European banks are wary of using frozen Russian assets to aid Ukraine

In the EU, there is a desire to utilize billions of euros obtained from frozen Russian assets for arms shipments to Ukraine. However, Western banks have begun to “lobby” against this proposal, Reuters reports.

Banks are concerned that, in the future, when sanctions are lifted, Russia may hold them accountable if they participate in any money transfers to Ukraine. Additionally, the EU’s plan could potentially extend to assets in accounts held for individuals and companies subject to sanctions. So far, the EU has not yet raised the issue of such an extension. Reuters sources are also worried that these proposals will further undermine trust in the Western banking system.

EU, UK and US sanctions legislation typically entails freezing assets belonging to specified individuals but not confiscating them. Assets may be confiscated under UK law, but only if it is established that they are proceeds of crime. Russia contends that any attempt to seize its capital or interest constitutes “banditry” that will result in decades of lawsuits against all involved parties. Moscow has repeatedly stated that it will take retaliatory measures if its assets or income are expropriated.