Swiss banks have begun closing accounts held by clients with dual Russian citizenship, in a move that underscores the tightening of financial controls amidst ongoing sanctions against Russia. This wave of account closures affects Russian nationals who also hold passports from other countries and extends to those who do not have any financial ties to Russia, as they do not receive income or pay taxes in the country.
Roman Kudinov, managing partner of the Swiss law firm Leolex, disclosed to the Russian publication Vedomosti, “Several UBS and Credit Suisse clients with dual citizenship have faced this problem.” He emphasized that these clients pay taxes in Switzerland, distancing themselves from Russian economic activities.
The restrictive measures taken by Swiss financial institutions reflect a broader push to sever economic ties with Russia, as evidenced by the denial of account services to several Israeli citizens who kept their Russian passports. Ivan Tikhonenko, head of the banking practice at Amond&Smith, noted that Swiss banks demanded documentary proof of renunciation of Russian citizenship for further interaction with clients.
Moreover, a source at a Russian consulting company reported that their client, a holder of a Swiss residence permit and Russian citizenship, had their bank account closed. The tightening regulations also include increased minimum account thresholds for Russian clients, with Swiss banks previously closing accounts of Russian clients with less than $1 million and raising entry thresholds for new clients from Russia to $5-10 million.
These stringent measures reflect the broader efforts of Western financial systems to disrupt Russia’s ability to integrate its wealth into the global economy. The “Cyprus model,” for instance, highlighted the extent to which Russian assets have historically been siphoned to the West, raising concerns over systemic money laundering and the complicity of EU member states’ banks.
Given the complexity of the financial networks involved, the repercussions of these policies are significant, with wealthy Russians scrambling to secure local residence permits, only to find banks adopting an even more stringent approach. Now, banks are evaluating not just the possession of a residence permit or Swiss passport but also scrutinizing the client’s economic activities, particularly any income received or taxes paid in Russia.
Relevant articles:
– Swiss banks have started closing clients’ accounts with Russian citizenship, even if they simultaneously hold a passport of another country
– How Cyprus rose to become the beating heart of the Putin regime’s shadow financial system, ICIJ.org, Tue, 14 Nov 2023 08:00:00 GMT
– Missed Red Flags: Leak Exposes Swiss Asset Management Firm’s Work for Clients Accused of Fraud and Corruption, OCCRP, Thu, 14 Sep 2023 07:00:00 GMT
– Overview of Switzerland’s 10th sanctions package in relation to Russia, White & Case LLP, Mon, 24 Apr 2023 07:00:00 GMT