European Commission - on confiscation of frozen Russian assets: joint decision to be made

European Commission - on confiscation of frozen Russian assets: joint decision to be made

The EU is determined to ensure that Russia pays for the damage caused to Ukraine

Given the latest, encouraging news about possible compensation for damage by the aggressor at the expense of its blocked assets, Ukrinform asked the European Commission's Directorate-General for Justice for details. They assured us that a joint legal decision for EU member states on mechanisms for confiscating frozen Russian assets is expected after the summer vacation. It is quite clear that the decision is already in place, and it has been agreed upon by the EU member states.

The confiscation "cart" is harnessed

Any decision at the European Commission level takes more than a year to be made due to the procedure of coordination with EU member states, so the fact that a legal decision on how to confiscate frozen Russian assets is being prepared in September demonstrates the EU's political will to achieve justice for Ukraine.

According to the European Commission's Directorate-General for Justice, with the help of the Freeze and Seize task force, EU member states have frozen about EUR 24.3 billion in private assets belonging to Russian and Belarusian oligarchs and companies. It is also known about more than EUR 200 billion of "immobilized" assets of the Russian Central Bank (which are subject to a ban on transactions).

The press office of the European Commission told Ukrinform that private assets can only be confiscated if there is a link to criminal activity established on the basis of current EU law.

"It is important to emphasize that freezing in the context of sanctions and seizure/confiscation of assets in the context of court proceedings are different measures. At this stage, frozen private assets cannot be confiscated simply because they belong to individuals and entities subject to EU sanctions.

However, if there is a link to criminal activity, these assets can already be confiscated by Member States on the basis of existing criminal law regimes, which are largely already harmonized at the EU level," the statement said at Ukrinform's request.

The European Commission has offered member states various options for possible actions to confiscate frozen assets, both private and sovereign. "It is now up to the EU member states to discuss and decide on the best way forward, and the discussion is progressing well - we want to see a legal proposal after the summer break. The EU is determined to ensure that Russia pays for the damage it has done to Ukraine," the European Commission's press office commented.

In order to ensure the enforcement of EU sanctions and effective confiscation of assets, in December last year, the Commission adopted a proposal to harmonize crimes and penalties for violations of EU sanctions. This decision is related to the implementation of the Asset Recovery and Confiscation Directive, which the Commission presented on May 25, 2022.

Once finalized, this package will expand confiscation options in EU member states, allowing them to dispose of confiscated proceeds in accordance with their national laws.

An interim solution is to give Ukraine the revenues generated by the aggressor's money

Also at the recent EU summit, European leaders supported a plan to introduce a tax on windfall profits from frozen Russian assets, derived from the assets of the Russian central bank worth more than EUR 200 billion. It is planned to be used to help restore Ukraine, so the initiators will seek political support from the key G7 countries.

At the same time, European Commission President Ursula von der Leyen denied the European Central Bank's concerns that the withdrawal of income from frozen Russian assets would harm the euro or financial markets. She noted that after the Western allies first raised the question of seizing Russian assets last year, there was no negative market reaction. "That was a long time ago, and the reaction of the markets was very calm," von der Leyen said. - "This shows that everyone is well aware of the prudent approach we are taking".

In the meantime, the President of the European Commission said that the Commission will continue to work on the tax on profits earned from Russian state assets worth more than EUR 200 billion. According to the EU plan, European securities depositories such as Euroclear, where Russian assets are kept, will be obliged to contribute by contributing profits earned from reinvesting income from immobilized assets. This proposal would not involve the seizure of the assets themselves, but would allow the EU to raise billions for Ukraine's recovery.

Oleksandra Klitina. Kyiv

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