Newsletter of the main news 31.03/13.04

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Date

15 Apr 2025

1️⃣ Frozen Russian assets

Estonian Foreign Minister Margus Tsakhkna supported the confiscation of frozen Russian assets worth €240 billion located in Europe. According to him, these funds should not be used against European countries, as their transfer to Russia could pose a threat not only to Ukraine but also to Europe. Tsakhkna emphasized the need for a legal process of asset confiscation, including support from Belgium, where the assets are stored. It is important to ensure that even without a unanimous decision in the EU, this money does not go to Russia, but remains in European countries.

As of March 2025, Switzerland has frozen $8.38 billion worth of Russian assets, which is $1.81 billion more than a year ago. This increase is due to money laundering investigations and additional asset freezes. Last year, criminal proceedings were opened on suspicion of violating sanctions and money laundering, resulting in the temporary freezing of CHF 1.65 billion. At the same time, 60 million francs (approximately $67 million) were unblocked due to non-compliance with legal requirements.

President Volodymyr Zelenskyy said that Russia is trying to withdraw $300 billion of frozen assets by offering various countries to buy products, including high-tech ones, with these funds. Zelenskyy emphasized that in this way Russia is trying to use these funds as a “cunning bribe.” He noted that the frozen assets remain in Europe, and European countries do not intend to return them, as these assets are an important part of the sanctions against which Russia is actively fighting.

Spain has proposed to create a new defense fund to finance European projects and support Ukraine using the frozen assets of the Russian central bank. Spanish Economy Minister Carlos Cuerpo called on the EU to create a temporary instrument to provide non-refundable grants to countries, particularly those in the east, that are most exposed to the Russian threat. Part of the €200 billion in frozen assets could be used to finance military projects for Ukraine. European Commissioner for Economic Affairs Valdis Dombrovskis noted that the European Commission is ready to explore new ways to implement this tool.

Ukraine plans to use frozen Russian assets to cover the budget deficit in 2026 if it gets access to them. NBU Governor Andriy Pyshnyi said that thanks to the support of its partners, Ukraine avoided emission financing of the budget in 2023-2024. He emphasized the importance of access to these assets to compensate for losses estimated at $176 billion, while the total cost of the country's recovery is $524 billion.

PACE called for the creation of an international trust fund to manage frozen Russian assets to support the victims of Russian aggression. The Assembly also asked the EU to quickly reach a political agreement on the launch of a Special Tribunal for Putin and to provide the necessary resources for its work. The resolution emphasizes the importance of establishing an international compensation mechanism to compensate Ukraine for its losses through the formation of a compensation fund to be filled with frozen Russian assets.

The European Union will provide Ukraine with another €2.1 billion in aid, derived from the proceeds of the frozen assets of the Russian Central Bank. This is the second tranche of such assistance. The European Commission has confirmed that although the assets remain frozen, their proceeds are used to support Ukraine. The funds will be channelled through the European Peace Facility and the Fund for Ukraine to strengthen the country's defense and reconstruction. Future tranches will be used to secure the repayment of funds under the G7's $50 billion loan initiative.

Since Russia's invasion of Ukraine, the Russian Elites Task Force (REPO) has frozen more than £48 billion of Russian assets worldwide, of which more than £18 billion has been frozen by the United Kingdom. The UK is taking a leading role in this process. UK Security Minister Tom Tugendhat emphasized that the country continues to work with international allies such as Australia, Canada, France, Germany, Italy, Japan, the United States and the European Commission to increase financial pressure on Russia and its elites, defending global democracy and fighting authoritarianism.

The European Union has transferred €1 billion to Ukraine under the Extraordinary Revenue Acceleration (ERA) initiative, part of the G7 program funded by the proceeds of frozen Russian assets. This is the third tranche of this initiative, bringing the total amount provided by the EU under the ERA program to €5 billion. The funds will be used to cover priority state budget expenditures. The Prime Minister of Ukraine Denys Shmyhal emphasized that the main task is to fully confiscate the frozen Russian sovereign assets to be used in the country's recovery. The G7 initiative envisages providing Ukraine with $50 billion, of which the EU will provide $20 billion.

Spain has proposed to create a new defense fund to finance European projects and support Ukraine using the frozen assets of the Russian central bank. Spanish Economy Minister Carlos Cuerpo called on the EU to create a temporary instrument to provide non-refundable grants to countries, particularly those in the East, that are most vulnerable to the Russian threat. The fund will be financed by contributions from member states and the European Stabilization Mechanism. Part of the frozen assets worth €200 billion can be used for military projects in favor of Ukraine. European Commissioner Valdis Dombrovskis confirmed the European Commission's readiness to explore new ways to implement this instrument.

