Israel’s banks initiate segregation of Russian accounts in reply to EU sanctions

(MENAFN) Several major Israeli banks have initiated the segregation of accounts belonging to Russian citizens or tax residents, as reported by several news agencies. According to Mark Oigman, the founder of the international financial company SmartGen, these measures are a result of EU sanctions, particularly those imposed on Russians by Euroclear, a depositary based in Belgium.

Euroclear, in the previous year, had frozen accounts at Russia's National Settlement Depository (NSD), through which Russian investors managed their assets in foreign jurisdictions. Euroclear's guidance dictated that if a Russian resident's investment portfolio exceeded €100,000 (USD108,000), any coupon income, dividends, or proceeds from asset sales linked to it would be credited to a specially segregated account.

This prevented Russian clients from managing their assets and provided Euroclear with a mechanism to block them in the event of sanctions violations, explained Vadim Pogosyan, a partner at the asset management firm Smartly to a news outlet.

Initially, the restrictions were limited to financial institutions within the EU that held assets linked to Euroclear. However, the clearing house has now extended its instructions to its counterparties outside the EU, compelling them to adhere to the specified requirements.

Previously, measures segregating Russian accounts were implemented at the UAE's NBD Bank and the Kazakhstan Stock Exchange (KASE). Media reports indicate that an order directing Israeli financial institutions to segregate accounts held by Russians took effect on November 13.

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