A first step towards “making Russia pay”?

On 12 February 2024, the Council of the EU adopted a new Regulation (EU) 2024/576 (“Regulation”) setting out the rights and obligations of Central Securities Depositories (“CSD”) holding assets and reserves of the Central Bank of Russia (“CBR”) that are immobilised because of the EU’s restrictive measures. That Regulation is the next step in a political process aiming to make Russia pay for the reconstruction of Ukraine, which we reported on in our earlier briefing (available here).


In response to Russia's invasion of Ukraine in February 2022, the European Union imposed sanctions on the CBR and associated entities and persons.

Those sanctions included restrictions in relation to various direct or indirect transactions that would benefit the CBR or associated entities and persons, such as transactions related to the management of assets and reserves of the CBR as well as making new loans or credits to the CBR.

The restrictions in relation to those transactions with the CBR have apparently led to an extraordinary and unexpected accumulation of cash balances on the balance sheets of CSDs.

Over the past months, the European Commission has been entertaining the idea and ambition of using those funds to rebuild Ukraine. As a forerunner to that, however, the EU needs to gain visibility on the amount of the funds at stake, as well as ensure that those funds remain available until a political decision is reached on the use of those funds. This is where the new Regulation comes in.

Obligations of CSDs in managing Russian assets

As of 15 February 2014, the new Regulation imposes several obligations on CSDs that manage assets and reserves of the CBR or any person or entity acting on its behalf or at its direction whose cumulative value exceeds EUR 1 million (“Affected Assets”):

  • CSDs are required to ensure that cash balances corresponding to these Affected Assets and any revenues accruing from or generated by them are managed in a manner that is clearly separated from their other financial activities;
  • CSDs are prohibited from disposing of net profits (including through dividends) until the Council decides whether to allocate the net profits resulting from Affected Assets to Ukraine's reconstruction and recovery.
  • However, the Council can decide that CSDs can provisionally retain a proportion of net profits, considering the necessity to comply with statutory capital requirements, risk management procedures and the risks and costs associated with holding CBR’s assets and reserves.
  • In the interim, CSDs facing risks and accruing costs from managing these Russian assets and reserves may seek approval from the authorities to release a portion of these net profits as a precautionary measure to ensure compliance with statutory capital and risk management requirements.
  • CSDs must report on an annual basis to the European Commission and their national competent authorities. These reports must detail the cash balances and net profits accrued due to the immobilization of assets and reserves belonging to the CBR or associated entities and persons, as well as the revenue generated from these assets.

What now?

The Regulation's amendments bring some clarity for the CSDs and seem to be a first step towards using Russian assets for the reconstruction of Ukraine. It will, however, take a further decision at the EU level to have these funds directed to the support of Ukraine.

If you would like to discuss any aspect of the new regime, please reach out to the contacts on this post or to your usual Linklaters contact(s).