2️⃣ International sanctions policy

The United States imposed new sanctions against Russia, including four individuals and three legal entities, as well as one bulk carrier. The formal reason for the sanctions is counterterrorism, but all of the individuals on the list are linked to the theft of Ukrainian grain from the temporarily occupied territories and its delivery to Yemen. The list includes Yuriy Belyakov, Vyacheslav Vidanov, Sohrab Gairat, Ushang Gairat, as well as Edison, Kolibri Group, Sky Frame, AM Asia M6 Ltd, and the Russian-flagged bulk carrier AM Theseus. At the same time, Katerina Rotenberg, the wife of Russian billionaire Boris Rotenberg, was removed from the sanctions list without any explanation from the US Treasury.

Finnish President Alexander Stubb expressed support for the package of sanctions against Russia proposed by US senators, emphasizing that without maximum pressure, Moscow would continue to delay peace talks. He called this bipartisan package of sanctions, initiated by Senators Lindsey Graham and Richard Blumenthal, an ambitious and important step towards achieving a just and lasting peace. Stubb emphasized that the sanctions, along with a clear deadline for a ceasefire, will be an important tool to stop Russia's aggression.

The Court of Justice of the European Union has rejected the claims of Russian billionaire Gennady Timchenko and his wife Yelena to lift EU sanctions. The couple sought to have the obligation to report on their assets under the jurisdiction of the European Union lifted. The European Court of Justice in Luxembourg ruled that the EU Council had the right to impose such an obligation on all persons on the sanctions list.

In Germany, the debate over sanctions against Russia continues, with some politicians calling for their revision or lifting. However, Deputy Government Spokesperson Christiane Hoffmann defended the existing European sanctions, calling them justified and effective. The German Foreign Ministry also supports this position, emphasizing that it is up to Russia to end the war that caused the sanctions. These statements came after criticism from the Prime Minister of Saxony, Michael Kretschmer, who opposed Germany's categorical refusal to ease sanctions, calling them “outdated” and not in line with recent US actions.

Germany, France, Italy, Poland, Spain, and the United Kingdom have expressed their readiness to strengthen sanctions against Russia to prevent its war against Ukraine. They emphasized the need to freeze Russian assets until the war is over and compensate Ukraine. The ministers also emphasized that no peace agreement would be accepted if it restricts Ukraine's defense industry or the presence of partners.

The EU ambassadors expressed strong support for continuing work on the 17th package of sanctions against Russia, although the details and timing of the sanctions package remain unknown. According to an anonymous source among senior EU officials, the ambassadors urged the European Commission to start effective work on the package, emphasizing the clear and strong position of the 26 EU member states in supporting Ukraine, particularly after Russia's recent crimes and changes in the geopolitical context.

Lithuania plans to introduce national economic sanctions against Russia and Belarus if the EU does not extend its sanctions. Lithuanian lawmakers are discussing amendments to the law on restrictive measures that would allow for sanctions to be imposed if the EU fails to extend its restrictions. These sanctions would include restrictions on funds and resources of individuals and legal entities supporting the war in Ukraine. The proposal, prepared by the Lithuanian Ministry of Foreign Affairs, is currently being discussed for registration in the parliament.

Clients of the Russian branch of the US Citibank have started receiving coupon payments on frozen assets after the Belgian Ministry of Finance granted permission to withdraw the blocked funds. The sanctions imposed in June 2022 against Russia's National Settlement Depository led to the freezing of about $300 billion in sovereign assets. The payments relate only to Citibank's clients' funds in Russia through the Euroclear system, as most Russian banks are unable to carry out such transactions due to sanctions.

US President Donald Trump signed an executive order extending for a year the sanctions against Russia imposed in April 2021 for the Russian government's harmful foreign activities and expanded after the invasion of Ukraine. Executive Order 14024 declared a national emergency, which allows for the imposition of sanctions against individuals and companies that threaten US national security. Trump noted that the United States retains the ability to impose additional sanctions if Russian President Vladimir Putin does not fulfill his obligations.

3️⃣ Violation and circumvention of sanctions

Oleg Patsulya, a Russian citizen, was sentenced to 70 months in prison for organizing a large-scale scheme to illegally export aviation technology to Russia. He and Vasily Besedin (who received two years in prison) bought parts for Boeing 737 aircraft and shipped them through offshore companies, deceiving American suppliers. They managed to earn more than $4.5 million by using Turkish banks to transfer money. The court also confiscated almost $4.5 million from Patsula, including a luxury car and a personal boat.

On March 25, 2025, the Spanish Council of Ministers approved a draft law transposing EU Directive 2024/1226, which criminalizes violations of EU sanctions. This draft law significantly changes the approach to sanctions by introducing new criminal offenses into the Spanish Criminal Code for individuals and legal entities that violate EU sanctions. The penalties include up to 6 years in prison, fines and confiscation of assets, and for legal entities - fines of up to 5% of the total global turnover. It is also planned to establish a coordination commission for more effective application of sanctions. The law is to be implemented by May 20, 2025, and the draft law is under consultation until April 9, 2025.

