Frozen Russian Assets Face Confiscation: Implications for Russian Passport Holders

Following the outbreak of the war in Ukraine in 2022, approximately €180 billion in assets belonging to the Central Bank of Russia were frozen in accounts held by the Belgian custodian Euroclear. An additional €25 billion is held in accounts of private individuals in banks and brokerage firms across Europe.

In February 2024, the European Council resolved to use the income derived from the investment of these frozen assets to support Ukraine’s reconstruction efforts. According to publicly available data, approximately €10 billion has already been transferred for this purpose.

Recent Developments: EU’s Plan for Asset Confiscation

Now, amid deepening political and financial challenges, the European Union is considering a more extensive measure—the potential use of the frozen assets themselves to finance additional assistance to Ukraine. The European Commission has developed a plan outlining the use of the liquid balance of these assets, estimated at approximately €140 billion.

Under the proposal, the redeemed Russian assets would be replaced by short-term, zero-coupon EU bonds, while the released funds would be transferred to Ukraine as interest-free “reparations loans.” These loans would be conditional upon the implementation of reforms and would become repayable only if Russia ceases hostilities and compensates Ukraine for damages incurred.

Should the EU approve this plan, private assets held in European financial institutions—including those belonging to Israeli citizens holding Russian passports—may also face potential risk of similar treatment.

Implications and Recommendations: Risks for Russian Passport Holders

It is important to note that not all restricted assets were frozen in Euroclear. For example, in 2022, American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs) for Russian shares—including those of Sberbank, Gazprom, Lukoil, and other major Russian companies—were delisted from exchanges. This action rendered the sale of these instruments on foreign markets impossible and resulted in the freezing of investors’ assets.

As we have previously noted, several legal and procedural mechanisms have been developed in recent years to facilitate the unfreezing of investors’ assets. Many investors have already submitted required documentation to banks and regulators in attempts to regain access to their funds. Nevertheless, numerous individuals remain unable to access their assets since 2022—preventing them from collecting income or rebalancing their portfolios amid evolving market conditions.

In light of these evolving regulatory and geopolitical risks, we recommend that holders of frozen assets seek tailored legal and financial counsel. Professional guidance can help assess effective strategies for engaging with European financial institutions and regulators, identify pathways for asset release, and protect financial interests in this rapidly changing environment. Early consultation with domain experts may significantly increase the likelihood of successful asset recovery and prevent further losses.

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Adv. Andrey Yanai is a partner in the firm’s Regulation Department.

Our firm’s Regulation Department offers comprehensive expertise across Israeli regulatory frameworks. We advise domestic and international clients on complex matters in banking, finance, privacy protection, life sciences, environmental quality, and numerous other sectors. With our deep understanding of legislative developments and enforcement trends, we deliver practical, business-oriented solutions—from licensing processes to regulatory compliance and representation before authorities. We serve as the trusted partner for foreign companies entering the Israeli market, providing tailored legal opinions, strategic guidance, and hands-on regulatory assistance.