Newsletter of the main news 23.08/29.08

1️⃣ Frozen Russian assets

   The US and the EU are close to providing Ukraine with a $50 billion loan to be repaid from future proceeds of frozen Russian assets. In our previous digests, we mentioned that the EU faced difficulties in disbursing this loan, as the US had doubts about the EU's continuation of its sanctions policy against Russia.

   Now, the US is ready to provide $20 billion if the EU updates its approach to extending sanctions against Russia. If the sanctions legislation does not change, the amount will be less. 

   At the same time, the international arena is actively discussing the financing of Ukraine's recovery through frozen Russian assets. Canadian Finance Minister Chrystia Freeland expressed confidence that Ukraine will start receiving funds from frozen Russian assets soon. According to her, only technical aspects of this process are being discussed. In addition, Japanese Ambassador Kuninori Matsuda said that his country is working with G7 partners to provide external loans from frozen assets to accelerate financial inflows to Ukraine.

   This support is confirmed by other G7 countries, which in a joint declaration adopted on September 25 in New York pledged to use the proceeds of frozen Russian assets to rebuild Ukraine. The participants of the declaration also emphasized that Russian assets will remain frozen until Russia stops its aggression and compensates for all the damage caused to Ukraine.

   It is worth recalling that Denmark has demonstrated confidence in the long-term freezing of Russian assets, as the country is investing a total of DKK 4.2 billion ($628 million) in the Ukrainian defence industry. For this purpose, Denmark will raise funds from Russian frozen assets.

   The European Union does not plan to limit Ukraine's use of the €35 billion loan provided by the European Commission. Vice President of the European Commission Valdis Dombrovskis noted that the frozen Russian assets will partially serve as collateral for this loan. 

2️⃣ International sanctions policy

🔸Introduction of new sanctions against Russia

   The US has expanded sanctions against Russia to cover virtual financial transactions. PM2BTC and Cryptex platforms, as well as Russian citizen Sergey Ivanov, who is associated with Cryptex, were subject to restrictions for money laundering and cybercrime. The US State Department is offering up to $10 million for information leading to Ivanov's arrest.

   The United Kingdom has imposed new sanctions on five ships and two shipping organisations involved in Russia's liquefied natural gas (LNG) sector. These measures are aimed at limiting Russia's plans to increase its share of the global LNG market from 8% to 20%, which is an important source of funding for the war against Ukraine. The sanctions targeted the vessels Pioneer, Asja Energy, Nova Energy, North Sky and SCF LA PEROUSE, bringing the total number of sanctioned vessels to 30.

   On September 24, New Zealand's Foreign Minister Winston Peters announces the extension of sanctions against Russia and Belarus in response to the invasion of Ukraine. The sanctions targeted five individuals and six organisations, including those involved in the occupation of the Zaporizhzhia nuclear power plant and the Russian military-industrial complex, as well as Belarusian figures who support the aggression. New Zealand, along with its international partners, is committed to holding all those who support the war accountable and has already imposed sanctions on more than 1,700 individuals and organizations since 2022.

🔸Bypassing sanctions

   For the first time, the UK has issued a fine for violating sanctions against Russia. Integral Concierge Services received a fine of £15 thousand for providing property management services to a person under sanctions whose assets were to be frozen. In the period from 2022 to 2023, ICSL made or received 26 payments related to these services, knowingly violating UK financial sanctions. The company did not appeal the decision and paid the fine in full, which was the first such practice for the UK Financial Sanctions Authority.

   The Netherlands reached a settlement agreement with an Amsterdam-based company and its director suspected of violating the Sanctions Act. The prosecution alleged that the company had illegally paid millions in dividends and a loan to Russian companies associated with sanctioned persons. As part of the out-of-court settlement, the company will pay €195 thousand to the state and its director will pay €20 thousand. 

3️⃣ Sanctions policy of Ukraine

   On September 20, 2024, the HACC ruled in favor of the claim of the Ministry of Justice of Ukraine to impose sanctions on Mikhail Gorilovsky and his business partners Viktor Buyanovsky and Andrey Menshov, founders and top managers of the Russian Poliplastik group of companies. The court's decision ordered the seizure of these individuals' assets in favor of the state because they supported Russia's aggressive policy. The companies of the Poliplastik group supplied products for the construction of sewage facilities in occupied Crimea, developed polymeric materials for small arms, and cooperated with the Russian military-industrial complex.

   As a result of the court decision, corporate rights to several companies that were part of the Ukrainian part of the Polyplastik Group were seized. In particular, the authorized capital of Eurotrubplast Trading House LLC, Kalush Pipe Plant and Rubizhne Pipe Plant, Polimerteplo-Ukraine LLC, as well as shares in Ukrainian Polymer Group LLC and Cordflex LLC.

   In addition, the HACC upheld the claim of the Ministry of Justice to impose sanctions in the form of asset forfeiture to the state on the assets of Alisher Usmanov's USM Group. The court ruled to recover assets, including iron ore products in the amount of more than 165 thousand tons and 100% of the authorized capital of Peter-Service Ukraine LLC, into the state's revenue. The defendants supported Russia's aggressive policy by supplying products to the Russian defence industry, providing telecommunications services to the Russian military and sponsoring propaganda.

   Also, the HACCU Appeals Chamber upheld the appeal regarding the recovery of assets of Royal Pay Europe LLC to the state. As a result, cash of more than UAH 53 million, US dollars, euros and domestic government bonds in the amount of more than UAH 1.75 billion, together with income from these assets, were recovered. The appeal of Royal Pay Europe LLC against the decision of the first instance on asset recovery was dismissed.

   At the same time, the Ministry of Justice of Ukraine filed a lawsuit with the HACC to impose sanctions on Russian businessmen Mikhail Fridman, Petr Aven, Andrey Kosogov and Rissa Investments Limited. The Ministry is seeking to recover assets, including 82% of shares in Alfa Insurance and stakes in several companies, such as Alfa-Leasing Ukraine and Parity Finance, as well as 100% of shares in Myrhorod Mineral Water Plant and other companies indirectly owned by the above-mentioned individuals and Rissa Investments Limited.