In April 2024, the Rebuilding Economic Prosperity and Opportunity Act (the "REPO Act") was passed which we reported about earlier. As a reminder, the REPO Act gave the President of the United States the authority, among other things, to decide on the confiscation of Russian sovereign assets (assets of the Bank of Russia, the Russian Direct Investment Fund, the Russian Ministry of Finance, and assets of the Russian government) located within the U.S. jurisdiction.
Pursuant to the REPO Act, on July 23, 2024, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) established reporting procedures for the frozen assets. Under the new rules, banks are required to provide detailed reports on the Russian sovereign assets located within the U.S. jurisdiction.
The new reporting requirements do not result in the immediate freezing or seizure of Russian sovereign assets. For this purpose, the REPO Act provides for a separate procedure and timing.
As we reported earlier, the EU Council adopted a number of legal acts aimed at utilizing the proceeds from the Russian frozen assets in the EU.
On July 17, 2024, the EU Commission approved the conditions for the transfer of the first tranche of funds from the profits generated by the frozen Russian assets held by Euroclear. Regular quarterly payments will depend on Ukraine's compliance with the pre-agreed conditions.
On July 26, 2024, the EU already transferred the first tranche of €1.5 billion for political purposes. The EU intends to transfer up to €50 billion from 2024 to 2027. This move by the EU can set a precedent for further use Russia's frozen assets as part of the sanctions regime.