International firms can use new laws to establish an offshore domicile and thereby bypass sanctions.
The Russian parliament’s upper chamber has approved a package of laws to enable Russia-controlled foreign offshore companies to be re-registered in offshore financial centers (OFCs). The new package establishes Russia’s Kaliningrad Region and Primorsky Territory as locations offering international companies the opportunity to minimise the possible consequences of sanctions and political risks from foreign countries. The legislation has established a procedure to nominate such areas on the Oktyabrsky Island in Kaliningrad and the Russky Island in Vladivostok as offshore locations. In a process called ‘redomiciliation’ companies can obtain the status of an international company, giving opportunities for foreign-registered companies to become subject to Russia’s jurisdiction
US sanctions list
Existing companies will not need to liquidate the company abroad, but will need to withdraw from registration and register in the OFC to obtain the status of an international company. The move comes after the US Treasury Department added 38 Russian entrepreneurs, senior officials and companies to its sanctions list in response to Russia’s alleged “malign activity” worldwide. Russian entrepreneurs designated by the Treasury Department include Viktor Vekselberg, Oleg Deripaska, Alexey Miller, Suleyman Kerimov, Kirill Shamalov and Andrey Kostin.