Brussels-based depositary and clearing house Euroclear has confirmed that it will confiscate interest generated by the frozen Russian funds that it holds and will transfer the money to Ukraine.
“In July 2024, Euroclear will make a first payment of €1.55 billion to the European Fund for Ukraine following the recent implementation of the EU regulation on the windfall contribution,” Euroclear said in a statement on Friday.
It follows months of deliberations among EU and G7 nations about how to use billions of dollars belonging to Russia’s central bank that were immobilized as part of Ukraine-related sanctions.
The announcement came as part of a report on the financial results for the first half of 2024, which revealed that frozen Russian assets had generated €3.4 billion ($3.7 billion) of the €4 billion ($4.36 billion) interest accrued by the clearing house during the six-month period.
After tax, the windfall amounts to €1.7 billion ($1.85 billion), €1.55 billion ($1.7 billion) of which will be sent to Ukraine. The remainder will be “put aside as a buffer against current and future risks.” A total of €836 million ($910 million) will be paid to Belgium in corporate taxes, the statement added. Euroclear said it is continuing to “diligently implement the international sanctions on Russian assets.”
The EU immobilized around €210 billion ($229 billion) of sovereign assets belonging to Russia’s central bank as part of sanctions imposed on Moscow over the conflict in Ukraine. The bulk of the funds is held in the privately owned depository. The clearing house previously reported that the assets had generated roughly €4.4 billion ($4.8 billion) in interest last year.
In June, the EU Foreign Affairs Council announced that it would make windfall profits from immobilized Russian funds available to Ukraine. The first tranche will be used to purchase ammunition and air-defense systems, it said, adding that another €1 billion will be transferred by the end of the year.
Some G7 members, such as the US and the UK, had been pushing for the outright seizure of Russian assets. Concerns over the legality of such a move led to a decision to use the interest generated by the funds instead.
Russia has repeatedly said any actions taken against its assets would amount to “theft,” insisting that seizing the funds or similar moves would violate international law and lead to retaliation.
Kremlin spokesman Dmitry Peskov warned this week that “illegal attempts to rob the Russian Federation” would cause huge damage to the international financial system.