Mainpage > News > Confiscation of Russian assets: what Ukraine and the world have (failed) to achieve in a year of war

The Kremlin must pay for its aggression. Is the world in a hurry to seize assets from Russia and how efficiently and transparently are confiscations conducted in Ukraine

World leaders have repeatedly stated that the Kremlin must pay for its aggression. Ukraine and some foreign countries have implemented mechanisms to confiscate the assets of those responsible for the war.

Some funds from the confiscation have already been transferred to the state budget.

How much are we talking about? Is the world in a hurry to seize assets from the aggressor and transfer them to Ukraine, and how effective and transparent is the confiscation process in Ukraine?

The Institute of Legislative Ideas has developed a confiscation tracker that displays the current state of confiscation of Russian assets in Ukraine and around the world in real-time.

During the year of the full-scale invasion in Ukraine, 18,955 civilians were officially injured (7,199 killed and 1,175 wounded), 13.3 million people became internally displaced, and the amount of damage caused exceeded $750 billion.

How much Russian money is in the world

After Russia invaded Ukraine, civilized countries froze the assets of the Russian Central Bank's foreign currency reserve - about USD 300 billion. The exact figure is unknown, as the latest data on assets date back to January 2022. Therefore, as part of the 10th package of sanctions, the European Union obliged all banks to indicate the exact amount of frozen Russian assets.

Along with Russian state assets, the private assets of war collaborators are also being frozen. This follows the adoption of international sanctions against individuals or legal entities that support the Kremlin and participate in the war in Ukraine.

The exact amount of these assets frozen or blocked around the world is also unknown. Each country in the EU, the US, Canada, Australia, Japan, and others do this independently. According to official sources and embassies, the amount of frozen private assets worldwide is about $100 billion.

The freezing of assets without further consideration of their confiscation is an ineffective measure. The problem lies in the need to find legal mechanisms that would ensure respect for property rights and fair trial standards.

Countries around the world and their associations are looking for such mechanisms. However, during the year of war, there were only a few cases of confiscation abroad that did not have a significant impact on compensation for Ukraine.

The funds transferred to Ukraine from such confiscations currently amount to only 0.0000077% of the total amount of war damage. We are talking about $5.4 million confiscated from Russian oligarch Konstantin Malofeev.

Below, we have collected all available information on the volume and condition of Russian assets in the world, as well as the position of states on their confiscation for the purpose of rebuilding Ukraine and compensating for losses.

The USA

The United States occupies a special place in the geopolitical arena, so its active stance on the confiscation of Russian assets will be a loud signal to other countries to move faster.

The Central Bank of the Russian Federation has frozen USD 38 billion of assets in this country. There is no official information on the amount of blocked private assets, so the figure of USD 1 billion announced by the media may actually be much higher.

The United States has a well-developed asset forfeiture legislation. In addition, they have developed several special bills to confiscate Russian assets and transfer them to Ukraine. A bill by Democrat Tom Malinowski has even passed the House of Representatives and has been submitted to the Senate. However, it is still at this stage.

At the end of 2022, Joe Biden signed the US state budget for 2023 with an amendment that allows the US Department of Justice to transfer to the Secretary of State the proceeds of property confiscated from sanctioned persons. The latter can use these funds to assist Ukraine in ‘repairing the damage caused by Russian aggression in Ukraine’.

It is thanks to this amendment that Ukraine will soon be able to receive $5.4 million confiscated from Russia's Malofeev.The decision on confiscation was made under the civil forfeiture mechanism in connection with the oligarch's violation of sanctions imposed in 2014, during the first stage of the Russian-Ukrainian war.

Thus, confiscation in the United States is still carried out using general tools and is linked to certain criminal behavior.

Although the mechanism used in Malofeev's case is difficult to scale up in the context of confiscating all assets of war collaborators, this example sends a clear signal to countries seeking ways to compensate for the damage caused by Russian aggression through confiscated funds.

The decision demonstrates the effectiveness of criminalizing sanctions evasion and simultaneous civil forfeiture preceding a court conviction. This guarantees a quick transfer of real money shortly.

