The Kremlin said on Friday that Western banks' legal departments understand the "catastrophic consequences" that would follow should the European Union proceed with plans to confiscate Russian assets amid the EU's recent talks to transfer some of these funds to supply Ukraine with arms.

Some Western banks are reportedly lobbying against EU proposals to redistribute billions of euros in interest earned on frozen Russian assets, senior industry sources said, fearing it could lead to costly litigation.

European Union leaders on Thursday agreed to move ahead with work on a plan to use up to 3 billion euros ($3.24 billion) a year to supply arms to Ukraine as they try to bolster Kyiv's fight against Russia, which would still own the underlying frozen assets. EU leaders said the proceeds could be used within a few months.

"We have heard statements from Brussels that the proceeds of our assets don't belong to anyone," Kremlin spokesperson Dmitry Peskov told reporters. "This is not so. They belong to the holders of the assets, the owners of the assets."

Responding to Reuters' report that some banks fear that they might later be held liable by Russia if they are involved in any transfer of money to Ukraine, Peskov issued a thinly veiled warning.

"The legal department of any bank understands the catastrophic consequences of such actions to expropriate assets, both for the bank, for the country as a whole and for the European economy," Peskov said.

"If such decisions were realized, this would have very serious consequences for those who took and implemented them."