Russian billionaires under Western sanctions are using a legal loophole in Dutch law to keep their financial activities hidden, according to an investigation by Dutch public broadcaster NOS.
By registering their companies as micro-enterprises, they are able to dodge strict financial reporting rules, even while facing international restrictions over Russia’s invasion of Ukraine.
This was reported by the Moscow Times.
How the Loophole Works
One of the businessmen taking advantage of this is Alexei Mordashov, a Russian steel tycoon who was sanctioned by the European Union.
His company, SMTT Holding, is registered in Amsterdam and worth €65 million, yet under Dutch law, it qualifies as a micro-enterprise. This means it is not required to disclose financial details that would normally be public.
And Mordashov is not alone.
Airport Alliance (Netherlands), a subsidiary of Russia’s state-owned VTB Bank, also benefits from this loophole. VTB’s chairman, Andrei Kostin, is a close ally of Vladimir Putin and has been sanctioned by Western countries.
Another company, Safmar, linked to Russian billionaire Mikhail Gutseriev, is also registered in the Netherlands as a micro-enterprise, avoiding financial scrutiny.
Under Dutch law, a company qualifies as a micro-enterprise if it meets at least two of three conditions: having fewer than ten employees, a balance sheet total below €450,000, or an annual turnover under €900,000.
Businesses that fit this classification don’t have to reveal profits, taxes, or assets to the Dutch Chamber of Commerce and are exempt from mandatory audits. The rule was originally designed to reduce paperwork for small businesses, but now it’s being used as a shield by billionaires facing sanctions.
Are Western Sanctions Failing?
The problem has become even more serious since the start of the war in Ukraine.
Major global accounting firms stopped working with Russian businesses, making it harder for them to get their financial records approved. But Mordashov’s SMTT Holding avoided this issue altogether thanks to its micro-enterprise status, which lets it keep operating without oversight.
These revelations raise serious concerns about how well Western sanctions are actually working. While countries have taken steps to freeze Russian assets and block financial activities, loopholes in places like the Netherlands allow sanctioned individuals to continue running businesses with little transparency.
