According to a recent report by Moody’s, the Czech Republic is home to the highest number of Russian-owned companies within the European Union. As of July, approximately 45,000 companies operating in EU countries have more than 40 percent of their shares directly or indirectly held by Russian entities or individuals with dual citizenship. Out of these, 12,400 companies are registered in the Czech Republic, placing it at the top of the EU-27 list. Bulgaria follows with 9,500 companies, while Germany, Latvia, and Italy host 4,200, 3,300, and 2,500 such companies, respectively.
The Polish daily Rzeczpospolita highlighted the Moody’s findings, underscoring the growing concern among EU member states regarding these companies’ activities. Moody’s has urged banks and financial institutions in these countries to closely monitor transactions involving Russian-owned firms and report any suspicious activities to the relevant authorities. This advisory aligns with the European Commission’s recent mandate requiring EU financial institutions to comply with new reporting standards for transactions involving Russian citizens, effective from July.
This measure is part of the EU’s twelfth sanctions package against Russia, aimed at identifying potential sanctions violations and mapping Russia’s revenue sources. The EU has been tightening its grip on Russian-owned entities since the invasion of Ukraine in February 2022, and member states are now tasked with evaluating reported financial activities to detect possible sanctions breaches.
In response to these developments, the Czech Ministry of Industry and Trade (MIT) has stated that it has been monitoring the situation closely due to concerns about economic security. “In cases where transactions may pose a security risk to the Czech Republic, the MIT screens investments,” said Marek Vošahlík, head of the ministry’s press department.
Under the new EU regulations, banks must report any transfers exceeding 100,000 euros (approximately CZK 2.5 million) to authorities if they involve companies in which Russian legal or natural persons hold more than 40 percent of the capital. This requirement applies to all types of transactions leaving the jurisdiction of the EU or its member states, regardless of the currency involved.
Additionally, the RELEX Working Party of Foreign Relations Advisers, a body under the EU Council, has recently revised the criteria for determining ownership and control of companies with Russian capital. Previously, a sanctioned individual was deemed to control a company if they held more than half of its capital. Now, ownership of just 40 percent is sufficient to meet this threshold, aligning the EU’s stance with that of the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).
Analysts believe that the EU has tightened these regulations to close loopholes exploited by some company owners. The European Commission plans to review the effectiveness of these new measures in December.
Source: Moody’s and CTK
