Out of the 90 companies listed on the RBE and the Stop Russian Capital database as owned 25% or more by individuals subject to EU sanctions or by the Russian state itself, 75 are structured as soparfi vehicles, the data shows.
The Stop Russia Capital data is extracted from the RBE and, in cases where beneficial ownership has not been provided, it is sourced from company financial statements or corroborated from the presence of recurring administrative beneficial owners. The ‘nace’ code indicating whether the company is a soparfi vehicle was sourced from the RBE and added into the data by Delano.
No answers on sanctions on soparfi vehicles
Soparfi, or Société de Participations Financiéres, are fully taxable unregulated companies, not subject to any supervisory authority in Luxembourg.
As such, it is their service providers who are required to implement any sanctions and report them to the Ministry of Finances with a copy to the Luxembourg financial regulator CSSF for those service providers which are under the CSSF’s supervision, the regulator confirmed to Delano.
However, neither the regulator nor the Ministry of Finances has confirmed the number of reports on soparfi vehicle sanctions implementation received.
“We got no answer on soparfi vehicles [during the 29 March meeting with the committee in charge of monitoring restrictive measures]” MP with Luxembourg’s Christian Social People’s Party Laurent Mosar told Delano.
“How much information has come from lawyers, bar association and accountants [on these soparfi companies] and how many bank accounts have been frozen?” he said.
The Ministry of Finance made its first communication on 30 March 2022 on assets frozen in the context of Russian sanctions, citing €2.5 billion in assets frozen. The government body has come under criticism for its delay in communicating action on sanctions more than one month after Russia made its 21 February military assault on Ukraine.
Certain Luxembourg-registered companies, such as sanctioned individual Mikhail Fridman’s Letterone, have been proactive in communicating their sanctions action.
“All sanctioned individuals have been removed from the business and are not involved in any way in the management, administration or supervision of the company or any of its subsidiaries. They cannot receive dividends, communications or funds or economic resources directly or indirectly from the company. Their assets are effectively frozen,” Letterone said in a statement.
However, other entities, such as Roman Abramovich’s Luxembourg-registered Evraz Group, commented that “EVRAZ considers that the financial sanctions shall not apply to the Company itself.” The group did not confirm whether the companies’ corporate services providers have implemented and reported the sanctions against the oligarch.
Tibor Tompa, one of the parties who compiled the Stop Russian Capital database, outlined some of the actions needed by entities owned by sanctioned individuals. “Freeze bank accounts and limit any possibility to transfer money outside of Luxembourg. The authorities must create a list of all sanctioned oligarchs and entities, and share with all banks, service providers, as a list of entities with whom starting new operations are forbidden. In case of disobedience, implement risk of licence removal for respective service providers.”
The Ministry of Finance said on 30 March that the Luxembourg Business Register had identified 86 companies registered in the trade and companies database that are linked to 11 individuals featuring in the list of sanctions.
However “we only got answers about what the entities under control of CSSF have reported,” Mosar said of the meeting.
The Ministry of Finance commented: “There is no indication that sanctions are circumvented in Luxembourg with the help of Soparfi. All operators, including domiciliation agents, are obliged by the law of December 19, 2020 to apply the sanctions.”
Source: Luxembourg Business Register (RBE) and Stop Russian Capital