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Bypassing Sanctions: Hide ‘n Seek in Tax Havens?

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  • Dominika Langenmayr
  • Mikayel Tovmasyan
  • Sebastian Vosseler

Abstract

Are sanctions bypassed by hiding money offshore? Using bilateral data on bank deposits, we compare how offshore deposits from sanctioned versus non-sanctioned countries develop after the U.S. and the EU impose financial sanctions. Sanctions targeting individuals increase offshore deposits, as (potential) targets attempt to hide their funds. Broader financial sanctions reduce offshore (and other foreign) deposits, as money is repatriated. A synthetic control case study of Russia following the annexation of Crimea confirms our main findings, showing a 15% post-sanction increase in offshore deposits. These findings highlight the limits of symbolic sanctions and the need for secondary sanctions and financial surveillance.

Suggested Citation

  • Dominika Langenmayr & Mikayel Tovmasyan & Sebastian Vosseler, 2025. "Bypassing Sanctions: Hide ‘n Seek in Tax Havens?," CESifo Working Paper Series 12086, CESifo.
    • Handle: RePEc:ces:ceswps:_12086
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    JEL classification:

    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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