In the new package of sanctions, Russians decided not to tighten the rules for transfers outside the EU

In the new package of European sanctions, which are going to be adopted this week against Russian individuals and legal entities, it was unexpectedly decided to make a relaxation. In the initial version, it was planned to introduce a mandatory requirement to obtain permission for any transfer outside the EU from a Russian citizen or a legal entity controlled by him. The new document only suggests informing European officials about transfers worth more than €100 thousand. However, this is due to a reduction in the bureaucratic work of European regulators, while European financial institutions themselves will retain more stringent requirements for Russian clients.

According to FrankRG, the EU countries have decided to slightly ease the planned sanctions against Russia in the 12th package, which is expected to be considered at the European Council meeting in Brussels on December 14-15. According to the Reuters news agency, which cites four people familiar with the situation, it was initially planned to introduce a mandatory requirement for the approval of any transfer of a Russian citizen, as well as a company owned or controlled by Russian individuals or legal entities, outside the European Union.

In the latest working draft of the document, as the news agency reports, the requirement for prior permission from EU member states for “any transfer of funds” by a Russian legal entity or individual outside the EU has been abolished. “Instead, banks and Russian legal entities or individuals will be required to notify transfers of at least €100 thousand ($107.5 thousand) to the relevant national EU regulators, who will then report them to the EU executive,” it said. Reuters.

As Alexander Naumov, deputy head of the National Financial Market Council, explained to Kommersant, since 2022, a limit of €100 thousand has been established in Europe (see Kommersant of April 8, 2022), which a Russian citizen or legal entity can hold in an account . “This rule does not apply only to those who have a second citizenship, so I highly doubt that any Russian will transfer larger amounts outside the EU than €100 thousand,” he says. Denis Primakov, head of the Sanctions Law and Compliance practice at AB KIAP, notes that the rule on transfers over €100 thousand complements the rule on the ban on deposits over €100 thousand (Art. 5b) and mandatory reporting where deposits over €100 thousand (Art 5g).

Last year, when the first sanctions appeared, Russians began to note that banks, on their own initiative, limited the ability of Russians, even those not on the sanctions list, to access accounts. The new option, according to Alexander Naumov, is aimed at identifying circumvention of sanctions, investing in real estate or purchasing expensive goods, such as cars. “This measure will primarily affect Russian companies that are transferring business from Europe to Russia as part of redomiciliation,” he believes.

Experts also note that this relaxation was made not for the convenience of Russians, but to facilitate the work of European officials. As Mikhail Zhuzhalov, senior lawyer at Tomashevskaya & Partners, explained, the mitigation may be due to overload from massive requests for approval, during which a detailed study of the transaction is impossible. “Despite the fact that the measure itself may be ineffective and does not use a risk-based approach, in which fewer approvals are considered, but more closely,” he says.

However, the impact of a change in the regulator’s general approach, according to Mr. Zhuzhalov, may be limited, because the banks themselves may continue to be suspicious of such transactions. “This is also associated with problems with opening accounts for Russians, as well as closing accounts of companies with Russians in the capital, despite the fact that there may not formally be any restrictions as such,” he notes.

Maxim Builov