Dutch financial institutions failing to freeze Russian assets, central bank finds

Banks and other financial institutions in the Netherlands have performed significantly below expectations when it comes to freezing assets as required by the sanctions lists released following the Russian invasion of Ukraine. Roughly one third of Dutch financial firms are unable to track down and freeze the assets, Nieuwsuur reported based on an investigation conducted by De Nederlandsche Bank (DNB), the central bank of the Netherlands.

Amateurish mistakes and a lack of accountability has been the driver behind many of the problems, Nieuwsuur reported. This was after the DNB examined 31 institutions which are required to implement the sanctions. A total of 1,473 people are listed on the sanctions lists, as well as 207 organizations from small businesses on up to the Wagner Group and Russia’s central bank.

The financial institution which performed the worst in the DNB analysis was not identified by name. One of the problems is that they do not always search for every spelling of a name on the sanctions list. In English, the last name of the Russian president is spelled “Putin,” however in Dutch, the spelling is “Poetin,” the broadcaster noted. “The worst party only finds 24 percent in such cases, so they really have to improve that," said DNB Director or Supervision Maarten Gelderman to Nieuwsuur.

"These are really kindergarten mistakes. In the sanction regulations, the name of the sanctioned person is often spelled in five ways, so in English, Dutch, Russian, Ukrainian and then possibly an extra spelling because this has been handled poorly before," said Heleen over de Linden, an attorney currently working towards a PhD in economic sanctions.

"If we look at easy-to-find transactions, they find about 95 percent, which is not bad,” Gelderman said. "But also there, one bank only recognizes 60 percent, so it has to improve a bit." If the situation does not improve, the DNB could rebuke those financial institutions which have failed to carry out their tasks.

Just 6 million euros in assets were frozen in the first month after sanctions were announced, figures which were rapidly put to shame by other European nations. After parliamentarians voiced their disapproval, financial institutions and the Dutch government managed to freeze another 634 million euros in assets before the summer of 2022. Nearly a year later, that total has barely increased from 640 million to 644.5 million euros, Nieuwsuur reported.

“We have made zero progress in the past year,” said Over de Linden

By comparison, the European Union members have jointly frozen 21.5 billion euros in assets to date, in addition to 300 billion euros in Central Bank of Russia assets which EU and G7 countries have blocked, according to a report from the European Council released last month. The European Commission also said that the EU banned about 43.9 billion euros in exported goods to Russia and 91.2 billion euros in imported goods. However, the EU’s delay in targeting the Russian energy sector also allowed Russia to accumulate 80 billion dollars in offshore cash, according to a Bloomberg report earlier this year.

“You would expect that more would have been frozen than what is happening now,” said Yvo Amar, an attorney specialized in laws regarding sanctions.

Amar said a lack of leadership from the Cabinet is part of the problem. Opposition political parties agreed, with SP calling for more endorsement and oversight from the Cabinet, and GroenLinks alleging the failure as an overall sign of serious structural problems.

The Cabinet disagreed. Representatives of the Ministry of Finance and the Ministry of Foreign Affairs said that the sanctions totals have stalled because enforcement has already been taken against the names currently on sanctions lists. When new names are added, they often have less significant amounts of assets compared to previous enforcement.

The Dutch Banking Association (NVB) did acknowledge that the “speed and complexity of the tasks which banks must perform” certainly presents challenges when enforcing sanctions. The banks have to do better, the organization said, but the Cabinet could help by creating one single point-of-contact for any questions pertaining to sanctions.