A large portion of the €258 billion being held in Belgium under Russian sanctions has reportedly been found to belong to Western banks and non-sanctioned individuals and businesses.
Disclosed by the Belgian newspaper De Tijd on February 19, the situation has raised questions about the effectiveness and fairness of the current sanctions regime.
Most of these frozen assets were said to be held by Euroclear, a global financial market infrastructure group based in Brussels. The company plays a crucial role in facilitating securities trading and custody.
“The inconvenient truth is that the vast majority of that sample amount does not belong to people and companies on a sanctions list”, De Tijd noted about the sanctioned money.
Of the total amount, €193 billion represented blocked transactions with Russia’s central bank, including substantial sums belonging to Western financial institutions including US-based JPMorgan, which has unsuccessfully attempted to recover €2.25 billion of blocked funds.
Several European banks were said to be in similar situations but had chosen to remain silent about their frozen assets to avoid negative publicity.
The remaining €65 billion consisted of traditionally frozen assets, with €55 billion linked to securities that passed through Russia’s National Settlement Depository (NSD). Some €10 billion was connected to sanctioned Russian lenders including Sberbank.
Many of these assets, though, belonged to non-sanctioned clients of these institutions, including ordinary citizens with no connection to the war in Ukraine.
The Belgian treasury, responsible for managing these sanctions and reported to be severely understaffed, has struggled with a backlog of 800 cases requesting the release of frozen assets.
Starting with just two officials when the war began, it now has 15 staff members handling Russian sanctions, with only five processing release applications.
Last year, it received 1,214 new refund applications but could process less than half, approving 232 cases, mostly involving smaller amounts from individuals with dual EU-Russian citizenship.
This situation has led to more than 200 legal proceedings at the Council of State against the treasury’s inability to release funds. Many cases involved non-sanctioned individuals whose assets were frozen simply because they passed through sanctioned Russian financial institutions.
The Belgian newspaper also noted that international sanctions now included a novel mechanism known as asset “freezing,” which differed significantly from traditional asset blocking. While frozen assets can potentially be released upon request, blocked assets are subject to much stricter controls.
The treasury has maintained rigid oversight of blocked transactions and can only authorise their release in exceptional circumstances — specifically when withholding the funds would pose a credible threat to the European Union’s financial stability.
Legal experts warned that the Belgian state could face substantial damage claims, and estimated that 80 per cent or more of the blocked billions belonged to legally innocent people who should not have been affected by sanctions.
The treasury faced additional challenges, including suspected Russian attempts to overwhelm the system with release requests and incidents where staff members received suspicious calls on their private mobile numbers.
Its online research activities appeared to have been sabotaged, with access to information about sanctioned entities being blocked.
Euroclear faced more than 100 lawsuits in Russia, primarily from asset managers and non-sanctioned individuals seeking to recover their frozen assets.
The company has tripled its sanctions-handling team to more than 100 people, who screen transactions and monitor dealings with countries regarded as high-risk such as Cyprus to prevent sanctions evasion.
Ukraine has expressed interest in using these frozen billions for reconstruction efforts, and some European bigwigs have pondered using the funds to support Ukraine, as suggested on February 19 by former British prime minister Boris Johnson.
When are we Europeans going to stop being scandalised about Donald Trump and start helping him to end this war?
Of course Ukraine didn’t start the war. You might as well say that America attacked Japan at Pearl Harbor.
Of course a country undergoing a violent invasion should…
— Boris Johnson (@BorisJohnson) February 19, 2025