Canada.

The first foreign country to implement the mechanism of confiscation of foreign assets as a sanction was Canada, where USD 16 billion of Russian sovereign assets and USD 80 million of private assets were frozen.

The law adopted there allows for the confiscation of both types of assets, but the practice of its implementation began only 6 months later.

At the end of 2022, the Canadian government began the process of confiscating $26 million belonging to Roman Abramovich for further transfer to Ukraine. The sanctioned assets belong to Granite Capital Holdings, a company owned by Abramovich.

The materials have now been submitted to the court. According to the law, the confiscated funds will be transferred to Ukraine.

United Kingdom

The United Kingdom is one of the countries that has frozen the most funds of the Russian Federation and its accomplices in the war - $26 billion of sovereign and $20.5 billion of private assets.

In addition, the UK, whose economy is flooded with Russian money, has many expensive real estate properties owned by the Russian Federation that have not yet been seized. According to media reports, there are 18 such properties in this country, including the 19th-century Seacox Heath Castle, which is used by Russian special services.

Many of the oligarchs' properties have not been frozen either. According to Transparency International, there are 33 properties worth £700 million in London and Surrey that are linked to sanctioned persons. A BBC investigation showed that 12 Russian oligarchs own property in London worth £800 million.

Recently, British Prime Minister Rishi Sunak said that his country is discussing the use of frozen Russian assets to help rebuild the devastated Ukraine. He noted that an independent fund is being set up to collect such assets.

Earlier, British Foreign Secretary James Cleverly said that the United Kingdom would study Canada's experience in the process of introducing the confiscation of Russian assets. But so far, no such steps have been taken.

Recently, the British Parliament registered a bill to confiscate Russian state assets in support of Ukraine. From the title, it is obvious that this refers to the assets of the Central Bank of the Russian Federation. The document passed the first reading in the House of Commons. The second reading is scheduled for 3 March.

The UK, like the US, has additional tools for rapid confiscation that allow it to confiscate assets of public figures whose legitimate origin cannot be explained. However, it has not yet been used against Russians, although many children of Russian high-ranking officials still enjoy life in the Londongrad apartments.

In general, statements by British politicians indicate that there is the political will to confiscate Russian assets, but so far in the format of ‘we are working with our international partners on this issue’.

Switzerland

The amount of private frozen assets in Switzerland is USD 8 billion. However, according to media reports, the amount ofRussian assets in this country may reach USD 200 billion, but not all of them belong to sanctioned persons. Given the significant amount of money held by citizens of the aggressor state and the public outcry, the country is discussing how to deal with these assets.

At the World Economic Forum in Davos, Swiss Foreign Minister Ignazio Cassis stated that the aggressor should compensate for the damage caused by Russia, but Switzerland does not have a legal framework for the withdrawal offrozen funds for such purposes.

The Swiss banking sector opposes the confiscation of Russian assets, given that it could negatively affect the state of the country's financial system and lead to a collapse. There was even talk of putting this issue to a referendum.

So far, they have limited themselves to a survey that showed that about half of the Swiss support confiscation.

However, in February 2023, the Swiss government abandoned the idea of confiscating Russian assets because it allegedly violated the constitution and undermined the existing legal order.

However, history shows that such a categorical position can be changed later. For example, Switzerland has already had experience in confiscating and transferring German assets after the end of World War II.

The European Union

It is no secret that most of Russia's funds and the Kremlin's aides are located in the EU. The assets of the Russian Central Bank are frozen in Germany ($55 billion), France ($71 billion), and Austria ($17 billion). The freezing of assets without further consideration of their confiscation is an ineffective measure. The problem lies in the need to find legal mechanisms that would ensure respect for property rights and fair trial standards.

The funds transferred to Ukraine from such confiscations currently amount to only 0.0000077% of the total amount ofwar damage. We are talking about $5.4 million confiscated from Russian oligarch Konstantin Malofeev.

There are several scenarios for the confiscation of sovereign assets by the Russian Central Bank, but this issue remains unresolved.

