German prosecutors have initiated legal proceedings to seize over €720 million from a Frankfurt bank account belonging to a sanctioned Russian financial institution

In a groundbreaking move, German prosecutors have initiated legal proceedings to seize over €720 million from a Frankfurt bank account belonging to a sanctioned Russian financial institution, the National Settlement Depository (NSD). This marks the first instance of Germany taking steps to outright confiscate Russian assets rather than merely freezing them. The EU had imposed sanctions on NSD in June 2022, four months after Russia's invasion of Ukraine, leading to the freezing of NSD's assets in European banks, including the substantial sum held in a Frankfurt account of JPMorgan Chase.

The seizure attempt focuses on NSD, a subsidiary of the Moscow Stock Exchange responsible for tracking and settling securities deals. Previous German actions had primarily centered on freezing assets of individuals and firms subject to sanctions, involving items such as yachts and real estate. However, this recent motion, if successful, could see the significant funds absorbed into the German federal budget.

The federal office of the public prosecutor filed a motion before a Frankfurt court on July 7, 2023, seeking "independent confiscation proceedings" regarding the €720 million deposited by NSD in a Frankfurt bank account. The move was prompted by a "suspected attempt to violate embargo regulations" when, shortly after the EU sanctions against NSD, "unknown individuals" acting on behalf of the sanctioned entity tried to transfer the funds to another account. The banks involved reportedly chose not to execute the transfer in light of the EU sanctions against NSD.

While the motion awaits a ruling from the Higher Regional Court in Frankfurt, prosecutors clarified that "no individual can be prosecuted or convicted" in connection with the attempted violation. Notably, the statement from authorities did not confirm how the seized funds would be utilized, leaving questions about whether they would be directed towards Ukraine, a possibility being explored in the West for seized Russian central bank assets.

This move represents a significant escalation in international efforts to enforce sanctions against Russia. Simultaneously, G7 officials have intensified discussions on potentially utilizing around $300 billion in immobilized Russian sovereign assets, contemplating a radical step that could reshape the financial warfare against Moscow and provide support for Ukraine. The developments highlight the evolving strategies Western nations are exploring to address the ongoing geopolitical tensions and conflicts involving Russia.

By fLEXI tEAM