New UK, EU and US Sanctions on Russia and Belarus update as of 16 MAY
With the rapid expansion of UK, EU and US sanctions on Russia and Belarus in recent weeks - and with more in the regulatory pipeline we set out:
- What's New This Week (to 16 May)
- A 5-step checklist for assessing how your activities may be affected
- A Sanctions Summary
WHAT’S NEW THIS WEEKNew measures announced or implemented in the last week are:
- The UK has provided a new general licence to Amsterdam Trade Bank N.V. such that until 12 May 2023 it may make various categories of payment despite being a majority owned subsidiary of Alfa-Bank JSC, which is a designated entity;
- The UK has designated 12 of Putin’s “inner circle”;
- The expiry date of the General licence in relation to Sovcomflot has been extended to 30 June 2022.
- The EU is continuing to negotiate on the introduction of a 6th package of sanctions including an import ban on oil from Russia.
- The US has issued 4 Russia-related General Licences authorising:
- transactions related to telecommunications and internet communications;
- the wind down of business with certain Russian broadcasting companies and their subsidiaries until 7 June 2022;
- the wind down of accounting, trust and corporate formation, and management consulting services until 7 July 2022;
- transactions involving credit rating and auditing services until 20 August 2022.
- A ban from 7 June 2022 on the provision of accounting, trust and corporate formation and management consulting services.
YOUR 5-STEP CHECKLIST
- Which countries’ sanctions apply to your activities?
The UK, EU, US and other countries’ sanctions typically must be observed by:
- their nationals, wherever they are in the world;
- all business done, in whole or in part, within their territory or airspace; and
- all legal entities incorporated or constituted under their law, including foreign branches;
Additionally, US sanctions may apply to non-US persons outside the US if a transaction:
- involves a ‘US nexus’ e.g. a transaction is conducted in US dollars (or needs to clear through the US financial system) or data is routed through servers in the US;
- with certain US-sanctioned persons or industries is deemed to be ‘significant’ or to constitute the provision of ‘material support’ (secondary sanctions); or
- involves the supply to certain organisations (on the US Entity List) of any US-origin items and certain non-US items incorporating US components or technology.
UK sanctions may also apply to non-UK persons outside the UK if there is a sufficient nexus. This will depend on the facts of each case but could include, for example, transactions using clearing services in the UK, actions by a local subsidiary of a UK company; actions directed from within the UK; and/or financial products or insurance bought on UK markets but held or used overseas.
- Are any of your business partners subject to an asset freeze?
The UK, EU, US and others are adding a growing number of Russian and Belarussian individuals and organisations to their national lists of those subject to an asset freeze (‘blocked’ in US terms). This generally requires those within the scope of the national sanctions, as described above:
- to freeze any assets of the designated parties that they may hold and to report these to their authorities;
- not to make any funds or economic resources available to them, directly, indirectly or for their benefit;
- US restrictions go further, in effect also prohibiting all transactions with the designated party.
The same restrictions also apply to any non-designated entity that is:
- ‘owned’ by a designated party or parties. The US threshold is 50% or more, while the UK and EU thresholds are ‘more than 50%’. The US and recently the EU (in updated guidance) consider the criterion met if the aggregated ownership of two or more designated parties exceeds the threshold. The UK (also in updated guidance) recognises aggregated ownership only if there is evidence of a joint arrangement between two or more designated parties; or
- (in the UK/EU, not the US) ‘controlled’ by a designated entity (i.e. able to ensure the affairs of the undesignated entity are conducted in accordance with their wishes, for example through controlling a majority of voting shares or having the right to appoint or remove a majority of the board of directors).
You should screen your business partners - banks, suppliers, customers, distributors – against the applicable national sanctions lists and, given the current rapid pace of developments, set up alerts for new designations if you do business with Russia or Belarus, in order to be able to identify any relevant new sanctions measures without delay. In some instances, the measures include general licences that provide for a wind-down period but other may have immediate effect.
Asset freezes on Russian banks may prevent you from receiving or making payments to business partners or to employees; if necessary, consider work-arounds to facilitate the payments.
- Are any of your activities affected by other financial sanctions?
Short of an asset freeze, sanctions measures may restrict or prohibit:
- granting new loans or credit (including payment terms);
- sanctioned banks from clearing payments in certain currencies;
- dealing in transferable securities and money market instruments issued by sanctioned parties;
- the size of bank deposits by nationals of sanctioned countries;
- the access of sanctioned banks to the SWIFT messaging systems.
The screening of your business partners, including banks, should check for the application of any of these restrictions.
- Are your products or services restricted?
Trade sanctions may restrict or prohibit:
- the sale, supply, transfer or export to Russia/Belarus, directly or indirectly, of certain goods and technology beyond those that are normally subject to export controls. This generally includes related financial services, brokering and technical assistance (e.g. repair, maintenance). The restrictions may be focused on only certain designated entities. There may be exceptions, grounds for licensing and wind-down periods;
- closure or airspace and ports to aircraft and ships;
- more wide-ranging embargoes on most finance and trade with certain regions (previously Crimea, now extended to the separatist regions of Donetsk and Luhansk).
- What, if anything, do your contracts say?
If new sanctions affect the performance of your contract, does the contract enable you (or the counterparty) to suspend or terminate it without liability or serious risk of challenge, whether through a specific sanctions provision or other clauses such as the material adverse change clause?
YOUR SANCTIONS SUMMARY
The UK has announced various new sanctions related to Russia's invasion of Ukraine which it has not yet implemented, including:
- an outright ban on all new outward investment to Russia;
- by the end of 2022 the UK will end all dependency on Russian coal and oil, and end imports of gas as soon as possible thereafter;
- a ban on accountancy, management consultancy, and PR services to Russia;
- import tariffs on goods including chemicals, platinum and palladium; and
- export bans on goods including chemicals, plastics, rubber and machinery.
