Newsletter of the main news 28.10/03.11

1️⃣ Utilisation of frozen Russian assets

Japan will provide Ukraine with more than $3 billion as part of a $50 billion joint loan program of the G7 countries financed by frozen Russian assets. The Japan International Cooperation Agency will disburse the funds through a World Bank fund, with the condition that they will not be used for military purposes. Payments will begin in December 2024 and continue until the end of 2027, with a maturity of at least 30 years.

The European Commission is considering authorizing the Euroclear depository to use frozen Russian assets to secure a G7 loan to Ukraine to protect it from potential Russian sanctions. The proceeds from the frozen assets could be used to cover the €45 billion loan to Ukraine. Euroclear already allocates 10% of its revenues to legal costs related to frozen assets, and the direct use of some of the assets could help cover the costs.

Officials consider the move to be cost-effective, but critics question its compliance with international law. Earlier, the European Central Bank and Western financial institutions warned that the confiscation of Russian assets could negatively affect the Eurozone's reputation as a financial centre and undermine confidence in the euro as a reserve currency.

The Helsinki District Court has seized Russian assets in Finland at the request of Naftogaz of Ukraine. The decision concerns real estate and other assets worth tens of millions of dollars and is part of Naftogaz's global strategy to seek compensation for losses caused by the seizure of assets in Crimea, according to the Hague arbitration. This is the first successful seizure of Russian assets outside of Ukraine aimed at actual recovery in favour of Naftogaz, which plans to continue similar actions in other countries where Russian assets are located.

2️⃣ Sanctions regimes and cases of their circumvention

The United Kingdom has imposed new sanctions on several Russian agencies and officials for spreading disinformation to destabilise Ukraine. Among the sanctioned companies are the Russian IT firm Social Design Agency and its partner Structura, which, with the support of the Russian authorities, have been trying to influence democratic processes and incite protests in Europe. British Foreign Secretary David Lammy emphasized that the sanctions demonstrate the country's determination to counter the lies and interference spread through a network of fake websites, diplomatic fakes, and forged documents.

The United States also imposed new sanctions on 275 individuals and organizations that facilitate the supply of advanced technology and equipment to Russia, as well as on 20 Russians. The sanctions target evasion networks operating in 17 countries, including China, India, Switzerland, Thailand, and Turkey. The restrictions include high-ranking officials of the Russian Defense Ministry and heads of leading companies, including JSC Transmashholding and subsidiaries of Rosatom - Rosatom Infrastructure Solutions, Zvezda, Angstrem, and tire manufacturer Cordiant. The U.S. Department of Commerce also added about 40 foreign companies to the list of restrictions to stop illegal supplies to Russia.

Switzerland has partially joined the EU sanctions against Belarus, adopted in June 2024, aimed at preventing the circumvention of sanctions. Since October 31, investments in the energy sector of Belarus, as well as imports of gold, diamonds, coal, and oil, have been banned. In addition, exports of luxury goods, goods for the oil industry, aviation fuel, and goods for maritime transport are prohibited. At the same time, Switzerland did not support all EU restrictions, including the requirement to ensure that subsidiaries in third countries do not violate sanctions, and did not impose restrictions on road transportation through the EU for Belarusian vehicles.

Latvia has consistently supported the EU sanctions against Russian and Belarusian individuals and companies, having blocked the assets of 147 sanctioned individuals. Deputy Head of the Financial Intelligence Service Paulis Ilienkovs emphasized that more than 80 million euros have been frozen, including 102 real estate objects, 80 vehicles and significant funds in bank accounts. He also rejected The Insider's accusations of circumventing sanctions through Latvia, calling the article biased and unconfirmed.

As evidence, the State Revenue Service (SRS) of Latvia has opened 94 additional criminal cases this year for violating sanctions against Russia and Belarus, confirming the tightened control. According to SRS Deputy Director General Raimonds Zukuls, the number of cases for sanctions violations this year is likely to exceed last year's, and the total number of criminal proceedings has already reached more than 300.

Latvia also failed to sell the Russian House at an auction held on November 2 for the second time. The primary reason for this sale was a Saeima resolution aimed at eliminating threats to national security - in January 2024, the building was transferred to state ownership. Despite the initial price of €3.57 million, the first auction in August did not find any buyers, so in October it was reduced by 20%. At the second auction, the price was €2.86 million, but this time there were no buyers either. Now it is proposed to reduce the price by another 10%, and a new auction is likely to be held on November 8 with a starting price of €2.5 million.

In Nuremberg, Germany, a citizen of Russia and Kyrgyzstan was detained on suspicion of violating sanctions by supplying technical equipment, including satellite dishes and sonars, to Russia. Investigators conducted searches in several cities, including Nuremberg and Frankfurt am Main, suspecting that the man used a German company to purchase the equipment and was part of a larger network.

Lithuanian customs officers seized 13 used cars worth more than €200 thousand that a Klaipeda-based company was trying to illegally export to Russia and Belarus in violation of international sanctions. Employees of the Klaipeda Customs Office found that the company had entered false information in customs declarations to circumvent control and conceal the real owners and buyers of the cars. A pre-trial investigation was opened against two suspects in the company for smuggling and attempts to circumvent sanctions.

3️⃣ Ukraine's sanctions successes

On October 29, 2024, the HACCU partially satisfied the claim of the Ministry of Justice of Ukraine to recover Russian assets to the state. In particular, the corporate rights of 15 Ukrainian companies owned or controlled by Volodymyr Lukyanenko were recovered as state revenue. These companies include Sumy Plant of Pumping and Power Engineering Nasosenergomash, Sumy Machine-Building Research and Production Association, and others, as well as an apartment and a rifle belonging to Lukyanenko.

At the same time, the court refused to seize Volodymyr Lukyanenko's movable and immovable property, as well as his shares in several companies, including 100% of the authorized capital of Yubileiny Hotel Complex LLC. The Ministry of Justice plans to appeal this part of the decision to the Appeals Chamber of the High Anti-Corruption Court.