitate investors in obtaining notarized Swiss bank statements and implementing additional measures to enable payments from Russian securities or their sale.

Please feel free to contact us for comprehensive guidance on navigating the evolving landscape of sanctions compliance.

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