Alert: EU Council approves use of windfall revenues from Russian assets tied up in Europe for Ukrainian reconstruction and self-defence

On 21 May, Council Regulation (EU) 2024/1469 amending Regulation (EU) 833/2014 concerning restrictive measures in response to actions by Russia destabilising the situation in Ukraine was adopted. In this regard, the Council of the European Union has given the green light to the use of extraordinary income earned by central securities depositories located in the EU, primarily in Belgium, generated by frozen public Russian assets to support self-defence and reconstruction in Ukraine.


Prior to this, the Council adopted Regulation (EU) 2024/576 of 12 February, endorsing the G7 decision to move decisively to ensure that extraordinary proceeds directly from retained Russian sovereign assets are used to support Ukraine (hereinafter “Regulation 2024/576”).

By Regulation 2024/576, the Commission was tasked to ensure that the use of the funds is in line with international law and economic rules. This decision aims to balance support for Ukraine with the need to maintain financial stability within the EU. Some Member States have expressed concerns about the possible impact on financial markets and the role of the euro as a reserve currency.

Continuation of sanctioning measures

Following the adoption of Regulation 2024/576, the EU has decided to continue the prohibition of certain transactions and transfers, direct or indirect, with the Central Bank of Russia (hereinafter the “CBR”), or to any legal person, entity or body acting on behalf of or at the direction of the CBR, such as the Russian National Investment Fund. Following the application of these prohibitions – which manifest themselves, for example, through the withholding of assets and reserves from the BCR – an extraordinary and unexpected accumulation of cash balances on the balance sheets of European central securities depositories is generated.

As the unexpected and extraordinary income to which Regulation 2024/576 applies necessarily arises from the application of the restrictive measures, it should not be made available to the BCR.

New legal frameworks

With the adoption of Regulation (EU) 2024/1469, new legal frameworks have been established to manage the unexpected and extraordinary income recognised in Regulation 2024/576, notably the obligation for European central securities depositories, holding Russian sovereign assets and reserves of more than EUR 1 million, to make a financial contribution from the net profits generated by such unexpected and extraordinary income.

The amount of this financial contribution by the obliged European central securities depositories amounts to 99.7% of the net profits, and will be paid to the EU on a biannual basis, to be used for the defence and reconstruction of Ukraine.


In view of all this, we see that the European authorities are increasingly willing to use frozen Russian funds, for the time being only those in public ownership, for the benefit of Ukraine. So far they have only acted on the windfall profits derived from these assets for European governments and central securities depositories.

Click on the link to read the EU Council press release.



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