Reporting requirements under the asset freeze regulation

The newly introduced Article 8 of Council Regulation (EU) 269/2014 (Regulation 269), which is the Regulation through which the EU imposes an asset freeze on designated persons, has introduced an expanded reporting regime in respect of assets impacted by Regulation 269.

In particular, under Article 8(1) of Regulation 269, persons required to comply with the EU sanctions regime are now required to supply to the relevant competent authority where they are resident or located:

• Any information on funds and economic resources frozen in accordance with Regulation 269 or information held about funds and economic resources within the territory of the EU subject to an asset freeze under Regulation 269 and which should have, but have not been, treated as frozen by the person subject to the obligation to do so. The notification to the relevant competent authority must be made within two weeks of acquiring the notifiable information.
• Any information on assets within the territory of the EU and currently subject to an asset freeze under Regulation 269 which in the two weeks preceding the listing of the relevant asset frozen person were subject to any move, transfer, alteration, use of, access to, or dealing referred to in Article 1(e) or 1(f) . The notification to the relevant competent authority must be made within two weeks of acquiring the notifiable information.
• With respect to the reference made to Article 1(e) and (f), this refers to the definitions of the terms ‘freezing of economic resources’ and ‘freezing of funds’ respectively included in Regulation 269. Given that this reporting requirement is concerned with reporting steps taken prior to the listing (ie when no freezing was in place), reference to these definitions should be read as reference to reporting the type of positive actions described in those terms, as opposed to reporting on steps take to effect a freeze.

The reporting parties are further obliged to cooperate with the relevant competent authority to verify information submitted.

Article 8 includes a granular breakdown of the minimum information which must be provided as part of the above reporting requirement.

Central securities depositories are also subject to the reporting requirements described above, as well as required to submit information on extraordinary and unforeseen loss and damage concerning the relevant funds and economic resources, to the competent authority of the Member State where they are located, within two weeks of acquiring it and every three months thereafter, transmitting it simultaneously to the Commission.

Reporting requirements under the sectoral (trade) sanctions

Similarly with the above, Article 5a of Council Regulation (EU) 833/2014 (Regulation 833), which imposes sectoral (trade) sanctions on specific types of dealings to do with Russia, has also introduced an elevated reporting regime, although this focusses on more targeted matters. In particular: natural and legal persons, entities, and bodies including the European Central Bank, national central banks, financial sector entities, insurance and reinsurance undertakings, CSDs and central counterparties are required to report to the competent authority of the Member State where they are resident or located, as well as directly to the European Commission, information on the assets and reserves of the Central Bank of Russia, or any person acting on its behalf or at its direction, which they hold or control or are a counterparty to

The reporting parties are additionally required to immediately report to the relevant competent authority and to the European Commission where they have established an extraordinary and unforeseen loss or damage to the assets and reserves of the Central Bank of Russia, as referred to above.

Article 5a includes a granular breakdown of the minimum information which must be provided as part of the above reporting requirement.

This reporting must be made no later than two weeks after 26 February 2023 and shall be updated every three months.

The introduction of these reporting obligations is intended to ensure that assets sought to be restricted by the EU sanctions are properly identified and monitored by requiring increased cooperation and transparency from individuals and entities subject to the Regulations.

Our recent blog post on the EU’s 10^th package of sanctions against Russia can be accessed here.