Around $3.4 billion will reportedly be redistributed to Western investors whose funds are stranded in the country

Belgium-based clearing house Euroclear is set redistribute around 3 billion ($3.4 billion) of frozen Russian funds, Reuters reported on Friday. The money will reportedly be used to compensate Western investors whose assets are stranded in Russia.

The Kremlin has repeatedly warned that doing so would amount to "theft," contravening international law.

A number of Western states froze an estimated 264 billion worth of Russian sovereign and private funds following the escalation of the Ukraine conflict in February 2022. Around 200 billion is currently held by Euroclear. The assets have already generated billions in interest, of which 1.55 billion was transferred to Ukraine in July 2024.

Euroclear will redistribute 3 billion from a pool of 10 billion in cash belonging to Russian entities and individuals blacklisted by the EU as part of Ukraine-related sanctions, according to two sources cited by the news agency.

"We received authorization from our competent authority to unfreeze the compensation amounts and make these available to our participants," Reuters cites a briefing document dated April 1 as saying.

The agency noted that changes to the bloc's sanctions regime, adopted late last year, allow for these disbursements to Western investors.

According to two Reuters sources, Moscow has recently seized 3 billion held by Euroclear at a depository in Russia to compensate Russian investors affected by Western sanctions.

In November, Russian Finance Minister Anton Siluanov said that Moscow would use the income from the frozen assets of Western investors in response to similar actions by the West.

The issue of confiscating frozen Russian assets has been debated by EU lawmakers for more than three years, but member states have so far failed to arrive at a consensus. EU foreign policy chief Kaja Kallas has repeatedly called for the funds to be tapped and transferred to support Ukraine's reconstruction. Last month, she acknowledged that some member states still oppose the move.

The Russian authorities have initiated around 100 court actions against Euroclear, one source told Reuters, without providing details on their status.

Moscow has condemned the asset freeze, arguing that it violates international law and undermines the global financial system. The Kremlin previously stated that it plans to launch legal action against those involved in the seizure of its assets.