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Difficulty in sanctioning oligarchs should generate more financial transparency in the EU

Difficulty in sanctioning oligarchs should generate more financial transparency in the EU

The European Union (EU) Fiscal Observatory hopes that the difficulties in applying sanctions to Russian oligarchs will cause changes to greater financial transparency in the community space, aiming to identify goods as in tax havens.

“For a long time, these ideas were not taken very seriously and didn’t arouse much interest, but now I think that this has started to change, namely with the difficulties encountered with the application of sanctions to Russian oligarchs and therefore it is progress”, says the director of the EU Fiscal Observatory, Gabriel Zucman, in an interview with the Lusa agency.

At a time when Brussels asks the authorities of the Member States to identify the assets of these Russian oligarchs, in order to ensure compliance with sanctions such as the freezing of assets, for the Ukraine war, Gabriel Zucman adds that he expects “concrete changes”, since “It’s really a matter of political will because […] current information is not used to create financial transparency”.

“If they do, then the EU would be able to say who the ultimate owners of shares and bonds or equity are,” he says.

Also due to the war, the European Commission asked the European Member States to revoke the citizenship by investment regimes, the golden passports, and control the residency regimes, the ‘gold’ visas, for the “increased risks”.

In the interview with Lusa, Gabriel Zucman adds that “many Russian oligarchs have wealth invested in the EU, such as in Cyprus, Luxembourg, Malta”, so this type of regime, namely citizenship ones, “are not acceptable”, while the of residence “must be reviewed”.

In a report released in mid-March, the EU Tax Observatory warned that economic and individual sanctions on Russia may not achieve their objective as they target oligarchs supporting the Russian regime who use tax havens.

According to the EU Tax Observatory, part of the wealth of wealthy Russian citizens is hidden in tax havens and European sanctions mostly target oligarchs with financial and non-financial assets abroad, which are difficult to detect due to financial confidentiality and lack of an exhaustive register of beneficiaries.

Data from this independent body funded by the European Commission indicate that around 20,000 individuals in Russia – 0.02% of the adult population – have a net wealth of over 10 million euros in 2021 and around 50,000 individuals – 0.05% of the population adult – a net wealth of more than five million euros.

It is estimated that around half to two thirds of the assets of these individuals are held abroad.

Heavy EU sanctions on Russia include freezing the financial assets of oligarchs linked to the Russian regime and President Vladimir Putin himself, banning several Russian banks from using the Swift international transaction system, imposing limits on exports of certain materials. raw materials, cutting visas and credits and closing European airspace to Russian aircraft.

Managed by the Paris School of Economics, the EU Tax Observatory is a consortium of academics that focuses its research on topics related to tax avoidance, tax evasion and aggressive tax planning, aiming to provide scientific data that can lead to better results. politicians.

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