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Dear Friends and Colleagues,

Our fourth newsletter of 2018 is dedicated to navigating recent developments in the Russian and CIS markets. The shockwaves caused by new US sanctions in April highlight the need for constant monitoring, flexibility and evaluation of clients exposed to these jurisdictions.

To match these challenges, Sqope has recently added additional premium resources to our CIS desk, enabling our expert analysts access to new databases and on-site resources to better serve you.

The Sqope Team


Current Situation

On 06 April 2018, the US levied sanctions against a number of major powerbrokers and Kremlin insiders, such as billionaire Oleg DERIPASKA and the head of Russian state energy giant Gazprom, Alexey MILLER. 14 companies were also hit with these new sanctions, including DERIPASKA’s aluminum giant Rusal and Gazprom Burenie. These sanctions have since been dubbed as the most significant since the start of the 2014 Ukraine conflict.

Shockwave felt by sanctions

  • The share value of the publicly-listed companies that were hit with sanctions plummeted – Rusal, for example, lost more than 60% of its share value and EN+ Group lost more than half of its value, according to reports from 24 April.

  • Press coverage focused mainly on the impact on DERIPASKA’s companies because they are publicly traded, representing the first time the US has ever sanctioned a publicly listed Russian company, according to at least one news outlet.

  • The sanctions have also caused alarm among Russia’s business elite ‘that anybody with frequent interaction with the Russian leadership and a dominant position in Russian business could be hit.’

  • Alarm bells have also sounded among those investing in Russia, “as they scramble to clear their portfolios of ‘oligarch risk’ - holdings in companies that may be next in line for U.S. sanctions after metals company Rusal was targeted," according to Reuters.

What’s next?

  • European Union: A consensus to match the US sanctions is unlikely, as France and Germany pressure the US to shield their economies from financial impact. Halfway measures, such as the extension of existing sanctions, or the tightening of AML regulations, are possible.

  • Russia: There is speculation that the Kremlin could use sanctions to further consolidate its economic control in the country, in what some analysts call an effort to ‘nationalize the country’s elites,’ in a reference to possible state plans to purchase DERIPASKA’s stake in Rusal.

  • United States: The next moves against Russia will continue to be muddled by jostling between the White House and Washington’s policy power brokers, particularly given the unintended negative fallout from the Rusal case. Russian foreign policy moves in Europe, Syria, and the Ukraine may have an impact, although internal US economic considerations linked to Trump’s economic worldview and personal outlook toward Russia will likely serve as dominant influences.

How Sqope supports your business in Russia:

  • Due Diligence reports that map links between prospects and Russian power brokers;

  • Ongoing monitoring of large client bases and ad-hoc screening for sanctions exposure;

  • Source of Wealth reports tracing historical and current sources of funds using Sqope’s exclusive network of ground sources and database access.

Read the rest of Sqope's April Newsletter HERE.

#compliance #newsletter #sqope #april #sanctions #CIS #Russia #Kremlin #Duediligence #Monitoring #SourceofWealth

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Phone: +352 20 60 17 77-1


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Phone: +41 22 310 20 17


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