Euroclear, a Brussels-based depositary and clearing house, has confirmed its plans to confiscate interest generated by frozen Russian funds it holds and transfer the money to Ukraine. This announcement comes after months of deliberations among EU and G7 nations about how to use billions of dollars belonging to Russia’s central bank that were immobilized as part of Ukraine-related sanctions.
According to a statement released on Friday, Euroclear will make its first payment of €1.55 billion to the European Fund for Ukraine in July 2024 following the recent implementation of the EU regulation on the windfall contribution. The financial results report for the first half of 2024 revealed that frozen Russian assets generated €3.4 billion ($3.7 billion) of the €4 billion ($4.36 billion) interest accrued by the clearing house during the six-month period.
Euroclear stated it will continue diligently implementing international sanctions on Russian assets and has put aside a portion of the windfall as a buffer against current and future risks. The remainder, totaling €836 million ($910 million), will be paid to Belgium in corporate taxes.
The EU immobilized around €210 billion ($229 billion) of sovereign assets belonging to Russia’s central bank as part of sanctions imposed on Moscow over the conflict in Ukraine. The majority of these funds are held in the privately-owned depository, which previously reported that the assets had generated roughly €4.4 billion ($4.8 billion) in interest last year.
In June, the EU Foreign Affairs Council announced it would make windfall profits from immobilized Russian funds available to Ukraine, with the first tranche used to purchase ammunition and air-defense systems. Another €1 billion is expected to be transferred by the end of the year. Some G7 members, such as the US and the UK, had been pushing for the outright seizure of Russian assets; however, concerns over the legality of such a move led to a decision to use the interest generated by the funds instead.
Russia has repeatedly warned that any actions taken against its assets would amount to “theft,” insisting that seizing the funds or similar moves would violate international law and lead to retaliation. Kremlin spokesman Dmitry Peskov also cautioned this week that “illegal attempts to rob the Russian Federation” would cause significant damage to the international financial system.