The inconvenient truth about Europe’s frozen Russian assets Millions of private investors have become collateral damage in Western sanctions against Moscow. Zhanna Nemtsova says the E.U. should do something about it.
The European Union’s freeze on Russian assets has affected more than 5 million private investors, most of whom are not under Western sanctions. Instead of trying to accommodate these people, the E.U. keeps returning to the possible confiscation of Russian assets in support of Ukraine. Zhanna Nemtsova — who cofounded the Boris Nemtsov Foundation and fundraises among businesspeople from Russia — argues that it’s in the E.U.’s own best interest to unfreeze private investors’ funds. In a guest essay for Meduza, Nemtsova explains why.
The debate over Russian assets drags on — without any visible progress
On March 20, Deutsche Welle reported that the European Union had halted discussions on confiscating frozen Russian assets. The German news outlet interpreted the conclusions from the most recent E.U. summit as follows:
In accordance with E.U. law, Russian assets must remain immobilized until Russia ends its aggressive war against Ukraine and compensates Ukraine for the damage caused by that war.
Whether this statement signals a definitive end to the debate over Russian assets remains open to interpretation. Many voices in the E.U. continue to advocate for a hardline confiscation approach. As recently as mid-March, both the European Parliament and the French Parliament called for Russian assets to be used for Ukraine’s reconstruction.
In any case, even if caution prevails in Brussels amid concerns about the E.U.’s image with investors, any progress is unlikely before the active phase of the war in Ukraine ends. The assets will remain frozen, while the revenue they generate will be allocated to supporting Ukraine.
The asset freeze impacts not only Russian state holdings but also the funds of millions of private investors, most of whom aren’t sanctioned
In late 2024, during a meeting with Russian-speaking entrepreneurs in a European capital, I was reminded that an estimated 20 percent of the total €300 billion in Russian assets frozen by Western countries may belong to private investors. This affects more than five million Russian citizens, the vast majority of whom are not targeted by Western sanctions but have nonetheless become “collateral damage” in the sanctions war.
This injustice — albeit one that Ukrainians understandably may not recognize as such — receives little attention in the European media or the halls of E.U. policymaking. At the same time, it would be wrong to say the subject is completely ignored. In February, for instance, the newspaper De Tijd reported that €65 billion of the €258 billion in Russian assets frozen in Belgium are securities not connected to the Russian Central Bank. “The inconvenient truth is that the vast majority of that sample amount does not belong to people and companies on a sanctions list,” the outlet noted.
However, for observers unaffected by the asset freeze and who don’t read the financial trade press, the impression may persist — even in the fourth year of sanctions — that all the frozen assets belong to Russia’s Central Bank. Regrettably, this remains the prevailing view among many European officials. I know because I got the chance to discuss the matter with five of them.
From these conversations, I came away with the impression that the E.U. likely didn’t deliberately intend to freeze private investors’ assets. Nevertheless, sanctions hit leading Russian banking institutions that provide retail brokerage services, including Sberbank, VTB, Alfa-Bank, and Rosbank. Restrictions were likewise imposed on the National Settlement Depository (NSD), Russia’s primary custodian of securities, and the SPB Exchange, Russia’s main venue for trading foreign stocks.
Ultimately, whether a Russian broker maintained an account with the European depositories — namely, the Belgium-based Euroclear or the Luxembourg-based Clearstream, where the majority of private investors’ frozen assets are held — or operated through the NSD, millions of Russians lost access to their securities.
Unfreezing assets is technically possible, but the process is painfully slow. 1.5 million Russians have managed to recover only some of their funds.
Technically, from the outset of European sanctions, private investors have had access to a mechanism to unfreeze their assets. The system requires them to obtain a special license from the Belgian and Luxembourg finance ministries. The process takes several years and is mostly accessible to persons with a European bank account, E.U. residency, and a financial guarantor (generally a bank, another financial institution, or a lawyer licensed to operate within the European Union). The guarantor must verify that the asset owner is not listed under E.U. or U.S. sanctions and is not connected to anyone who is.
The cost of legal services and associated expenses for obtaining the license can range from $50,000 to $100,000, making the process viable only for affluent investors with at least $1 million in frozen assets. Sanctions attorney Elena Ryazanova confirmed this in an interview on the podcast How Money Works.
