February 20th our media SanctionsLists.org (in the telegram @finalsanction) published the response of the State Security Service (Valsts drošības dienests, VDD), according to which Russians with residence permits from EU countries violate EU sanctions if they deposit funds in Russian banks under sanctions.
We have also received a more detailed response from The Financial Intelligence Unit of Latvia (FIU), which is responsible for verifying compliance with sanctions and preventing money laundering. FIU, like VDD, published material about a criminal case against a Latvian citizen who worked as a programmer for a Russian company and received a salary for several months into the bank account of the Russian Alfa–Bank, which is under sanctions.
We asked both VDD and FIU whether it is a violation of sanctions if a Russian holds money in a sanctioned Russian bank (Alfa–Bank, Sberbank, VTB, etc.) with a residence permit.
SanctionsLists.org publishes FIU‘s response in full:
“Maintaining an account with a bank that has been included in the European Union (EU) sanctions list constitutes a violation of EU restrictive measures. This follows from Article 2 of Council Regulation (EU) No 269/2014, which provides that the funds and economic resources of listed persons must be frozen and that no funds or economic resources may be made available, directly or indirectly, to or for the benefit of such persons.
By maintaining an account with a credit institution that is subject to asset-freeze measures, a person effectively makes funds available to that sanctioned entity – for example, through the payment of fees, commissions, or other service charges. Such conduct is considered a breach of EU sanctions.
The same applies where a client holds or deposits funds with such a credit institution, including in the form of a term deposit, savings account, or other similar financial arrangement. Any form of holding funds or receiving financial services from a listed credit institution results in funds being made available to the sanctioned entity and therefore qualifies as a violation of sanctions.
The fact that an account or deposit was opened prior to the imposition of sanctions (for example, before 2022) does not exempt a person from the obligation to comply with the applicable restrictive measures. Once a credit institution is designated under EU sanctions, the person must immediately cease cooperation with that institution and close the account or terminate the deposit agreement without delay.
It should also be noted that, in the case referred to in our publication, criminal liability is not based solely on the existence of a bank account. The proceedings concern the provision of services prohibited under EU sanctions, while the maintenance of the bank account constitutes an additional relevant circumstance in the overall assessment of the alleged violation.
EU restrictive measures apply within the territory of the EU and are binding on all persons within that territory, irrespective of their nationality. Accordingly, Russian citizens who reside in the territory of EU are equally obliged to comply with EU sanctions.”