The amount of private individuals' funds frozen is not much less - about USD 75 billion.

From the above figures, it can be concluded that the approach of EU countries to asset freezing is very different.

It should be borne in mind that we are talking about frozen funds, so potentially frozen real estate in Italy, Greece, or France (41 properties worth $1 billion), which are so favored by Russian oligarchs, could significantly raise these countries in the ranking of ‘confiscators of private assets’.

So far, the only case in the EU has been the confiscation of three apartments of a Russian MP for violating the sanctions regime in Germany. However, it was not related to the events after 24 February 2022, and, as far as we know, the funds did not go to the Ukrainian budget, as Germany has not developed such a procedure.

Despite the large amounts of frozen assets in the EU, there is no rush to confiscate them. Back in the summer, European Commission President Ursula von der Leyen said: ‘We are working on a legal framework to enable the use of Russian assets and partly those of the oligarchs to rebuild Ukraine.’

But so far, the European Commission has only suggested that EU countries criminalize sanctions circumvention as a serious crime, with the possibility of confiscation of the objects of the crime.

Estonia has pioneered the search for a proper confiscation mechanism. In early 2023, the Ministry of Foreign Affairs of this country announced that a legal instrument for the confiscation of Russian assets would be developed in a month. The European Commission supported the initiative but asked to wait for EU legislation.

As we can see, the ‘old’ Europe supports the idea of confiscation, but is delaying the development and implementation of the necessary legal solutions. The countries that do not have significant Russian assets on their territory but are ready to launch this process may take the lead in this process, after which others will be forced to act.

What about confiscation in Ukraine

The world is moving very slowly toward confiscation of Russian assets. Ukraine should set an example of legal and effective confiscation for others.

There are no funds from the Russian Central Bank in Ukraine, but there are objects owned by the Russian Federation or its state-owned companies. A law was passed on 3 March 2022 to confiscate such assets.

For almost a year of the document's existence, only 1 decision was made to seize the assets of 3 Russian banks, which brought UAH 17 billion in revenue to the state budget by the end of 2022. These amounts could have been much higher if the authorities had not delayed the confiscation.

Back in August 2022, it was reported that the government had decided to confiscate more than 900 Russian-owned properties in favor of Ukraine. However, as of the end of February 2023, no decision on such confiscation had been made.

In response to an official request, the Ministry of Economy indicated that the NSDC had returned the relevant draft decision for revision, where it has been since August. We assume that such confiscation is not hindered by legal shortcomings in the document that could not be corrected in more than six months.

Ukraine has a mechanism of sanctioned confiscation of private assets. As of the end of February 2023, the HACC had issued 15 decisions to confiscate assets from such persons.

Assets have been confiscated from Russian oligarchs, propagandist rectors, State Duma deputies, and even fugitive President Yanukovych.

10 of the 15 lawsuits concerned the confiscation of assets located in Crimea. Undoubtedly, they should also be confiscated, but there are no mechanisms to enforce such a decision until the peninsula is de-occupied.

There are also significant problems with the management of confiscated assets. According to the government, as of 13 February, out of the 13 decisions made, only the assets of oligarch Volodymyr Yevtushenkov were transferred to the State Property Fund. All the others are still in a ‘suspended’ state, and therefore the goal of such confiscation remains unachieved.

Another way to confiscate Russian assets is through criminal prosecution and the imposition of appropriate penalties. The situation here is even more complicated, as such assets can only be seized in the short term, not confiscated.

For the latter, it will take years to get a court decision. Seized assets are managed by the National Agency for Finding, Tracing and Management of Assets Derived from Corruption and Other Crimes (ARMA).

According to its head, ARMA manages exclusively seized assets, which de jure remain the property of the same Russians, and only about 2/3 of all assets received since 24 February are assets related to the Russian aggression.

Moreover, ARMA cannot unambiguously identify all Russian and Belarusian assets, as court rulings do not always contain information about the ultimate beneficiaries.

Tetyana Khutor, Head of the Institute of Legislative Ideas, think tank