Lithuania will auction off confiscated trucks and fire trucks that were detained for evading sanctions. Lithuanian Prosecutor General Nida Grunskene confirmed that 17 milk trucks and 17 fire trucks that were detained in Klaipeda in 2023 will be sold. The milk trucks were supposed to go to Cuba and the fire trucks to Zimbabwe. Grunskene hopes that the vehicles will be purchased and transferred to Ukraine.

On March 1, 2025, searches and seizures of assets worth more than €7.8 million were conducted in Germany as part of two investigations into sanctions violations and tax evasion. The suspects purchased and resold cars without paying taxes, including exporting them to Russia. As a result, high-value assets, including cars, watches and paintings, worth more than €4 million were seized. Three suspects, including two men aged 58 and 81, are accused of exporting more than 150 cars to countries bordering Russia in violation of sanctions. The investigation is ongoing.

In its annual report, the Swiss Attorney General's Office reported on two ongoing cases related to sanctions violations. The first case involves the freezing of assets worth CHF 1.3 billion in connection with suspected violations of sanctions imposed on a designated person, with searches of eight properties in the cantons of Lucerne, Zug and Nidwalden. The second case concerns the violation of sanctions by a Swiss company through its subsidiaries abroad, but the details of this case remain limited.

Between January and March 2025, HM Revenue and Customs (HMRC) agreed to comprehensive fines totaling £3.7 million for three UK exporters for export license violations relating to unlicensed exports of military goods. The fines were imposed under the Export Controls Order 2008 and the Customs and Excise Act 1979, but are not related to sanctions violations. The settlements include fines of £10,900 in January, £431,232 in February and £3,231,762 in February 2025. HMRC resolves violations through comprehensive settlements rather than prosecution, provided that companies do not attempt to evade scrutiny.

Dmitry Ovsyannikov, the former governor of Sevastopol, became the first person to be convicted of violating UK sanctions. He was found guilty of sanctions violations and money laundering after receiving £76,000 and a Mercedes car from his relatives. Ovsyannikov has been under sanctions since 2017 for his role in the illegal annexation of Crimea. His brother, Oleksiy Ovsyannikov, was also convicted of helping to circumvent sanctions, including buying a car for Dmitry. This decision is an important signal of the effectiveness of the UK's sanctions enforcement, and the UK government continues to increase pressure on Russian oligarchs who support the war in Ukraine.

US Senators propose a bill that would allow the confiscation of oil from tankers on the US Treasury's “blacklist” of the US Treasury Department. The proceeds will be used to repay the national debt. The bill provides for the creation of a fund to monitor sanctions with a budget of $150 million, as well as expanding intelligence sharing and providing law enforcement agencies with new tools to combat illegal oil trade. As of the end of January, 200 tankers were under US sanctions, transporting oil from Russia in violation of sanctions, including the price ceiling set by the G7 countries. One such tanker, the Eventin, was confiscated by Germany in March with 100,000 tons of oil on board.

On April 11, 2025, Estonia detained the oil tanker Kiwala, part of Russia's shadow fleet. The vessel, which was heading to the port of Ust-Luga without cargo, violated sanctions because it was sailing without a flag. The tanker is subject to sanctions imposed by the EU, Canada, Switzerland and the UK. During the inspection, it turned out that the tanker was not registered under the flag of Djibouti, but was operated by Tirad Shipping Inc from Mauritius.

4️⃣ Sanctions policy of Ukraine

The HACC upheld the claim of the Ministry of Justice against Russian oligarch Oleg Deripaska and RUSAL. The court ruled to recover from them more than 440 thousand tons of bauxite and 110 thousand tons of alumina, worth more than UAH 2 billion. The assets belonged to RS International GmbH, a Swiss company controlled by the sanctioned persons. The decision also includes the recovery of the right to claim under the tolling agreement, which provides for the import of bauxite to Ukraine.

On April 9, the court ruled in favor of the Ministry of Justice of Ukraine, satisfying the claim to recover the assets of the sanctioned enterprise Belaruskali OJSC into the state's revenue. The company, which is a leading producer of potash fertilizers in Belarus, was involved in financing the war against Ukraine through cooperation with Russian military-industrial complex enterprises and support of the occupation administrations of the DPR and LPR. The court recovered more than 70 thousand tons of potassium chloride, over UAH 250 million in cash, 1,545 railway cars, and 48% of the authorized capital of AGROZKVIT LLC in favor of the state.

Volodymyr Zelenskyy signs a decree imposing sanctions on four individuals, including politicians and businessmen, including Serhiy Arbuzov, Andriy Kliuyev, Viktor Polishchuk, and Aliona Shevtsova. The sanctions include the freezing of assets and the suspension of economic activity in Ukraine. Kliuyev was under US sanctions back in 2015, but Ukraine made this decision only almost 10 years later. Polishchuk had ties to the Russian Federation and debts to Ukrainian state-owned banks, while Shevtsova's business structures were involved in tax evasion schemes in the gambling business.