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EU moves to seize assets of Russian oligarchs

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The European Commission will propose on Wednesday a way to criminalize sanctions evasion at the EU level, providing legal grounds for the confiscation of Russian oligarchs’ assets seized by EU countries.

A draft of the directive, seen by POLITICO on Tuesday, proposes to establish a common legal framework on how to deal with frozen assets in relation to crimes of EU relevance, including establishing new grounds for confiscation, as first reported by POLITICO. Under a separate directive, also to be published on Wednesday, EU countries should agree to make sanctions evasion an EU crime.

Confiscation is currently a matter of criminal law in many EU countries and requires a conviction, while sanctions are an administrative procedure. The draft provides for “a new possibility of confiscation in which assets are frozen based on suspected involvement in organized criminal activity.” This bar is removed if “the national court is satisfied that the property in question is derived from criminal activity”, without the need for a conviction.

Under the draft proposal, countries could also sell frozen assets before a confiscation order is issued and charge the costs of managing the frozen assets to the beneficial owner. Meanwhile, asset owners receive guarantees, including the right to be heard.

“There would be a separate crime. There would be a sanctioned person, but there would be the crime of evading or violating the sanctions,” explained Jan Dunin-Wasowicz, an attorney at Hughes Hubbard & Reed LLP who focuses on sanctions compliance, commenting later. of the proposal “On that basis, one could imagine having a legal instrument that would allow member states to proceed with the confiscation of assets.”

Some EU countries, namely the Baltic States and Slovakia, have called for such a proposal. But others have expressed skepticism, arguing that even if agreed to and implemented, such a proposal would produce years of litigation for relatively little gain.

“Moral justice, unfortunately, does not get you very far in criminal law,” said an EU diplomat.

Highest hurdle

The avenue to freeze Russian state assets, such as Moscow’s nearly $300 billion in foreign exchange reserves held by seven sanctions-imposing countries, is an even higher legal hurdle to overcome, as state assets are protected by international law. Ukraine is pushing this more radical step and some EU countries are open to the idea.

The Commission, for its part, has said it is exploring that option, but remains cautious. “Everything we do must be based on the rule of law,” a Commission spokesman said on Tuesday.

Moving to expropriate those assets could also destabilize financial markets, as reserve currencies like the dollar and, to a lesser extent, the euro would be seen as unsafe havens by countries at odds with the US or Europe.

US Treasury Secretary Janet Yellen addressed that issue last week while in Europe, warning that such an option “is not something that is legally permitted in the United States.”

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