February 14, 2024

EU adopts rules for Central Securities Depositories’ handling of immobilized Russian assets

On February 12, 2024, the Council of the European Union adopted a decision and regulation to establish clear rules for the handling of immobilized assets and reserves of the Central Bank of Russia and to clarify the obligations of Central Securities Depositories (“CSDs”) that hold them.  More specifically, the decision requires CSDs that hold more than 1 million in CBR assets to account for and manage the extraordinary cash balances that have accumulated in connection with EU restrictive measures separately and to keep any related revenues separate.  CSD’s are also prohibited from disposing of their ensuing net profits.  Each CSD may also request its supervisory authority to authorize the release of a portion of those net profits in an effort to comply with statutory capital and risk-management requirements.

The Council reported that its decision is in line with statements made by G7 leaders in December 2023 who acknowledged the need to address extraordinary revenues held by private entities associated with Russia’s immobilized sovereign assets, with the goal of directing them to support Ukraine and its recovery and reconstruction.  According to the Council, jurisdictions of G7 partners, the European Union, and Australia have immobilized approximately € 260 billion in securities and cash, with more than two thirds of these assets held in the EU.

Council of the EU Press Release | Council Decision (CFSP) 2024/577