Frozen Assets | Legal Advice on the Swap Scheme

Frozen Assets | Legal Advice on the Russian Swap Scheme

The ongoing conflict between Russia and Ukraine has had a profound impact on the global financial landscape. One consequence is the freezing of foreign securities held by both Russian nationals and foreign investors. In an attempt to mitigate this issue and revitalize the Russian stock market, the Russian government has introduced a swap scheme.

Frozen assets due to the Russia-Ukraine conflict

In the wake of the 2022 invasion of Ukraine, Western nations imposed a series of sanctions on Russia, aiming to isolate it financially and exert economic pressure. These sanctions included the freezing of assets held by Russian nationals and entities abroad. According to estimates, over 3.5 million Russians currently have frozen assets worth approximately 1.5 trillion rubles (16.3 billion dollars). Conversely, foreign investors also hold securities in Russia that are now inaccessible due to countersanctions imposed by the Russian government.

Legal advice on frozen Russian assets

Russia's swap scheme: a potential solution?

The Russian government's proposed swap scheme offers a possible solution to unlock these frozen assets. Under this scheme, Russian investors holding frozen foreign securities can apply to sell them to foreign buyers. The key element of the plan involves the use of "type-C" accounts. These accounts, established within Russia, hold funds belonging to foreign investors that are currently inaccessible due to sanctions. The swap scheme proposes foreign buyers to utilize these "type-C" accounts to bid for the Russian-owned foreign securities.

Legal and practical considerations:

Sanctions compliance

A significant concern surrounding the swap scheme is its compatibility with existing sanctions imposed by the West. While Russia appoints a broker to facilitate the first scheme for small ticket Investors (OOO “Investitsionnaya Palata”), the utilization of "type-C" accounts raises questions about potential circumvention of sanctions. Foreign investors will need to carefully scrutinize the legality of participating in the swap scheme, ensuring it does not violate any applicable sanctions imposed by their home countries (UK or USA in this case).

Feasibility and participation

The success of the swap scheme hinges on the participation of both Russian sellers and foreign buyers. Several challenges might limit participation:

  • Limited trading window: The scheme operates with a strict timeline for applications and bidding, potentially hindering participation from international investors.
  • Restricted funds in "type-C" accounts: The requirement for foreign buyers to utilize funds held in "type-C" accounts restricts their purchasing power and flexibility within the scheme.
  • Transparency and oversight: The lack of transparency surrounding the pool of securities offered and the bidding process creates uncertainty for potential foreign investors.

Potential benefits and risks


  • Unlocking frozen assets: If implemented successfully, the swap scheme can provide relief to both Russian sellers and foreign investors by unlocking a portion of their frozen assets.
  • Market revitalization: A functional swap scheme could revitalize the Russian stock market by increasing liquidity and attracting new investments.
  • Foreign investment opportunities: Foreign investors with "type-C" accounts may see opportunities to acquire Russian securities at discounted prices.


  • Sanctions evasion: The scheme could potentially be used as a means to circumvent or weaken the impact of existing sanctions.
  • Benefitting sanctioned individuals: There is a risk that sanctioned individuals could indirectly benefit from the scheme if their assets or funds flow through the system.
  • Devalued ruble: The ongoing devaluation of the ruble diminishes the attractiveness of Russian securities for foreign investors.

Recommendations for international investors

International investors, particularly those based in the UK and USA, should proceed with caution and thorough due diligence before considering participation in the swap scheme. Here are some crucial steps:

  • Sanctions compliance review: Investors should consult with legal counsel specializing in sanctions to ensure that participation in the swap scheme does not violate any applicable sanctions laws.
  • Detailed scheme analysis: A comprehensive understanding of the scheme's mechanics, the pool of securities offered, and the bidding process is essential before making any investment decisions.
  • Independent risk assessment: An independent risk assessment should be conducted to evaluate the potential financial and legal risks associated with participating in the scheme.

GCC (Gulf Cooperation Countries) investors:

Investors from GCC countries should be aware of the following additional considerations:

  • U.S. dollar transactions: The swap scheme might involve transactions denominated in U.S. dollars, potentially triggering scrutiny from U.S. authorities if the underlying assets or activities violate U.S. sanctions. Consulting with legal counsel specializing in U.S. sanctions is crucial for GCC investors.
  • Reputational risk: Participating in a scheme with potential links to sanctions evasion could damage the reputation of GCC investors. Careful evaluation of the scheme's compliance and potential consequences is essential.
  • Long-term investment strategy: The political and economic situation in Russia remains uncertain. GCC investors should consider their long-term investment goals and risk tolerance before participating in the swap scheme.

Other considerations

  • Market volatility: The Russian stock market is experiencing significant volatility due to the ongoing conflict and sanctions. Investors from all countries should be prepared for potential losses and a high-risk environment.
  • Transparency concerns: As with investors from other countries, transparency surrounding the pool of securities and the bidding process remains a concern. Investors should seek as much information as possible to mitigate risk.

As a leading German law firm with extensive experience in complex financial transactions and sanctions compliance, WINHELLER is closely monitoring the recently announced Russian asset swap scheme.

While the potential to access currently inaccessible assets holds some appeal, the scheme presents significant legal and practical uncertainties. Our team of legal professionals can assist international investors in navigating these complexities.

Comprehensive legal advice on frozen assets and the Russian swap scheme

We offer a comprehensive suite of services including:

  • Sanctions compliance review: A thorough analysis of the swap scheme's compatibility with applicable sanctions regulations to ensure your participation does not violate any legal restrictions.
  • Detailed scheme analysis: A deep dive into the mechanics of the scheme, the pool of available assets, and the bidding process to empower informed investment decisions.
  • Risk assessment: A comprehensive evaluation of the potential financial and legal risks associated with participating in the swap scheme.
  • Regulatory guidance: Expert advice on navigating the regulatory landscape within your home country and Russia.

Don't navigate these uncertain waters alone. Contact us today to discuss your specific situation and explore how we can help you make informed decisions regarding the Russian asset swap scheme.

Advisor on the Russian swap scheme

Russia's proposed swap scheme presents a complex and evolving situation. While the potential for unlocking frozen assets and revitalizing the Russian stock market holds some promise, significant uncertainties and legal constraints remain. International investors, regardless of their home country's stance on Russia, must exercise caution and prioritize a comprehensive understanding of the legal and practical implications before engaging with the scheme. By conducting thorough due diligence, seeking legal counsel, and carefully evaluating the risks, international investors can make informed decisions regarding their participation.

Please feel free to conatct us if you need assistance. You can easily reachus by e-mail ( and phone (+49 69 76 75 77 85 25).

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