The L&P sanctions team scored standout success in two cases related to the protection of our clients’ lawful interests from ungrounded application of the EU Restrictive Measures in Austria last week.
Our client, who is a citizen of the Russian Federation, faced an unlawful freeze of his bank account opened more than 20 years ago for savings with BAWAG Bank, which is ranked Top-4 among Austrian credit institutions in terms of total assets. Last year, our Client addressed the BAWAG Bank with an instruction to transfer the funds to his account opened with another credit institution, which was declined by the bank. As an attempt to withdraw the funds was also blocked by the BAWAG Bank due to the corporate AML/CFT policies, the Client approached the L&P with a request to liaise with the credit institution and unfreeze the funds.
After detailed study of the case file, the L&P sanctions team attorneys along with our colleagues from GRAF ISOLA, one of the national Austrian leading law firms in this field, decided to file an official letter of complaint to BAWAG Bank claiming the funds unfreeze and specifying the information about the source of Client’s funds and his professional activities. Having examined the complaint, the BAWAG Bank’s compliance department agreed to our position and passed the decision to unblock the funds and transfer them to the bank account specified by the Client.
“Unreasonably long and detailed verification of the sources of origin of funds deposited by Russian citizens to foreign bank accounts is becoming commonplace. However, it is not always possible to easily and promptly confirm the legality of the origin of funds. Foremost, this is due to the fact that a significant amount of time has passed since the money was deposited into the account. Fortunately, in our case, the bank has received comprehensive information about the legality of the money earned by our client”, comments Anton Minakov, one of the leading attorneys of the L&P sanctions practice group.
Opposite to this case, which was successfully settled within short timeframes, our work on the unfreeze of funds of a credit institution – client of L&P opened with the largest Austrian credit institution, Raiffeisen Bank, took almost a year. The assets were frozen due to incorrect assessment of our Client’s legal status in terms of the EU restrictive measures by the Raiffeisen Bank’s compliance department, therefore it was necessary to address the National Bank of Austria directly. The long-lasting consideration of our application has finally led to the favourable decision stating that our Client is not subject to any sanctions on the EU level and instructing Raiffeisen Bank to unblock the account transactions.
«The special feature of the EU financial restrictive measures implementation in Austria is granting a right by the National Bank to the credit institutions to determine their policies towards potential and acting clients and to assess their legal status in the context of the sanctions applicability. Challenging the restrictions under such circumstances is similar to going round in circles: the regulating authority shifts the responsibility to the credit institutions, which in their turn tend to anticipate the official statements from the National Bank. Breaking out of this vicious circle with a positive decision appears to be an outstanding achievement which is of paramount importance not only for the client involved into this case but also for the whole field of sanctions law being formed at the particular moment», – admits Alexey Sereda, one of the leading attorneys of the L&P sanctions practice group.
