Euroclear Sidesteps OFAC as New Procedure Unfreezes Over $200 Billion in Russian Assets

Euroclear Opens a Path for Unfreezing Russian Assets Without US Approval

The Facts

Euroclear has softened the requirements for the unblocking of Russian assets, potentially opening a path for billions to be released to their owners.

The Belgian depository, which has custody of over $45 trillion in assets and intermediates close to 267 million transactions, has implemented a new unfreezing procedure that leaves the Office of Foreign Assets Control (OFAC) out of the loop.

NSP Law and Compliance Practice Attorney Gleb Boiko declared that this new procedure, approved by Euroclear a month and a half ago, simplifies the attempts of unfreezing Russian assets affected by sanctions tied to the current Russian-Ukrainian conflict.

He explained:

In the absence of involvement of a U.S. person (American persons or financial institutions) in the transaction to unlock, Euroclear will not require an OFAC license even to unlock assets from U.S. nexus (securities related to the United States).

Since 2024, an OFAC license was mandatory for these procedures, as the U.S. imposed sanctions against the Moscow Stock Exchange.

Boiko stressed that he was aware of three different cases that had allegedly unfrozen their assets using this new procedure, but did not identify the entities involved or the figures associated with these operations.

Why It Is Relevant

Euroclear has become the focal point of a battle involving over $200 billion in frozen Russian assets, as the European Union and the U.S. have mulled to use these assets in aiding the Ukraine effort.

Analysts like Jim Rickards have raised concerns about this potential move, claiming that it would undermine the trust in the current European financial pipeline. Euroclear’s own CEO Valerie Urbain acknowledged the dangers of taking such steps. In 2024, she stated:

It is the risk of creating a precedent, because the trust that you have had for decades in the system, suddenly it’s been questioned.

Looking Forward

While this new procedure enables Russian investors to recover their securities and assets, it is still unknown to what percentage of Russian assets this applies. As long as the conflict continues, there will be a risk of using these assets to aid Ukraine or to provide reparations.

FAQ

• What recent change did Euroclear make regarding Russian assets?
  Euroclear has relaxed the requirements for unblocking Russian assets, potentially allowing billions to be released to their owners without the involvement of U.S. regulators.
• How does the new unfreezing procedure work?
  The new procedure eliminates the need for an OFAC license as long as no U.S. persons or institutions are involved in the transaction to unlock the assets.
• Why is this change significant for frozen Russian assets?
  Euroclear is central to the management of over $200 billion in frozen Russian assets, and this change may facilitate their reallocation amid ongoing sanctions related to the Russian-Ukrainian conflict.
• What concerns have been raised about this new procedure?
  Analysts warn that unblocking these assets could undermine trust in the European financial system, as noted by Euroclear’s CEO regarding the risks of setting a concerning precedent.