Eegle Management provides you with information on the procedure for unlocking assets in the depositories Euroclear (Belgium) and Clearstream (Luxembourg)
General context and current situation
As a result of the blocking sanctions imposed by the EU on NSD on June 3, 2022, as well as sanctions against individual banks, many banks’ accounts were blocked and their assets were frozen in European depositories Euroclear or Clearstream.
Euroclear’s headquarters are located in Belgium and, therefore, assets are frozen in Belgium, while Clearstream’s headquarters are located in Luxembourg.
Regarding NSD, the Regulations on EU Sanctions provide for a special article that provides investors with the opportunity to request the unblocking of assets within a specific period – no later than 01/07/2023.
In the event that investors or financial institutions miss the specified period, they can no longer benefit from it, but other scenarios are possible, which to date still allow reliance on the general principle of unlocking assets set out in the EU Sanctions Regulation and which has not been limited to date by time.
According to the article on “derogation” (“derogation from compliance”), an application is submitted to the Belgian Treasury, which, on the basis of this article and if certain requirements are met by investors, authorizes their release. This competence is vested in the Treasury both in the EU Sanctions Regulations and in Belgian domestic law. The regulator’s resolutions apply to Euroclear. If the assets were stored in Clearstream, then the regulatory authority is the Ministry of Finance of Luxembourg, where a similar application is submitted.
Sometimes “derogation/derogation allowance” is called an “individual license”, but we use the legal term in accordance with Belgian law.
We provide asset-unlocking services in both jurisdictions.
What scenarios are typical in the current situation?
- Neither the investor nor his bank/broker has applied for “derogation” – the possibility remains to apply on the basis of the general principle of “derogation”
- The investor and his bank/broker submitted a group application on behalf of his clients, but was refused – there is an opportunity to request a re-examination of an application originally prepared on the basis of the principle of a specific deadline for “derogation from compliance” (since the application was submitted before 01/07/2023) for based on the general principle of “derogation from compliance”
- The investor and his bank/broker have submitted a group application that has not yet been reviewed: it is possible to submit an individual request for consideration based on the general principle (since the application was submitted by 01/07/2023).
What deadlines should be taken into account?
Currently, due to the increasing number of applications for unlocking assets, it is difficult to accurately estimate the time frame for receiving a decision from the Belgian Treasury, since the Regulator does not have clear internal regulations on the time for processing requests. Good working contacts allow us to talk about terms from 3 to 6 months. In some cases, it may be longer. For example, if a bank/broker has sent a group application, then the Regulator needs to evaluate each individual client, which significantly increases the review time.
If one of the group’s clients does not meet the criteria, the entire application may be suspended. Needless to say, individual requests are a priority.
What to do if the Regulator makes a positive or negative decision?
If the Regulator makes a positive decision, the decision to unfreeze assets and the asset transfer transaction will be executed by Euroclear / Clearstream and the assets will be unblocked.
In case of a negative decision:
Option 1: an application for re-examination can be submitted (the application processing time by the regulator is 3–6 months).
Option 2: file a claim in court (the time for processing documents and considering a claim in the State Council is 12–24 months.
- Preparation of an application to the Belgian Treasury takes 5–10 working days after the Client has provided a complete set of documents
- Residence permit, permanent residence, or EU or Swiss citizenship
- Having a bank/broker account in the EU or Switzerland (for transferring unlocked assets)
- No PEP status
- Availability of a guarantor in the EU (e.g. lawyer, accountant, consultant, company, financial institution, which guarantees that the client’s data is correct and the assets will not leave the EU).
In the absence of a guarantor, Eagle Management will assist in resolving this issue.
If the client or its activities are connected with the USA, Euroclear may additionally send documents to OFAC, however, this is not obligatory