Final Report National Coordinator Sanctions Compliance and Enforcement news

News feature | 13-05-2022 | 15:15

The national coordinator for compliance with sanctions and enforcement Stef Blok has submitted his final report to Foreign Minister Hoekstra. It contains his results from recent weeks and long-term recommendations. The main conclusion is that there is a need for improved enforcement and supervision of sanctions. At the same time, there is nothing to suggest that anything has been missed by freezing assets of persons and entities on the sanctions list. The final report is sent to the House of Representatives.

Due to the unrivaled scale of sanctions against Russia, they affect virtually every sector of the economy and involve many ministries, market participants and executive services. Much is going well, but certainly now that it is clear that the war in Ukraine and thus the sanctions against Russia will continue for a longer period of time, improvements are needed. For this reason, Mr Blok made a number of recommendations in various areas.

Some of the recommendations:

  1. Ensure permanent anchoring of coordination in accordance with sanctions in the Ministry of Foreign Affairs;
  2. Register the supervision of compliance with the sanction rules for notaries, the legal profession and bookkeeping, as well as strengthen the duty to report in relation to the duty of confidentiality for these professional groups;
  3. Create a stronger legal basis for data exchange, preferably by amending the Sanctions Regulation and otherwise through national laws and regulations;
  4. Advocates in Brussels for improving the process of publishing sanctions, including in terms of timing and form of submission of names.

All recommendations can be read in the final report.

Results

Over the past few weeks, Mr Blok has spoken to regulators, market participants and professional groups in the Netherlands and Brussels. He has also set up a data team to verify that nothing has been missed in compliance with sanctions. This team kept information from various registers side by side. These are parties such as the Investment Assessment Bureau (BTI, part of the Ministry of Economic Affairs), the Land Registry, the Chamber of Commerce (KvK) and the Tax Authorities. The conclusion is that with the freezing of assets – based on the current information – there is no indication that anything has been missed.

The results to date are:

  • Financial frozen assets: € 640.8 million
  • Financial transactions held: € 425.2 million
  • Vessels: 24 vessels
  • Aircraft: 1 on the ground, 5 ‘packed’
  • Shipping: 34,169 containers stopped and assessed, 77,500 export declarations assessed, 11,300 import declarations assessed and 1,750 outgoing parcel packages scanned
  • Real estate: no signals that the freezing obligation has not been complied with.

Holding companies

The size of the frozen assets can be well explained by the structure of the Dutch economy.

Stef Blok: “Thousands of containers have been stopped at the port of Rotterdam because the Netherlands has a world port. Luxury yachts are more likely to be on the French Riviera than on the IJsselmeer. But they are built here. In addition, the Dutch real estate market is hardly interesting for Russian sanctioned individuals ”.

Many holding companies are established in the Netherlands, including Russian. Although these are Dutch companies, the assets that are sometimes worth billions – such as supermarkets or cell towers – are largely or completely located outside the EU. As a result, these assets cannot be frozen in the Netherlands.

Property

It is often difficult to find out who owns a business. Sometimes it is due to deliberately created complex ownership structures. Likewise, properties are only frozen if there is more than 50% ownership. In Brussels, the Netherlands is in favor of lowering this threshold to 25%. This makes it harder to evade sanctions while maintaining control of a business. Unfortunately, there is not yet a majority for that. The Netherlands continues to fight for this.

Now that it looks like the sanctions will be in place for a longer period of time and new sanctions can always be added, a review of the legal sanctions system is needed. For example, to more easily exchange data and be better able to monitor. It requires the capacity and expertise of all involved, but in order to maintain an overview, Mr Blok recommends that the Ministry of Foreign Affairs be closely coordinated.

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