Introduction
On the eve of the anniversary of the Russian invasion of Ukraine, the question of what we should do with the approx US$300 billion of Russian Central Bank assets and US$30 billion of assets of Oligarchs & Officials close to the Russian leadership estimated as immobilised and or frozen in Western countries, is being actively considered.
Whilst it’s a more than a reasonable suggestion that these assets should be used to aid Ukraine in its defence and for future reconstruction once Russia is defeated, decisions as to whether this is legally possible and can be achieved is actively being discussed in Washington, Ottawa London, Tokyo, Canberra, Bern and Brussels in particular. Also whether the answer is different for funds immobilised from the Russian Central Bank or from assets seized from private persons such as Russian Oligarchs and or officials is yet to be clarified.
With estimates of up to US$750 billion for the amounts needed to rebuild Ukraine, attention on the US$330 billion has never been greater. Still whatever is decided, how much is immobilised and or frozen and by whom is less clear than it appears and may be as important to clarify this in order to decide what could be done with these funds.
Executive Summary
On 29th June 2022, The Russian Elites, Proxies, and Oligarchs (REPO) Task Force reported, blocked or frozen sanctioned Russians’ assets of more than US$30 billion and the immobilisation of about US$300 billion worth of Russian Central Bank assets. It’s members include the USA, Australia, France, Canada, Germany, Japan, Italy, the UK and the European Commission.
On 30th November 2022, EU Commission President Ursula Van der Leyen, made a statement that, “the damage suffered by Ukraine is estimated at €600 billion. Russia and its oligarchs have to compensate Ukraine for the damage and cover the costs for rebuilding the country. And we have the means to make Russia pay. We have blocked €300 billion of the Russian Central Bank reserves and we have frozen €19 billion of Russian oligarchs’ money.”
It is assumed and consistent with other reporting and public statements that the EU Commission President was referring to the REPO countries when using we for the blocked Central Bank assets and the EU when referring to the freezing of Russian oligarchs money.
Still are these figures accurate, and where are the assets frozen?
In this paper, after piecing together publicly available information, it appears that the Russian Central Bank assets frozen could be overstated and the assets frozen against the Russian oligarchs understated. Greater clarity on REPO countries asset freezes is called for to address this uncertainty.
For example as regard assets frozen related to sanctioned Russian oligarchs & officials:
- The UK reported that, “£18.39 billion (US$22 billion/€20.7 billion) of Russian assets had been frozen, but it is not clear whether this includes Central Bank of Russian assets or is made up of Russian oligarchs and officials assets.
- The EU reported it had frozen Russian assets worth a total of €21.5 billion.” (US$23 billion). It is believed this doesn’t include Central Bank of Russian assets. From publicly available information €17 billion can be mapped to EU countries with just 8 countries reporting at least €1 billion in assets frozen.
- Switzerland reported it had frozen financial assets worth CH7.5 billion (US$7.94 billion). It is believed that these assets relate to assets of sanctioned Russian oligarchs and or officials.
- The latest available reports for Canada show C$122 million (US$90 million) blocked and for Australia US$45 million has been frozen, which appears to be assets of sanctioned Russian oligarchs and or officials. Japan & the USA have not provided any material details of asset freezes.
- Assuming all these assets are assets of sanctioned Russian oligarchs and or officials, the aggregated amounts from REPO members is approx US$53 billion.
- These figures do not directly include assets reported from the Cayman Islands of US$8 billion as frozen, or from Jersey of US$7 billion, (though they may be included at least in part indirectly in other countries reporting, for example a significant portion of the Jersey amounts relate to an oligarchs former holding in Chelsea FC through Jersey Companies but the Assets were in the UK ). These numbers also do not include assets frozen in Belgium and Luxembourg which are not counted by the EU in their reporting. For example Belgium has independently reported €50.5 billion as frozen, but the EU includes €3.5 billion for Belgium and Luxembourg reports €5.5 billion as frozen, the EU includes €2.5 billion as frozen. Much of these additional frozen assets could probably be assets frozen out of an abundance of caution relating to securities held by Russian custodians for their customers at custodians in Brussels and Luxembourg.
