Bloomberg: Due to sanctions and pressure from the Kremlin, Russian billionaires withdrew $50 billion worth of assets from Europe

The Kremlin is putting pressure on sanctioned Russian businessmen to withdraw assets from "unfriendly" countries. Since the beginning of the full-scale war, they have transferred at least $50 billion from Europe.

Bloomberg writes about it.

For years, Russian billionaires have stashed money in Europe, taking advantage of investor-friendly legal systems, foreign currency dividends and low taxes. However, many of the wealthiest Russians are now under sanctions from the EU, Great Britain and the USA and are losing places to invest their wealth.

After February 2022, the Russians began to withdraw assets to Russia and its "friendly" countries, in particular to the United Arab Emirates and Kazakhstan. For example, the assets of billionaire Andrei Guryev and steel magnate Viktor Rashnikov moved from Switzerland and Cyprus to the Russian Federation.

Double taxation agreements are currently suspended, which has made it irrational to remain registered in European countries. Russia makes it difficult for companies registered in such jurisdictions to pay dividends or sell assets.

In August, Putin ordered the government to create a mechanism for Russia to regain control of Russian companies if they are now controlled from abroad due to sanctions. The Kremlin also uses domestic "offshore" low-tax zones to bring rich Russiansʼ money back to the country. At the same time, the Russian Federation raised the cost of storing assets in Cyprus and Malta, so that it would be more profitable to re-register holdings with international assets in Russia, and then claim additional benefits.

Assets are moved not only by the richest — other Russians also return money to the Russian Federation. In 2023, 115 companies moved to Russian "offshores" (out of a total of 254).

Meanwhile, unsanctioned billionaires also prefer placing assets in "friendly" countries: steel tycoon Volodymyr Lisin and the transport holding Globaltrans Investment Plc moved from Cyprus to Abu Dhabi, and the second largest Russian gold miner Polymetal International Plc re-registered in Kazakhstan.

• On September 7, the United States informed that for the first time it would transfer the confiscated assets of Russian oligarchs to Ukraine. We are talking about $5.4 million, which will go to support Ukrainian veterans. Estonia plans to become the first country in the EU to transfer confiscated Russian assets to Ukraine.
• Since the beginning of Russiaʼs full-scale invasion of Ukraine, Western countries have begun to freeze Russian assets. Official representatives of our country expect that these assets will be confiscated and transferred to Ukraine. In particular, such an initiative is already being seriously considered in the USA. On February 3, Attorney General Merrick Garland for the first time allowed the confiscation of funds of a Russian oligarch to be transferred to Ukraine.
• Since the beginning of the war in Ukraine, the EU has frozen the assets of the Russian Central Bank for more than €200 billion. A significant part of these funds is kept in the Euroclear depository and in the first quarter of 2023 brought almost €750 million in profit. In addition, the EU has frozen €24.1 billion in assets belonging to Russians and Russian companies under sanctions.