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Peter Davis

An writer at FOMOdrive

  • Jan 05, 2024
  • 3 min read

Russian investors will not be able to claim assets from blocked accounts “C” and “I”

President Putin has forbidden the confiscation of assets in non-citizen accounts of categories "S" and "I".

Investors from Russia will not be able to ask for the return of any assets that have been blocked in these accounts.

Laws amending the methodology for returning assets frozen by European regulators to Russian investors were signed by President Vladimir Putin, according to RBC.

A decree has been issued that prohibits foreclosures, seizures, and other interim measures in regards to assets in "C" and "I" accounts. Additionally, another decree has been issued that enlarges the list of those who are eligible to receive payments from an "I" account.

After the implementation of the CBO, "C" type accounts were created in order to prevent funds from being accessed by residents of unfriendly countries in response to foreign restrictions. These accounts are eligible to receive dividends, interest, and other payments on behalf of non-residents, however, non-residents from unfriendly jurisdictions are not allowed to withdraw funds from these accounts.

Foreigners in Russia utilize "I" accounts for investments and reinvestments. These accounts are used to exchange rubles for foreign currency in order to repatriate income earned from investments in Russia.

BFM reported that, so far, there have been no seizures of assets in accounts "C" and "I". In November, the St. Petersburg Arbitration Court had taken almost 3 billion rubles from both types of accounts due to a claim from an investor against Euroclear, but later reversed the decision, deeming it to be too extreme.

NSP partner and lawyer Aram Grigoryan believes that the new presidential decree does not align with established practice, nor with the reasonable expectations of Russian plaintiffs who are attempting to recover losses or debts from foreign defendants by using property in type “C” accounts.

Viktor Mashinsky, a lawyer from the NSP Law Office, has declared that the decree that was signed renders it impossible to meet the demands of Russian investors by using the assets of foreign investors that are blocked in Russia.

The authorities may use the fact that the state is partially compensating investors for their losses to justify the advisability of implementing new restrictions. This compensation could be in the form of income on securities based on Presidential Decree No. 665, or through the mechanism of trading in blocked assets.

RBC Investments was informed by the Pervaya Management Company that, in accordance with the new decree, they will continue to work diligently to give their customers access to their blocked funds through both individual and collective applications. The company has requested 184.8 billion rubles, which is the largest amount currently.

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