The huge leak of the Panama Papers increases the risk of new US sanctions against people considered close to Vladimir Putin and companies associated with them, follows from the US Treasury response to RBC and comments from experts

Documents from the Panamanian law firm Mossack Fonseca, in particular, indicate that minority shareholder of Rossiya Bank Sergei Roldugin and VTB’s former Cypriot subsidiary, RCB Bank, may be involved in circumventing existing sanctions against people from Putin’s entourage. The US Treasury department responsible for sanctions, OFAC, declined to comment on the specific findings of international investigative journalists. But a representative of the US Treasury, in response to questions from RBC, emphasized that “the American government pays special attention to investigating possible illegal actions and activities to circumvent sanctions, using any sources of information - both public and non-public.”

Cellist Sergei Roldugin is one of the few in Putin’s entourage who escaped American sanctions in the spring of 2014, when co-owners of Rossiya Bank Yuri Kovalchuk, Nikolai Shamalov and Gennady Timchenko, the bank itself, the ex-head of Russian Railways Vladimir Yakunin, and the Arkady brothers were blacklisted and Boris Rotenberg. Bank Rossiya, described by the US Treasury as the “personal bank” of senior Russian officials, “apparently tried to exploit this loophole” [that Roldugin was not subject to sanctions], writes The Guardian , which participated in the journalistic investigation. In 2014, after the imposition of sanctions against Rossiya Bank and its owners, Swiss lawyer Andres Baumgartner helped open a secret account in the Swiss subsidiary of Gazprombank for the offshore International Media Overseas, owned by Roldugin, the publication writes.

OFAC, as a rule, is “very concerned about the problem of circumventing existing sanctions: if it turns out that a person is helping to circumvent existing sanctions, OFAC can add him to the list of SDNs (persons whose assets are blocked in the American jurisdiction), a lawyer for the American company tells RBC Jacobson Burton Kelly PLLC Doug Jacobson specializes in sanctions. At the same time, OFAC can rely on any sources of information, including journalistic data, the lawyer notes. In July and December last year, OFAC already imposed sanctions against individuals who, according to the service, helped previously blacklisted figures and thereby contributed to the evasion of sanctions: this is how Roman Rotenberg and various structures associated with Timchenko and his brothers ended up on the OFAC list The Rotenbergs.

Two companies are also at risk of sanctions due to the “Panamanian” leak: Russia’s largest TV advertising seller Video International (Vi) and the Cypriot RCB Bank, 46% owned by VTB. According to investigative journalists, one of the main sources of financing for offshore companies associated with Roldugin were significant unsecured loans from RCB Bank that defied commercial logic. The Guardian reports the words of its "senior source in Moscow" who describes RCB as a "private wallet" for senior government officials. The bank itself calls such accusations unsubstantiated; “RCB Bank strictly complies with the requirements of the law,” its press service reported on Monday.

Until September 2014, VTB owned 60% of the Cyprus bank, until RCB carried out an additional issue, which was bought by the private Otkritie group. Due to this transaction, RCB ceased to be subject to automatic sectoral sanctions (financing restrictions) against the VTB Group. “Thanks to the reduction in VTB’s share, the Cypriot subsidiary was able to avoid falling under the geopolitical sanctions of the EU and the United States and freely work with Western financing,” explains Paragon Advice Group partner Alexander Zakharov. In his opinion, if Western authorities become interested in the findings of a journalistic investigation, RCB will have potential risks associated with the possibility of inspections by OFAC. Currently, RCB is not part of the VTB group (the state bank owns only 46% of the shares) and is not on the sanctions lists. However, VTB continues to issue and guarantee the majority of RCB's loans: according to Moody's, such loans accounted for 70% of the Cyprus bank's loan portfolio in mid-2015.

“If we record cases of sanctions violations and we have evidence to build a legal basis, we act in accordance with the interests of national security and foreign policy of the United States,” a representative of the US Treasury tells RBC.

From the “Panama archives” it also follows that Roldugin was a secret shareholder of Vi in 2010–2015 - through the Cyprus Med Media Network, whose beneficiaries were previously unknown. Mossack Fonseca documents show that the owner of 100% of Med Media is Roldugin’s offshore International Media Overseas. Roldugin controlled 20% of Vi at least until 2015, when the stake was transferred to an offshore company from Belize, Robertson Financial, whose beneficiaries have not been identified.

