Belgium refuses Alfa Capital request to unfreeze assets in Euroclear

MOSCOW. Sept 7 (Interfax) - Belgium's Treasury has refused a request from Russia's Alfa Capital to unblock client assets frozen in Euroclear, the company told Interfax.

The company earlier filed four appeals with European Union national authorities, including Belgium's General Administration of Treasury and Luxembourg's Finance Ministry.

"At this stage of review of one of Alfa Capital's appeals filed in January 2023 regarding client assets blocked in Euroclear, under a general license issued for [Russia's National Settlement Depository (NSD)] and Euroclear, Belgium's Treasury refused to approve the unblocking of assets in violation of the principles of legality and reason," the company said.

With the support of external advisors, Alfa Capital is now challenging the actions of Belgium's Treasury. Objections and a request for a review of the decision have been sent to the Treasury and an administrative complaint over the refusal has been filed with Belgium's Council of State.

"We will use all available mechanisms to protect the legal interests of our clients. But it is important to understand that the consideration of submitted documents can take a significant amount of time and a positive result is not guaranteed in the current circumstances even with a complete legal foundation for claims," the company said.

It was reported in August that Tsifra Broker and Tinkoff Insurance also had their requests to unblock assets in Euroclear refused.

Relations between European central depositories Euroclear and Clearstream and Russia's NSD were essentially cut off almost immediately after the start of the military operation in Ukraine last year. At the time, Russia, responding to tough sanctions, imposed currency and capital restrictions, while the European settlement and clearing systems closed ruble "bridges" and the option of settlements in rubles. The NSD, a division of the Moscow Exchange Group, imposed restrictions on transactions on Euroclear and Clearstream accounts at the beginning of March 2022 on the recommendation of the CBR. The European central depositories, in turn, restricted transactions on NSD accounts.

At the beginning of June 2022, the European Union imposed sanctions on the NSD, leading to its accounts being blocked at Euroclear and Clearstream.

The European Commission issued clarifications in early October under which the authorities of some EU members could allow transactions necessary to close contracts and agreements entered into prior to the imposition of sanctions against the NSD on June 3 until January 7, 2023. Russian market participants filed requests for general licenses from the finance ministries of Belgium and Luxembourg to unblock the assets of all investors not subject to sanctions.