Final report National Coordinator Sanctions Compliance and Enforcement | news item

News item | 13-05-2022 | 15:15

Due to the unparalleled scale of the sanctions against Russia, they affect virtually all sectors of the economy and involve many ministries, market players and executive services. A lot is going well, but certainly now that it is clear that the war in Ukraine and with it the sanctions against Russia will continue for a longer period of time, improvements are needed. For this reason, Mr Blok made a number of recommendations in various areas.

Some of the recommendations:

1. Ensure permanent embedding of coordination in compliance with sanctions at the Ministry of Foreign Affairs;
2. Record the supervision of compliance with the sanction rules for notaries, the legal profession and accountancy and strengthen the reporting obligation in relation to the confidentiality obligation for these professional groups;
3. Create a stronger legal basis for data exchange, preferably by amending the Sanctions Regulation and otherwise through national laws and regulations;
4. Advocates in Brussels for improvement of the process surrounding the publication of sanctions, including with regard to the timing and form of submitting names.

All recommendations can be read in the final report.

Results

Over the past few weeks, Mr Blok has spoken with regulators, market parties and professional groups in the Netherlands and Brussels. He has also set up a data team to verify that nothing has been missed in sanctions compliance. This team kept information from different registers side by side. This concerns parties such as the Investment Assessment Bureau (BTI, part of the Ministry of Economic Affairs), the Land Registry, the Chamber of Commerce (KvK) and the Tax Authorities. The conclusion is that with the asset freeze – based on the current information – there is no indication that anything has been missed.

The results to date are:

• Financial frozen assets: €640.8 million
• Held financial transactions: €425.2 million
• Vessels: 24 vessels
• Aircraft: 1 on the ground, 5 ‘packed’
• Freight: 34,169 containers stopped and assessed, 77,500 export declarations assessed, 11,300 import declarations assessed and 1,750 outgoing parcel postal items scanned
• Real estate: no signals that the freezing obligation has not been met.

Holding companies

The size of the frozen assets can be well explained by the structure of the Dutch economy.

Stef Blok: “Thousands of containers have been stopped in the port of Rotterdam because the Netherlands has a world port. Luxurious yachts are more likely to be on the French Riviera than on the IJsselmeer. But they are built here. In addition, the Dutch real estate market is hardly interesting for Russian sanctioned persons”.

Many holding companies are established in the Netherlands, including Russian ones. Although these are Dutch companies, the assets that are sometimes worth billions – such as supermarkets or cell towers – are largely or entirely located outside the EU. As a result, those assets cannot be frozen in the Netherlands.

Property

It is often difficult to find out who owns a company. Sometimes this is because of deliberately set up complex ownership structures. Also, properties are only frozen if there is more than 50% ownership. In Brussels, the Netherlands is advocating lowering this threshold to 25%. This makes it more difficult to evade sanctions and at the same time retain control of a company. Unfortunately, there is not yet a majority for this. The Netherlands continues to champion this.

Now that it looks like the sanctions will be in force for a longer period of time, and new sanctions can always be added, a review of the legal sanctions system is necessary. For example, to exchange data more easily and to be able to monitor better. This requires the capacity and expertise of all those involved, but in order to keep an overview, Mr. Blok recommends that the Ministry of Foreign Affairs be closely coordinated.