Newsletter of the main news 09.12/15.12

1️⃣ Confiscation of Russian assets

Valerie Urben, CEO of Euroclear Ltd. Valerie Urben said that the company will not be liable in case of confiscation of Russian assets if the obligations under them are not properly transferred. Urben stressed that the decision on confiscation should also take into account possible future claims by Russia to avoid a situation where securities disappear and the country demands their return.

Amid active discussions about using the proceeds of frozen Russian assets to support Ukraine, the issue of their full confiscation has once again become relevant. Urbain also warned of potential risks to Europe's financial stability, in particular to the euro's status as a reserve currency, and the possible emergence of non-European competitors to Euroclear if such a scenario were to materialise.

2️⃣ International sanctions policy

The EU ambassadors agreed on the 15th package of sanctions against Russia. The new restrictions include the expansion of the list of individuals and legal entities, and target organisations in Russia and third countries that contribute to the strengthening of Russia's military and technological base by circumventing export restrictions. In addition, the sanctions cover the activities of third-country vessels that help Russia avoid restrictions.

The EU is also preparing the first sanctions against Russia for disinformation and hybrid activities, targeting more than a dozen individuals and three legal entities, including Russian intelligence officers, government officials and media entrepreneurs. The restrictions are part of a new sanctions regime adopted earlier this year to combat Russia's destabilising activities around the world. In addition, the EU is planning to impose sanctions against Belarus on two dozen individuals involved in human rights violations and cooperation with the Lukashenko regime. The decision is expected to be made at a meeting of EU foreign ministers in Brussels.

The Office of the President of Ukraine hopes that the 16th package of EU sanctions will include new restrictions, in particular against Rosatom and a number of sectors of the Russian economy. Vladyslav Vlasyuk, a freelance adviser to the Presidential Office, said that the Ukrainian side is already working with partners to develop a more substantial package of sanctions and expressed hope that it will be adopted quickly next year during Poland's EU presidency. Commenting on the previous 15th package, he noted its positive steps, including sanctions against 50 tankers and dozens of individuals linked to the Russian military-industrial complex, but stressed the need to increase sanctions pressure.

The British government announced new sanctions against the illegal trade in Russian gold to limit the financing of the war against Ukraine. The sanctions include freezing the assets of five individuals involved in smuggling and purchasing gold worth more than $300 million, which has generated significant revenue for Russia. The British Foreign Office stressed that the illegal gold trade fuels corruption, human rights abuses and is used by Russia to launder money and circumvent sanctions, supporting the Kremlin's military actions.

3️⃣  Sanctions circumvention and violation

The UK will help Cyprus fight illicit Russian finances to limit the flow of funds that support Putin's war machine. As part of the partnership, a national sanctions enforcement unit will be established with the support of London to investigate cases of sanctions evasion and track illicit financial flows through Europe. The unit will cooperate with British agencies and share intelligence and experience. Additionally, the UK will provide training for Cypriot customs and law enforcement officials in 2025, strengthening their ability to counter organised crime.

Russia continues to receive thousands of sniper rifles from the United States, the European Union and Turkey, bypassing sanctions through neighbouring countries. Arms supplies to Armenia, Georgia, Kazakhstan, and Kyrgyzstan have increased significantly: according to UN Comtrade, arms exports to these countries increased from 19,500 in 2020 to more than 53,000 in 2023. The largest growth is recorded in arms exports from Italy, the United States, and Turkey, from where significant volumes go to Russia.

Russian Alexei Komov is accused of violating US sanctions for helping oligarch Konstantin Malofeev, who finances Russian aggression in Ukraine. According to the investigation, Komov facilitated the hiring of American Jack Hanik to launch a television network in Russia and organised an illegal transfer of $10 million from the US to Greece to circumvent sanctions. The U.S. Attorney's Office for the Southern District of New York stated that the case is seen as an important step in the fight against undermining national security and financing Russian aggression.

4️⃣ Sanctions policy of Ukraine

The Ministry of Justice of Ukraine filed a lawsuit with the HACC to impose sanctions on Oleksiy Popov, who, after the full-scale invasion of Russia, provided oil supplies to the occupation authorities of Zaporizhzhia and Kherson regions using special vehicles to transport fuel from the occupied Crimea. As part of the lawsuit, the Ministry of Justice seeks to recover in favour of the state vehicles, real estate, corporate rights in Trans Oil 1 LLC, Yug Oil PE, Agropromenergo LLC, as well as funds belonging to O.K. Popov for his aiding and abetting activities to the occupation administrations of the Russian Federation.

The HACCU ruled to confiscate flight control system steering units belonging to the Russian company Rodina Research and Production Association OJSC. This leading Russian enterprise provides development and maintenance of aircraft for the Russian armed forces, supporting the aggression against Ukraine. The decision was made at the request of the Ministry of Justice of Ukraine, and the defendant has five days to file an appeal from the date of publication of the full text of the court decision.

The HACCU Appeals Chamber confirmed the legality of the decision to seize Taisiya Povaliy's assets in favour of the state, finally concluding the case on 12 December 2024. The decision provides for the transfer to the state of 7 land plots in Kyiv region with a total area of 9.3 hectares, a residential building of 442.8 sq m, a household of 101 sq m, two BMW cars, four ammunition devices and property rights to music and lyrics to 9 works. Thus, the assets of the sanctioned person will become the property of the state, and the decision has entered into force and is not subject to appeal.