RBC Pro development program Leadership: the first skill New leadership: how to manage a business in conditions of uncertainty The power of the environment: how a leader can grow together with the team Dictator's dictionary: what 6 phrases will betray an authoritarian manager Psychology in business: 6 types of destructive leadership A leader from whom people will not leave: how to earn the loyalty of subordinates Growing the pie. How great companies achieve goals and make profits “No relation”: how officials responded to the OCCRP investigation Photo gallery

A source at Vi told RBC that the company was never interested in the ultimate beneficiaries of offshore companies, believing that they somehow belonged to the structures of Rossiya Bank. A Vi representative declined to comment on Monday.

In 2014, when Yuri Kovalchuk and Rossiya Bank were under sanctions, Vi began to receive many requests about the shareholder structure from the largest advertisers - American and European manufacturers of consumer goods, Vedomosti writes , citing sources in the agency and large advertising agencies . According to the publication, foreign advertisers feared that they might violate the terms of the sanctions by working with a company controlled by Rossiya Bank. The difficult situation of Vi was also one of the reasons for developing the idea of a single seller. This idea was actively promoted in 2014 by Mikhail Lesin, then the head of the Gazprom-Media holding. As Vedomosti writes, both in 2014 and now, the project of a single seller is largely related to the desire to remove Vi from the risk of sanctions. This risk will be even higher when information is published that Roldugin, Kovalchuk’s partner and Putin’s friend, was also a co-owner of Vi, the publication reports, citing an agency employee.

A US State Department spokesman told RBC that the American government “does not comment on leaks.” Jacobson of Jacobson Burton Kelly has no doubt that “the US Treasury Department is interested in the Mossack Fonseca documents and OFAC will carefully study the information.” However, there is a potential catch: it is not a fact that OFAC will be able to use information obtained in violation of attorney-client privilege and disclosed without the consent of the clients of the Panamanian office (Mossack Fonseca claims that its servers were hacked). “At best, OFAC could try to use the knowledge gained from this dossier to develop untainted evidence that would justify imposing sanctions on those involved in circumventing existing sanctions,” said Cliff Burns, a sanctions lawyer at Washington-based Bryan Cave.

After the publication of this article, RCB Bank provided RBC with an extended comment, which is as follows:

RCB Bank Ltd is a bank operating under the laws of the Republic of Cyprus and included in the Single Supervisory Mechanism (SSM) of the European Central Bank. The Bank strictly complies with all requirements and restrictions, including sanctions imposed by the US and EU authorities. RCB Bank, in accordance with the applicable laws of the Republic of Cyprus, never discloses to third parties, including the media, information relating to its clients, their operations and transactions.

A bank representative also told RBC that Sergei Roldugin has never been a client of the bank, either as an individual or as a beneficiary of any companies that hold accounts with RCB Bank.

Regardless of the individuals or companies mentioned in the [international consortium of journalists] investigation, RCB Bank has never provided and does not provide unsecured loans. When issuing loans, RCB Bank follows all necessary procedures and, in particular, always fully understands the purposes of the planned transactions. The bank's compliance with established procedures has been carefully and repeatedly verified by the Central Bank of Cyprus and the ECB. However, RCB Bank voluntarily handed over questions and documents received from journalists a week before publication to the competent authorities of Cyprus so that they could make their own independent assessment.

RCB Bank has not provided and does not provide any services to persons included in sanctions lists, and does not help such persons or companies to circumvent sanctions restrictions. Moreover, the questions we received from journalists as part of their investigation relate to transactions carried out between 2009 and 2011, two years before the Cyprus financial crisis and three years before the first sanctions against Russia were introduced.

After the Cyprus crisis, RCB Bank revised its strategy. To improve operational stability, the bank decided in December 2013 to open a branch in Luxembourg (this happened in February 2014) and move on to further expansion and development of its operations in Cyprus and other European countries. In this regard, the bank decided to increase its authorized capital and attract a new strategic investor, Otkritie Financial Corporation, the second largest private banking group in Russia. Therefore, the assertion that the increase in RCB Bank's capital was aimed at avoiding sanctions is irrational and incorrect.

VTB Bank also issued a commentary, which is as follows:

The Cyprus RCB Bank was part of the VTB Group until 2014; for the last year and a half, VTB has been the main shareholder of RCB, the VTB press service reported. “In this regard, we declare that in the VTB Group all loans are issued in strict accordance with the risk policy, the requirements of regulatory authorities and legislation. We, as a shareholder of the bank, know that RCB Bank has not issued and does not issue unsecured loans, its activities are regulated by the European Central Bank and meet all the requirements of the ECB,” VTB said in a statement.

The United States will study the Panama Papers in the context of new sanctions against Russia