Posted at 5:00 a.m.
Canada and its bankers refuse to say how much assets are actually frozen due to sanctions against powerful Russians and their companies. Which makes some observers say that Ottawa probably doesn’t know who owns what.
The Canadian Bankers Association (CBA) has confirmed by email that assets in Canada have been frozen or blocked in connection with sanctions related to the war in Ukraine. As for the amount, the ABC indicated “it does not have this data”.
Of the seven major banks and financial institutions contacted by The Press, only the National Bank confirmed having blocked funds due to economic sanctions linked to the war in Ukraine. These would be small sums – amounts that “are not material”, specifies the institution. Desjardins Group has indicated that it does not have any clients on the list of sanctioned persons. The other institutions (RBC, Scotia, CIBC, BMO, TD) did not answer the question.
The Trudeau government also did not respond to the question of whether Canada froze funds in relation to the sanctions, and how much was frozen.
Several European countries are much more transparent in terms of economic sanctions against Russia.
In mid-March, Italy said it had seized about 800 million euros in assets (yachts and buildings) belonging to sanctioned Russian oligarchs, according to Reuters.
Another European country was particularly transparent. And it might not be the one you’re thinking of, due to its reputation for banking secrecy.
It’s Switzerland.
As of April 7, Switzerland has blocked 7.5 billion Swiss francs in Russian assets and assets since the start of the war in Ukraine, a source told AFP. The Press the Federal Department of Economics of Switzerland (the equivalent of the Ministry of Finance). This is the equivalent of 10 billion Canadian dollars. Eleven buildings were seized or blocked.
And that’s not all. The Swiss Bankers Association also disclosed the amount of Russian foreign assets in the Swiss banking system. It would be between 150 and 200 billion Swiss francs (between 200 and 267 billion CAN). The blocked assets belonging to sanctioned Russian persons (7.5 billion Swiss francs) therefore represent between 4% and 5% of all Russian assets in Switzerland. It is a “fraction of Russian funds and assets in Switzerland”, indicates by email the federal department of the Economy of Switzerland.
How many Russian assets have been frozen in Canada due to sanctions? Canada’s Finance Minister, Chrystia Freeland, and Foreign Affairs Minister, Mélanie Joly, declined to answer these questions or comment. The Royal Canadian Mounted Police (RCMP) also did not respond, citing “privacy laws.”
Canadian bankers more discreet than Swiss colleagues
Nor can we know how much the Russian oligarchs and companies hold in Canadian banks. On this subject, Canadian bankers are more discreet than their Swiss colleagues.
“We have no amount to share,” said Mathieu Labrèche, spokesperson for the ABC, who directed our questions to each of the Canadian banks. The ABC said it did not count this information and declined our request for an interview.
BMO and RBC directed our questions to the ABC. Scotiabank cited reasons of confidentiality. TD Bank said it had “minimal exposure” to Russia, CIBC “limited indirect exposure”. In Quebec, Desjardins Group said its foreign Russian customers were “few” and did not include oligarchs. For its part, the National Bank indicated that the assets of its Russian customers do not represent a “material” amount for the institution. All the institutions contacted, as well as the ABC, state that they comply with the regulations in force with regard to economic sanctions.
The Trudeau government has not responded to find out what the total Russian assets in Canada are.
“They don’t know it”
Transparency International Canada believes it knows why Canada does not want to disclose the amount of Russian assets in the country and what has been frozen.
” They [le gouvernement du Canada] don’t know,” said James Cohen, executive director of the Canadian chapter of Transparency International, an anti-corruption coalition.
I suspect they [le gouvernement] have almost no idea. We have sanctions, but they are on paper. They are minimal.
DT Cochrane, economist for Canadians for Tax Fairness, which is dedicated to improving tax fairness
The reason Canadian sanctions wouldn’t work: Canada currently doesn’t have a registry forcing companies to disclose the true identity of their owners (the “ultimate beneficiaries”). And wealthy Russian oligarchs can use front companies across multiple countries, a strategy that makes it difficult, if not impossible, to trace their assets.
“The system allows billionaires to hide what they own [au Canada] says DT Cochrane.
