On January 3, 2024, amendments came into force which prohibit foreclosure under enforcement documents, seizure and other interim measures in respect of funds and securities held in “C” type bank accounts. Similar measures have been taken with respect to assets held in “I”-type accounts[1].
"C"-type accounts were introduced to block and prevent uncontrolled withdrawal of funds of so-called “unfriendly” non-residents as a reaction to the freezing of foreign currency reserves of Russian individuals and legal entities. The use of "C"-type accounts restricts the withdrawal of funds and assets only to the list of controlled transactions. Thus, non-residents have no possibility to withdraw funds from Russia, which in turn remain frozen in the country.
“I”-type accounts are used by non-residents in Russia for investments and reinvestments and currently make it possible to compensate Russian investors for assets frozen in foreign depositories.
Despite the fact that to date there is no positive practice of successful seizure of assets on these accounts, the legislator has stopped any possibility of withdrawal of assets, including through favorable decisions of Western courts. It is possible to assume that the above measure is also intended to develop a mechanism for realization of mutual unblocking of assets.
[1] The ban is established by Presidential Decree No. 8 of January 3, 2024 “On Amendments to Presidential Decree No. 95 of March 5, 2022 “On the Temporary Procedure for the Execution of Obligations to Certain Foreign Creditors” and Presidential Decree No. 665 of September 9, 2023 “On the Temporary Procedure for the Execution to Residents and Foreign Creditors of State Debt Obligations of the Russian Federation Expressed in State Securities, the Nominal Value of Which is Specified in Foreign Currency, and Other Obligations on Foreign Securities".
"C"-type accounts were introduced to block and prevent uncontrolled withdrawal of funds of so-called “unfriendly” non-residents as a reaction to the freezing of foreign currency reserves of Russian individuals and legal entities. The use of "C"-type accounts restricts the withdrawal of funds and assets only to the list of controlled transactions. Thus, non-residents have no possibility to withdraw funds from Russia, which in turn remain frozen in the country.
“I”-type accounts are used by non-residents in Russia for investments and reinvestments and currently make it possible to compensate Russian investors for assets frozen in foreign depositories.
Despite the fact that to date there is no positive practice of successful seizure of assets on these accounts, the legislator has stopped any possibility of withdrawal of assets, including through favorable decisions of Western courts. It is possible to assume that the above measure is also intended to develop a mechanism for realization of mutual unblocking of assets.
[1] The ban is established by Presidential Decree No. 8 of January 3, 2024 “On Amendments to Presidential Decree No. 95 of March 5, 2022 “On the Temporary Procedure for the Execution of Obligations to Certain Foreign Creditors” and Presidential Decree No. 665 of September 9, 2023 “On the Temporary Procedure for the Execution to Residents and Foreign Creditors of State Debt Obligations of the Russian Federation Expressed in State Securities, the Nominal Value of Which is Specified in Foreign Currency, and Other Obligations on Foreign Securities".