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12 Dec, 2023 14:22

Swiss banks charging Russians for frozen accounts

Nearly $9 billion in private funds is blocked in the country's institutions due to sanctions
Swiss banks charging Russians for frozen accounts

Some Swiss financial institutions have begun charging their Russian clients fees on frozen accounts, sometimes accruing interest payments years in advance, Vedomosti reported on Tuesday, citing bankers and a brokerage firm.

Commissions on the blocked assets of Russian citizens are charged years in advance, an auditing company source told the outlet, citing an employee at a Swiss bank. 

“The idea is that there is an account, it needs to be serviced, and it doesn’t matter that a person cannot use the banking service, in fact it is still provided,” one of the banks explained.

Two sources in law firms confirmed to Vedomosti that they’d heard of cases of Swiss banks charging fees on frozen funds, but not of them accruing interest years in advance.

“It seems counterintuitive, but nowadays anything is possible,” a source told the outlet.

PostFinance, a financial services company and a unit of Swiss Post, confirmed to the news outlet that it does not charge commissions on seized or frozen Russian funds. A number of other financial institutions, including Julius Baer, UBS, Zurich Cantonal Bank, Vontobel and Pictet Group, did not respond to requests from Vedomosti.

By slapping interest payments on Russian assets, banks are passing on to their clients the significantly increased costs of compliance procedures, and possibly a premium for the risk of fines being imposed on them, Donat Podniek, partner at KPMG in Russia and the CIS, told Forbes Russia.

Under pressure from Western regulators, Swiss banks are gradually shedding their Russian clients; however, they continue to serve some large customers, economists say. A number of major Swiss banks such as UBS and a Swiss subsidiary of the US investment bank JP Morgan continue to work with Russians and even take on new clients, according to Sergey Ishkov, co-founder of the fin-tech firm Skyfort.

Switzerland has an estimated 7.7 billion Swiss francs ($8.81 billion) of Russian assets frozen in its financial institutions, the latest estimates from the country’s national agency overseeing sanctions showed.

The current estimate includes properties and luxury cars belonging to sanctioned Russians, as well as profits from cash deposits, bonds, and shares.

For more stories on economy & finance visit RT's business section

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