The Trudeau government has promised to implement a public register of ultimate beneficiaries by 2025, which could solve part of the problem of corporate opacity.
Ottawa also wants to “introduce a bill that would clarify the ability of the Minister of Foreign Affairs to seize property held by sanctioned individuals and entities, to cause its confiscation and to dispose of it. More details will follow in due course,” the Department of Finance Canada said by email.
Registers in Europe
Italy and Switzerland can identify the assets of Russian oligarchs because, since 2020, the European Union (EU) requires each of its member countries to register the ultimate beneficiaries of companies. Switzerland is not a member of the EU, but it also has this type of register.
For Switzerland, which has a foreign policy of neutrality, applying EU economic sanctions is important. Notably because the Russian oligarchs have long had a significant economic presence in the Swiss country. “It is undeniable that the oligarchs have a strong attraction for Switzerland,” says Christian Bovet, professor of banking and financial law at the University of Geneva, Switzerland.
According to a report by the European Laboratory of Taxation, Russian oligarchs have invested around 60% of their wealth abroad (these figures are for the years 2000 to 2009). Where do they place their assets abroad? In the opinion of several experts, there are four places where their assets would be more concentrated: tax havens, the United Kingdom, Switzerland and the United Arab Emirates. the Jersey tax haven froze US$7 billion worth of assets belonging to oligarch Roman Abramovich last week, according to Reuters.
“They know they are ‘in danger’ [sur le plan financier] for a long time, that they must for example take into account the risks of change of regime, says professor Christian Bovet. So they divided their property [dans plusieurs pays] always keeping that in mind. They never have all their assets in one country. »
According to Christian Bovet, Swiss banking secrecy has evolved a great deal over the past 10 years, in particular with the new system for the international exchange of tax information. Switzerland has also recently indicated that tax secrecy does not apply to international sanctions. Both tax authorities and banks must report to the Swiss State Secretariat for Economic Affairs (SECO) any knowledge of assets that may fall under economic sanctions. We are a long way from the time when Swiss banking secrecy seemed almost absolute.
“When you open a bank account in Switzerland, you have the obligation to indicate who the beneficial owner is,” says Christian Bovet. The bank has an obligation to know the ultimate beneficiary due to anti-money laundering mechanisms. »
Plea for a single European register
Certainly, Europe knows much more than Canada about the assets of the Russian oligarchs.
The European Observatory of Taxation nevertheless pleads for the creation of a single European register, rather than a different register in each country as is currently the case. This proposal was launched last month by the economists of the Observatory, including Professors Thomas Piketty (author of the book Capital in the 21st century) and Gabriel Zucman.
“Currently, most countries do not really know who owns what,” says economist Theresa Neef, researcher at the Observatory and co-author of this proposal. ” Implementation [des différents registres] is not satisfactory. The current system has a lot of blind spots. Real estate data still allows beneficial owners to hide behind front companies. »
As a result, the sanctions against the Russian oligarchs are “ineffective”, believes Theresa Neef. “A European registry would help us trace the assets of Russian oligarchs. Moreover, it would help combat tax evasion and money laundering. »
Note: For this report, the currency exchange rate is that of Friday, April 15.
Switzerland v. Abramovich
In 2016, the most famous Russian oligarch in the West, Roman Abramovich, wants to settle in Switzerland. Except that the Swiss Federal Office of Police (Fedpol) refuses on the grounds that he would be a “threat to public security” and a “risk to the reputation of Switzerland” because of “suspicions of money laundering. money and contacts with criminal organizations” 1. According to the daily 24 hours, Roman Abramovich then withdrew his request to move but sued to have the negative information about him removed from the Fedpol system. He lost his case in a Swiss federal court in 2019. Mr Abramovich is particularly well known in the West because he owns the Chelsea soccer club, which he is trying to sell.
1. The quotes are from an article in the Swiss daily 24 hourswhich cited a federal court decision.
Learn more
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- LESS THAN 10 %
- Russian assets in the Swiss banking system (150-200 million Swiss francs) represent “a low single-digit percentage” – thus certainly less than 10% – of all cross-border assets deposited in Switzerland.
Source: SWISS BANKERS ASSOCIATION