Freezing of accounts | Transferring the accounts of Finnish embassies to VTB Bank would not be possible in practice

Policy|Freezing of accounts

Russian The VTB bank designated for use by Finland is on the sanctions list of both the European Union and the United States.

The bank was already added to the US sanctions list in February 2022, right after Russia attacked Ukraine. The bank was added to the EU list in April of the same year.

Based on its balance sheet, VTB is Russia’s second largest bank and approximately 20 percent of Russian bank deposits are deposited there and its the major owner is the Russian state.

According to the US Treasury Department’s assessment, the bank’s significant size and state ownership make it a central part of the Russian economic system. This is also the reason why it has been put under sanctions.

HS said on Wednesday that Russia had frozen the accounts of Finnish embassies in Russia.

Later, the Russian embassy said in its press release that it can only use Nordea’s banking services in Finland.

According to the embassy, ​​Finland has been offered the opportunity to use VTB Bank in Russia to ensure the day-to-day operations of its representative office.

The bank being on the banned list practically prevents European parties from dealing with it or using its services.

“Russia knows very well that VTB bank is subject to sanctions in the EU region, and therefore it cannot be thought that the Finnish embassy would use the bank”, comment also Finland’s former ambassador to Russia Hannu Himanen situation to HS.

of the EU personal sanctions regulation allows an exception to this, if the bank is used to enable the money transfer of diplomatic missions. However, the exception only applies to banks that, unlike VTB, are not excluded from the international Swift payment brokerage system.

Excluding Swift also means that you cannot transfer funds from abroad, in this case Finland, to accounts at VTB, which would make it practically impossible to use an account there.

of VTB serves as CEO Andrei Kostinwhich has been deemed to belong to the President of Russia Vladimir Putin close circle. Kostin, who is personally on the sanctions lists of the United States and the European Union, is also a member of the Supreme Council of the Russian ruling party. That’s why VTB is in some contexts called “Being a bank for Putin’s friends”.

“He has made public statements in which he has supported the annexation of Crimea and encouraged Russian citizens to vacation in Crimea. He is also close to a winery and a luxury hotel in Crimea and, according to the media, owns them,” Kostin is described in the EU’s justification for sanctions.

“He therefore supports actions and policies that undermine Ukraine’s territorial integrity and benefits from the annexation of Crimea,” the reasoning continues.

I took revenge has been a strict opponent of Western countries’ sanctions policy in his public statements. VTB has said that in 2021 it made a loss of around 7.7 billion dollars. Kostin accused due to the collapsed operating result in February, the sanctions policy of the EU and the United States.

I took revenge presented in April, that Russia should take over the local assets of foreign companies as a protest against the sanctions policy. At the time, he mentioned the Finnish company Fortum as an example.

In Kostin’s opinion, the property of foreign companies should be returned to the original owners only at the point when Western sanctions against Russia are lifted.

Shortly after Kostin’s statement, Russian President Vladimir Putin signed the agreement Russia temporarily took over Fortum’s and Uniper’s shares and assets in Russia.