It is estimated that around €300bn in Central Bank of Russia assets have been immobilised across the jurisdictions of the G7, the EU and Australia, with the majority of these assets frozen within the EU. On 12 February 2024, the European Council a decision and a regulation to clarify the obligations of central securities depositories in managing these immobilised assets.

According to the decision, CSDs holding more than €1m in CBR assets are now required to account for extraordinary cash balances that have accumulated due to the EU’s restrictive measures in a separate account and to also keep the revenues generated from these assets distinct. Furthermore, these CSDs are prohibited from disposing of the net profits that ensue from these holdings. The segregation could aid in the imposition of potential future sanctions.

In response to inquiries about the impact of these measures on Luxembourg, a spokesperson from the Luxembourg Financial Sector Supervisory Commission (CSSF), after consultation with the ministry of finance, clarified to Delano that Luxembourg is not currently affected by this regulation. However, as a member of the EU, Luxembourg is expected to participate in discussions and decisions regarding the deployment of immobilised Russian assets in support of Ukraine’s reconstruction efforts, stated the representative.

The EU sanctions on Russian assets were imposed in the wake of Russia’s full-scale invasion of Ukraine in February 2022. These restrictions prohibited transactions related to the management of these assets and reserves, effectively freezing them.

The council said that the decision comes amid repeated calls from the G7 for the use of extraordinary revenues, derived from Russia’s immobilised assets, to aid Ukraine.