How a legal loophole prevents Spain from sanctioning Russian oligarchs
A legal anomaly which doesn’t exist anywhere else in the EU is preventing Spanish authorities from freezing or seizing the assets of Russian billionaires in Spain, many of whom are being allowed to keep their wealth hidden.
In Spain, there is no way to know who is a partner in a company (socio de una sociedad).
Unlike in the rest of EU countries, the content of the shareholders’ register is private and can’t be accessed by anyone - not even investors, creditors or the State - through Spain’s Mercantile Registry.
In the United Kingdom, France and even Switzerland, the details of limited liability companies can be viewed online by anyone.
But not in Spain, where registering legalises the LLC or PLC, without the details of the business having to be disclosed.
This anomaly is impinging on the Spanish government’s ability to fight against fraud and corruption, as disclosed by online Spanish daily Vozpópuli, and currently is one of the chief reasons why sanctions by the Spanish State against Russian oligarchs aren’t proving effective.
This legal reform introduced by former Spanish Prime Minister Felipe González in 1989 turned Spain into a sort of paradise of untraceable opaque companies.
The general consensus among legal experts is that the Spanish government isn’t doing enough to sanction Russian oligarchs, as for now it’s limited itself to freezing assets, not seizing them.
Earlier in April, Spain’s General Council of Notaries (CGN) sent a letter to the Spanish government urging them to implement new legal measures that will allow for the fortune of the Russian oligarchs in Spain to be embargoed.
Their demand has not fallen on deaf ears, as Spain’s Justice Ministry is now drafting a law that will make sure real estate belonging to Russian oligarchs can be confiscated and their owners evicted, even if these properties are registered in the name of figureheads or intermediaries.
The measures should also ensure notaries and property registrars can have access to the information they need to carry out these embargoes, which should result in the anonymity of Russian partners in companies in Spain being scrapped.
A total of 862 people and 53 entities with links to Putin have so far been named as targets for asset freezes and travel ban measures since sanctions against Russia were introduced by Spanish authorities on March 15th, according to registry stats.
It’s worth noting that Spain’s National Securities Market Commission (CNMV) does not break down all the shares in listed companies that do not exceed 3 percent of the company’s share value so there may be many more Russian investors who also remain unknown as a result.
Spain did also stop issuing so-called golden visas to Russians - a scheme which allows non-EU nationals who purchase a €500,000 property or invest large amounts to gain Spanish residency - but Pedro Sánchez’s government dragged its heels on the matter and has allowed existing Russian golden visa holders to hold onto their residency.
Several oligarchs’ super yachts docked in Spanish ports have been seized as well since Russia invaded Ukraine.
2018 data from Spain’s Ministry of Foreign Affairs show that Russia ranked 41st among the largest investors in Spain, with just over €470 million.
Russian investments focus primarily on real estate and construction (45 percent), hotels and tourist accommodation (35 percent) and the metal industry (close to 4 percent).
READ ALSO: How much influence does Russia have over Spain?
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In Spain, there is no way to know who is a partner in a company (socio de una sociedad).
Unlike in the rest of EU countries, the content of the shareholders’ register is private and can’t be accessed by anyone - not even investors, creditors or the State - through Spain’s Mercantile Registry.
In the United Kingdom, France and even Switzerland, the details of limited liability companies can be viewed online by anyone.
But not in Spain, where registering legalises the LLC or PLC, without the details of the business having to be disclosed.
This anomaly is impinging on the Spanish government’s ability to fight against fraud and corruption, as disclosed by online Spanish daily Vozpópuli, and currently is one of the chief reasons why sanctions by the Spanish State against Russian oligarchs aren’t proving effective.
This legal reform introduced by former Spanish Prime Minister Felipe González in 1989 turned Spain into a sort of paradise of untraceable opaque companies.
The general consensus among legal experts is that the Spanish government isn’t doing enough to sanction Russian oligarchs, as for now it’s limited itself to freezing assets, not seizing them.
Earlier in April, Spain’s General Council of Notaries (CGN) sent a letter to the Spanish government urging them to implement new legal measures that will allow for the fortune of the Russian oligarchs in Spain to be embargoed.
Their demand has not fallen on deaf ears, as Spain’s Justice Ministry is now drafting a law that will make sure real estate belonging to Russian oligarchs can be confiscated and their owners evicted, even if these properties are registered in the name of figureheads or intermediaries.
The measures should also ensure notaries and property registrars can have access to the information they need to carry out these embargoes, which should result in the anonymity of Russian partners in companies in Spain being scrapped.
A total of 862 people and 53 entities with links to Putin have so far been named as targets for asset freezes and travel ban measures since sanctions against Russia were introduced by Spanish authorities on March 15th, according to registry stats.
It’s worth noting that Spain’s National Securities Market Commission (CNMV) does not break down all the shares in listed companies that do not exceed 3 percent of the company’s share value so there may be many more Russian investors who also remain unknown as a result.
Spain did also stop issuing so-called golden visas to Russians - a scheme which allows non-EU nationals who purchase a €500,000 property or invest large amounts to gain Spanish residency - but Pedro Sánchez’s government dragged its heels on the matter and has allowed existing Russian golden visa holders to hold onto their residency.
Several oligarchs’ super yachts docked in Spanish ports have been seized as well since Russia invaded Ukraine.
2018 data from Spain’s Ministry of Foreign Affairs show that Russia ranked 41st among the largest investors in Spain, with just over €470 million.
Russian investments focus primarily on real estate and construction (45 percent), hotels and tourist accommodation (35 percent) and the metal industry (close to 4 percent).
READ ALSO: How much influence does Russia have over Spain?
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