Freeze and seize? The EU fights to attack the assets of the oligarchs

  • Germany has not detailed any frozen assets so far
  • Austria, Ireland and others refuse to report freeze
  • EU aims to ‘freeze and seize’, but seizures are often illegal

BRUSSELS, March 24 (Reuters) – The wealth of oligarchs remains largely untouched in the European Union, weeks after Brussels approved measures to freeze the assets of dozens of billionaires and senior officials linked to Russia following its invasion of Ukraine.

Every week since the war broke out on February 24, the EU introduced new sanctions against Russia, adding nearly 700 top politicians, businessmen and military personnel to its blacklist, including 42 super-rich “oligarchs” like the owner of Chelsea football club. Roman Abramovich and banking tycoon Mikhail Fridman.

The bank accounts and assets of those on the list are set to be frozen, but so far only a small fraction of their funds have been affected amid legal restrictions and enforcement challenges, according to EU officials and government data. from a dozen EU countries.

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Germany, the EU’s largest economy, has refused to give details of frozen assets so far. It set up a task force last week to enforce the sanctions, and the Economy Ministry told Reuters it expected to report progress in a week or two.

Austria and Ireland also refused to specify whether they had frozen any assets, as did Cyprus and Malta, which in recent years have issued “golden passports” to wealthy people, including Russians.

Some countries that have reported asset freezes say they have affected only a small portion of the wealth subject to sanctions.

The Dutch Finance Ministry, for example, said it had frozen some 390 million euros ($428 million) in financial transactions and deposits. That’s only about 1% of the wealth of sanctioned people in bank accounts, trusts and other financial vehicles in the Netherlands and in offshore centers linked to the country, according to government estimates.

Italy, one of the most active countries in the EU in seizing physical assets, having seized yachts and villas worth around €800 million so far, has not yet reached the liquid wealth of the oligarchs because it is he believes much of it is stored in third-party bank accounts. or in trusts with no clear beneficial owner, Italian tax police chief Giuseppe Zafarana said.

Spain has also not frozen any bank accounts, authorities said, but has detained at least three luxury yachts linked to blacklisted people. Read more

Neighboring Portugal has blocked just one account owned by a sanctioned person, with just 242 euros in it, a banking source familiar with the matter said.

Belgium seems to have been the most successful EU country so far. It has frozen around €2.7 billion in bank accounts and €7.3 billion in transactions, but has not identified any property belonging directly or indirectly to a blacklisted person, the Finance Ministry said.

Abramovich and Fridman were not immediately available for comment. Fridman previously described the sanctions against him for Russia’s invasion of Ukraine, which Moscow calls a special military operation, as “bogus and unfounded.”

The United States, which has imposed similar sanctions on Russia, is also facing difficulties freezing assets amid legal hurdles. The oligarchs are believed to have most of their assets outside the EU and the US, including in offshore jurisdictions, Britain, Switzerland and the Gulf. Read more

Switzerland said on Thursday that it had frozen $6.2 billion of sanctioned Russian assets. His banking lobby estimates that Swiss banks hold as much as $213 billion of Russian wealth. Read more

FIGHT UPHILL

The EU has struggled for years to implement sanctions because enforcement depends on member states, which often lack the legal tools, staff and, in some cases, the political will to target wealthy investors, a senior EU official said. the European Union.

“Historically, enforcement across the EU has not been consistent. What was agreed to be implemented at the EU level is not necessarily implemented as required at the member state level,” said David Savage, a sanctions expert at the law firm Stewarts.

To address this, the European Commission set up a “freeze and seize” task force this month specifically to enforce sanctions against oligarchs.

However, so far, the task force has not identified any assets that need to be frozen urgently because they could be sold or moved outside the EU, the senior EU official said on condition of anonymity.

A Commission spokesman said EU members were required to report measures taken to implement the sanctions, but declined to say whether they had all done so and did not give a value for the assets frozen so far.

Last year, the Commission proposed establishing a “Sanctions Information Exchange Repository” by the end of 2021 to facilitate the process. That repository “is currently in the development phase,” the spokesperson said.

Even when there is the political will to act, it is not easy to find the wealth of the oligarchs.

After four rounds of sanctions, the EU is still working to close the loopholes that allow selected individuals to protect money through third parties, trusts or crypto transactions, diplomats said.

FREEZE, MAYBE, BUT DON’T TAKE ADVANTAGE

Even when fully implemented, EU sanctions typically cannot go beyond freezing assets.

In most countries, this means that the assets cannot be sold, but can still be used. In theory, an oligarch could live in a “frozen” villa.

Despite the Commission’s “freeze and seize” task force, seizure, or the state taking control of an asset and even profiting from its sale, is generally not a start.

“In most member states, this is not possible and a criminal conviction is necessary to confiscate assets,” the Commission said in a statement to Reuters.

In Poland, one of the staunchest proponents of sanctions, seizing assets would require a change to the constitution, government spokesman Piotr Muller said.

France froze around 850 million euros of assets of blacklisted people, including properties and yachts, the Finance Ministry said. But physical assets can still be used by their owners.

Italy, which has one of the strictest laws among EU countries to recover assets from criminals, also does not seize yachts and villas.

Separate legal proceedings would be needed for that, the Italian lawyers said.

($1 = 4.2766 zlotys)

($1 = 0.9105 euros)

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Reporting by Francesco Guarascio @fraguarascio, Emilio Parodi in Milan, Michele Kambas in Nicosia, Catarina Demony and Sergio Goncalves in Lisbon, Jesus Aguado and Belen Carreno in Madrid, Karol Badohal in Warsaw, Tom Sims in Frankfurt, Anthony Deutsch and Toby Sterling in Amsterdam , Layli Foroudi in Paris, Chris Scicluna in Valletta, Francois Murphy in Vienna, Graham Fahy in Dublin Edited by Mark Potter

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