One of my sources, who requested anonymity, was also hit by the asset freeze. He is an entrepreneur who built his business from the ground up and invested his earnings in securities, including U.S. and European stocks, but he did it all through Russian brokers. After the start of the full-scale invasion of Ukraine, he obtained E.U. residency and left Russia. Despite meeting all criteria and securing licenses from the Belgian and Luxembourg finance ministries, he still hasn’t been able to unfreeze his assets — more than three years in.
One reason this process is so slow is the enormous backlog of applications to unfreeze assets. Last year, Belgium received 1,214 such requests and approved just 232. There are only five people on the team handling this paperwork. Meanwhile, some 200 people have filed lawsuits against the Belgian Treasury.
Further complicating matters, in June 2024, the U.S. Treasury’s Office of Foreign Assets Control added Russia’s National Settlement Depository to its sanctions list. Now, investors who already have E.U. licenses must also get OFAC’s approval, as nearly all private portfolios include U.S. dollar-denominated securities or equities issued by American companies. Processing these applications can add a year to the overall wait time.
“Russians invested in U.S. and European securities precisely for their reputation as stable and reliable assets. For some — often middle-class, educated, progressive individuals — these were retirement savings. The inability to manage their portfolios is causing them real losses,” one source told me.
The Russian authorities are trying to help a broader group of affected investors. In 2023, Vladimir Putin issued two executive orders designed to facilitate the unfreezing process:
- The first proposal envisions the distribution of dividends and coupon payments on frozen assets. The total amount of compensation is unclear, but according to Russia’s Finance Ministry, it could reach 474.6 billion rubles ($5.6 billion). One of my sources noted that if the total amount of frozen retail assets is estimated at $50 billion, then Russia has paid out roughly 10 percent of that — equivalent to the return those securities would have generated over two years.
- The second executive order allows Russian citizens and non-residents to swap assets worth up to 100,000 rubles ($1,200). However, the scheme failed due to low demand from foreigners. In October 2024, Russia’s Central Bank reported that it had conducted securities buybacks totaling just 8.1 billion rubles ($96.3 million) — four times less than planned.
Nevertheless, in February 2025, Central Bank head Elvira Nabiullina announced that Russian investors had managed to unfreeze approximately 570 billion rubles ($6.8 billion) by the end of 2024. Some 1.5 million people were able to recover at least part of their investments.
Asset confiscation could seriously damage Europe’s reputation, but the E.U. shows no sign of accommodating private investors from Russia
As the Trump administration accelerates negotiations on a broader ceasefire between Russia and Ukraine, European policymakers have returned their attention to the idea of using frozen Russian assets to fund Ukraine’s postwar reconstruction. It’s undeniable that Russian accountability for compensating Ukraine is a key condition for any durable peace settlement, but the expropriation of securities held by private individuals who are not under sanctions carries enormous risks. First and foremost, it could trigger a wave of lawsuits against the E.U. and seriously undermine trust in a united Europe.
“The right to private property and its inviolability are fundamental pillars of E.U. law. Undermining that foundation would have extremely serious and negative consequences — and European officials understand this. Confiscating assets would trigger a chain reaction, as Russia would respond with countermeasures. For example, a large number of assets belonging to E.U. investors are frozen in so-called ‘C-type’ accounts in Russia,” said one lawyer, who spoke on condition of anonymity.
The confiscation of assets could also trigger a substantial capital flight by other foreign investors from Europe. Outgoing German Chancellor Olaf Scholz echoed this concern in emotional remarks at an E.U. leaders’ summit late last year, warning that expropriation could destabilize financial markets. There’s also the risk that such a decision could further alienate millions of Russians from Europe while strengthening support for Putin.
One potential path forward involves distinguishing between state-owned assets and those held by unsanctioned private individuals and institutions. This would require establishing a simple and accessible process for filing asset-unfreezing requests.
Given that E.U. policy rightly restricts the transfer of unfrozen assets back to Russia while the war against Ukraine continues, one potential solution could be the creation of a specialized management company within Europe. Such an entity could temporarily manage the securities of non-sanctioned individuals who lack E.U. residency and accounts at European banks.
However, at present, European officials have taken no action — or even opened talks — on the matter.
Text by Zhanna Nemtsova
Translation by Kevin Rothrock