Residence permit and citizenship as help with blocked assets

Following the introduction of a new package of sanctions by the United States of America, the Belgian depositary Euroclear announced the suspension of its work with assets "until clarification is received". Expectedly, this put a stop to the process of unblocking the assets of Russian citizens. 

Euroclear has already sent letters to its clients informing them that asset servicing processes involving the National Settlement Depository (NSD) have been suspended. Why? Because NSD is on the sanctions list. Suspension of servicing assets that are in any way related to NSD automatically means suspension of licenses to unblock assets previously received by investors from the Russian Federation.

How Euroclear's actions will affect Russian investors

Earlier, sanctions lawyers explained that unblocking assets under a license imply their transfer to another depository. But since at this stage of the chain of custody the assets are held at NSD, Euroclear cannot make such a transfer without an explanation of the impact of the US blocking sanctions on the Russian entity or without an authorizing license from the US OFAC.

It should be noted that OFAC issued a license on June 12 to carry out and complete the processes with the sanctioned NSD. The authorization is valid until August 13. If an investor holds the license and has the opportunity to transfer assets, it is theoretically possible to do so until August 13. But how to do it in practice? It is still unclear.
There is also the question of what to do when the general license expires. Euroclear needs to receive clarifying instructions from the Belgian regulator and the EU authorities on what actions to take during the period of the OFAC general license and after its expiration.

Foreign assets of Russian investors and payments on them have been frozen in Euroclear and Clearstream depositories since spring 2022. Centro Bank cites data that about 5 million individuals have been affected by the sanctions restrictions.

How will a residence permit or European citizenship help?

The main difficulty in obtaining a license from foreign regulators arises from the need to register securities and cash accounts in the EU. Why? The first point - brokers and banks require residence permits or citizenship of these countries. Another point - without residency status, it is impossible to place in one institution more than 100,000 € in cash equivalent. Even if you have an open account, but you do not have residency status in a European country, the account is very likely to be blocked.

It turns out that even if according to the law residence permit or citizenship is not a prerequisite for obtaining a license, the lack of such status will not allow you to regain control over the assets. What is the way out of the situation? You can gift (fictitiously) the assets to a close relative who has an EU or Swiss resident status.
Another effective method is to sell the assets to a trusted person who has the status of a resident of the European Union or Switzerland. In this case, the parties themselves agree on the value, payment procedure, and transfer of assets. 

Registration of a second citizenship or residence permit of the EU country or Switzerland is another effective method. Here everything will depend on the chosen basis and the country of second citizenship. In this case, the applicant can make an application through the Ministry of Finance or the Central Bank of the country in which he has a resident status. Many EU countries actively help their citizens in the issue of unblocking assets.

You can get the status of a residence permit or EU citizen with the help of specialists from the migration agency GARANT.in. We will analyze the situation in each specific case and offer an effective solution for you. With us the fulfillment of any task becomes real!