For example as regard assets frozen related to sanctioned Russian Central Bank Assets:
Based on estimates from the Russian Central Bank as at the end of June 2021, published in January 2022, in terms of amounts and locations had these amounts and locations remained the same once the sanctions were imposed on 28th February 2022, Western Countries could have seized as much as US$341 billion (58% of the then total) in Russian Central Bank Assets.
The actual amounts held and frozen in the West have been touted regularly at US$300 billion but very little transparency has been provided beyond this figure.
Just one REPO country provided information on its immobilisation of Russian Central Bank assets, which raises questions about the potential amount immobilised in the West. France had been reported as holding Russian Central Bank assets of US$71 billion (12.2%), as reported as at 30 June 2021 by the Russian Central Bank in January 2022, but on 12 April 2022, it was reported by the French Finance Ministry that, “France has frozen Russian assets with the majority belonging to the Russian Central Bank, in the amount of €22.8 billion out of €23.7 billion (US$25.6 billion)”.
This represents a reduction from US$71 billion in June 2021 or by two thirds and from 12.2% to 3.9% or by US$48.2 million. If the reductions reported by France only apply to France then the estimate would fall from the estimate of US$340 billion (based on the 30 June 2021 figures) to US$292 billion or close to the US$300 billion oft quoted figure by REPO members.
If the French figures are correct, it would seem unlikely that other Western countries though didn’t experience a similar reaction. Applying the same level of reduction seen in France across all Western Countries would reduce the amounts potentially frozen to just US$112 billion or a reduction of US$228 billion.
For a range of potential outcomes see the chart below and for more details as to the basis for the estimates see Appendix 1 below and or attached.
For more details, including a brief summary of Russian assets outside Russia, including Russian oligarchs and the Russian Central Bank and a high level summary of sanctions against Russia taken by the EU as an example and a timeline and chronology over the last 12 months of relevant publicly available information about asset freezes, focused on Western countries where these sanctions apply, with sources see Appendices 1 – 3 below and or attached.
For more details, including a brief summary of Russian assets outside Russia, including Russian oligarchs and the Russian Central Bank and a high level summary of sanctions against Russia taken by the EU as an example and a timeline and chronology over the last 12 months of relevant publicly available information about asset freezes, focused on Western countries where these sanctions apply, with sources see Appendices 1 – 3 below and or attached.
Conclusion
Providing greater transparency on the amounts frozen & the locations of Russian oligarchs frozen assets & Russian central bank assets would help clear up whether & how much of these assets are actually frozen & where in the West these assets are held, as well as then who gets to decide what happens to these assets & what laws apply.
On 15th February, 2023, EU President Ursula von der Leyen appears to have recognised their is a transparency problem too, stating that new proposals for the 10th sanctions package (timed to be announced for the anniversary of the invasion) will include measures “to will track oligarchs trying to hide or to sell their assets to escape sanctions. And together with Member States we will set up an overview of all frozen assets of the Russian central bank held in the EU. We need to know where these are located and how much they are worth. This is crucial in view of the possible use of public Russian assets to fund reconstruction in Ukraine.”
It would also enable a greater understanding of how much and where might the missing or yet detected assets be and how best these can be targeted.
Financial Crime News
22nd February, 2023
For a PDF including Appendices of 20 pages summarising the available reporting and asset seizures and frozen assets, and sources See: Sanctioned Russian Assets Frozen in the West Pbd 24
NOTE: Post script added on 28th February, 2023:
A day after publishing, Canada helpfully published an update on the REPO (Russian Elites, Proxies, and Oligarchs) Countries progress on seizing sanctioned Russian assets, which is now being reported at “US$58 billion in financial accounts and economic resources”. It is not clear if this valuation includes, “seized or frozen luxury real estate and other luxury assets owned, held, or controlled by sanctioned Russians, valued in the many billions of dollars”. The figures aren’t broken out by country, unfortunately though we know the UK has separately published US$22billion and the EU US$23 billion so far. No figures are provided regarding the Russian Central Bank assets, other than to state that, “Russian Central Bank and National Wealth Fund assets remain immobilised, and cannot be used to support Russia’s war effort”. See: https://www.canada.ca/en/department-finance/news/2023/02/statement-on-russian-elites-proxies-and-oligarchs-task-force-results.html
