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German prosecutors have filed a motion to seize more than €720mn held in the Frankfurt bank account of a Russian financial institution under sanctions, the first time they have moved to confiscate Russian assets rather than just freeze them.
If successful, it would mark a big step-up in international efforts to enforce anti-Russian sanctions. Previously, Germany has only frozen the assets of individuals and firms under sanctions, including yachts and real estate. But if prosecutors succeed in their motion, the funds could be absorbed into the federal budget.
Authorities have not confirmed how they would use the cash or whether it would be funnelled to Ukraine, a plan being explored in the west for Russia’s central bank assets if they are eventually seized.
In a statement, the federal office of the public prosecutor said it had filed a motion before a court in Frankfurt on July 7 this year requesting “independent confiscation proceedings” with regard to more than €720mn deposited by a Russian financial institution in a Frankfurt bank account.
The move was triggered, it said, by a “suspected attempt to violate embargo regulations”.
The institution at the heart of the motion is Russia’s National Settlement Depository (NSD), a subsidiary of the Moscow Stock Exchange where securities deals are tracked and settled. NSD was placed under sanctions by the EU in June 2022, four months after Russia’s full-scale invasion of Ukraine.
The sanctions in effect froze all assets held by NSD on behalf of investors which were deposited with European banks, including the €720mn it held in a JPMorgan Chase account in Frankfurt.
But according to prosecutors, shortly after the EU moved against the company, “unknown individuals” acting for NSD attempted to transfer the €720mn to another account.
A person familiar with the matter said JPMorgan Chase received instructions to transfer the money to the Commerzbank account of another Moscow Stock Exchange subsidiary, the National Clearing Corporation.
However, both banks decided not to execute the transfer, in view of the EU sanctions against NSD.
The person said that prosecutors viewed the transfer request as an attempt to evade sanctions, a suspected crime which they say justifies confiscating the money rather than simply freezing it.
The motion is currently with the Higher Regional Court in Frankfurt, which has yet to rule on it. Prosecutors said “no individual can be prosecuted or convicted” of the crime.
The prosecutors’ statement comes as western nations actively explore ways to seize Russian central bank assets to fund Ukraine.
G7 officials have intensified talks in recent weeks on spending some of the roughly $300bn in immobilised Russian sovereign assets, a radical step that would open a new chapter in the west’s financial warfare against Moscow.
Until now G7 governments have mostly balked at such a move, fearing that some foreign investors in dollar and euro assets would take flight.