European banks are stepping up to complain to Brussels over lack of clarity on how to implement EU sanctions against Russia And the “misalignment” with the equivalent measures implemented in the US and UK.

Representatives of the region’s biggest banks, including the European Banking Federation, will discuss their concerns with European Commission officials in a video conference on Thursday, while the umbrella group plans to raise its concerns in a letter to Brussels.

These include whether to process proceeds from investment sales for Russian clients, how to tell if a company is controlled by a sanctioned individual, and managing existing agreements with Moscow’s central bank.

Confusion among banks over the EU’s response to Moscow’s invasion of Ukraine is likely to intensify as Brussels is discussing a fifth round of curbs this week. Targeting Russian coal imports And expand restrictions on the banking sector.

committee Post a Q&A Addressed some preliminary concerns raised by the bank in an earlier letter from the department to Brussels. EU officials are keen to provide lenders with more detailed guidance, while also addressing the risk of “over-compliance”, where lenders take an overzealous approach to sanctions.

One concern is that banks may refuse to hold deposits for Russian residents in the EU, as current sanctions only prevent EU banks from accepting new deposits of more than 100,000 euros from Russians without EU passports. “You tend to err on the prudential side,” said one senior European banker.

There are two types of “over-compliance” that are raising concerns, committee officials said: “One is over-compliance by member states, which may be overly cautious and address issues that may not be fully covered by sanctions.

“Then banks may over-comply, such as stopping deposits from Russian customers, even if they live here and are not sanctioned. Companies may make decisions to preserve their reputation or limit risk more broadly; it’s not just about curbs decision,” the official added.

Valdis Dombrovskis, executive vice-president of the commission, told the Financial Times: “Obviously we understand the need for some guidance on the banks and institutions imposing sanctions, and we are looking into that.”

One of the main concerns for large European banks with operations around the world is that they are being pulled in different directions due to uncoordinated EU, US and UK sanctions on Russia.

While Western countries try to coordinate their measures, banks say there are important differences. For example, the key question of whether an entity is controlled by individuals or companies on the sanctions list, which the US defines as whether they own 50% or more, but the EU defines it as more than 50%.

If two sanctioned individuals or entities jointly own more than half of a company, the EU and the US consider it control, but the UK does not.

In addition, the UK does not consider secondary trading in the shares of sanctioned companies to violate sanctions, but the US and EU do in some cases.

Some banks are also unsure what they should do with repurchase agreements where the counterparty is Russia’s central bank, which is now under sanctions. Repurchase agreements are a way for banks to raise money or provide financing by taking out loans for assets.

Banks are seeking guidance on whether they should unwind repurchase agreements with central banks by returning funds or liquidating assets. If such unwinding transactions are deemed to violate sanctions, these agreements will be effectively frozen.

Lenders are also concerned about the trading and investment accounts they hold on behalf of Russians. Banks want clarity on whether sales of investments worth more than 100,000 euros by Russian clients would violate sanctions.

EBF declined to comment on the issues.

“Given the scale of the sanctions, the request for clarification is important, and the risk of a different interpretation is high,” the committee official said. “That’s why we publish FAQs. That’s why we engage with business associations and stakeholders.”