- Banks include: VTB; Credit Bank of Moscow; PJSC Sberbank; VEB.RF; Bank Otkritie; Financial Corporation PJSC; SovComBank; Bank Rossiya; IS Bank; GenBank; Promsvyazbank; Alfa-Bank; Gazprombank; Russian Agricultural Bank; Ural Bank for Reconstruction and Development; SMP Bank; and the Black Sea Bank for Development and Reconstruction;
- General Licences provide for the wind-down of certain transactions involving: Sovcomflot and subsidiaries until the revised date of 30 June (previously 15 May) 2022; energy-related payments through Sberbank; payments related to the insolvency of VTB’s UK subsidiary; payments for basic needs, bank fees and legal services by VTB Capital plc, Sberbank CIB (UK) Ltd and their UK subsidiaries until 3 April 2023; payments to Gazprombank or a subsidiary for making gas available in the EU until 31 May 2022; allowing for the continuation of business operations of Evraz's North American subsidiaries until 2 September 2022; and certain payments by Amsterdam Trade Bank N.V. until 12 May 2023;
- Entities: include Russian Direct Investment Fund; UralVagonZavod; United Aircraft Corporation; United Shipbuilding Corporation; Rostec; Tactical Missiles Corporation; Sogaz; Geopolitica; Internet Research Agency; New Eastern Outlook; Oriental Review; Alrosa; Kronshtadt; the Wagner Group; Russian Railways; SOVCOMFLOT; TV-Novosti; Rossiya Segodnya; Photon Pro LLP; Majory LLP; Djeco Group LLP; Aleksandrov Scientific Research Technological Institute NITI; JSC Arzamas Machine-Building Plant; KSC Kalashnikov Concern; Dukhov Automatics Research Institute; JSC GTLK, LLC Military Industrial Company; Promtech-Dubna; Radiotechnical and Information Systems Concern; Evraz plc; Progress Rocket and Space Centre; and media/propaganda organisations. The Central Scientific Research Institute of Chemistry and Mechanics was designated under the Cyber Sanctions regime;
- Individuals include: President Putin, Foreign Minister Lavrov, Maria Lavrova, various members of the Russian State Duma, Gennadiy Timchenko, Boris Rotenberg, Igor Rotenberg, Denis Bortnikov, Petr Fradkov, Elena Georgieva, Kirill Shamalov, Yury Slyusar, Kirill Dmitriev, Alisher Usmanov, Igor Shuvalov,Oleg Deripaska, Igor Sechin, Andrey Kostin, Alexei Miller, Nikolai Tokarev, Dmitry Medvedev, German Khan, Mikhail Fridman, Petr Aven, Alexey Mordashov, Andrey Melnichenko, Viktor Vekselberg, Alexander Ponomarenko, Dmitry Pumpyanky, Vadim Moshkovich, Mikhail Mushustin, Sergei Shoigu, Dmitry Peskov, Maria Zakahrova and Dmitri Lebedev, Oleg Tinkov (founder of Tinkoff Bank); Herman Gref (CEO of Sberbank); Oleg E Aksyutin (Deputy Chairman of the Management Board at Gazprom PJSC); Didier Casimiro (First Vice President of Rosneft); Zeljko Runje (Deputy Chairman of the Management Board and First Vice President for Oil, Gas, and Offshore Business Development of Rosneft); Galina Danilchenko (‘mayor’ of Melitopol); and Polina Kovaleva (stepdaughter of Sergey Lavrov); Roman Abramovich (with a general licence in respect of Chelsea Football Club (owned by Abramovich) permitting certain payments until 31 May, amended to allow Chelsea FC to sell certain tickets excluding Premier League home matches, with the proceeds of such sales kept by the competition organisers and other clubs); Sergey Brilev Mikhail Mizintsev; Alekzandr Zharov; Anton Anisimov; Vladimir Maksimenko; Andrey Areshev; Irina Bubnova; Anton Bespalov; Sergei Saenko; Natalya Skorokhodova; Svetlana Zamlelova; Sergei Ivanov; Boris Rotenberg; Andrey Akimov; Alexander Dyukov; Sergey Kogogin; Andrey Guryev; Leonid Mikhelson; Viatcheslav Kantor; Katerina Tikhonova; Maria Vorontsova; Yekaterina Vinokurova; Alexander Ananchenko; Sergey Kozlov; Eugene Tenenbaum; David Davidovich; a number of journalists/war correspondents; Alina Kabaeva; Anna Zatseplina; Lyudmila Ocheretnaya; Igor Putin; Mikhail Putin; Roman Putin; Mikhail Shelomov; Alexander Plekhov; Mikhail Klishin; Vladimir Kolbin; Yuri Shamalov; and Viktor Khmarin; and
- The UK government is establishing an Oligarch Taskforce to coordinate work to sanction oligarchs.
- A ban on dealing with transferable securities and money market instruments or issuing new loans or credit to, with a maturity exceeding 30 days:
- issued since 2014: an entity listed in Schedule 2 (including Sberbank, VTB Bank, Gazprombank, and VEB) or their non-UK subsidiaries;
- issued since 1 March 2022: UK subsidiaries of Schedule 2 entities; a “person connected with Russia” or an entity owned by or acting on behalf/at the direction of such as person; or the Government of Russia (i.e. Russian sovereign debt);
- A ban on UK credit or financial institutions from establishing or continuing a correspondent banking relationship, and from processing sterling payments to, from or via a designated person or a credit or financial institution owned or controlled by them (with a wind-down period for Sberbank and connected entities until 24 June for making certain energy products available for use in the UK). The General Licence has been amended to authorise UK credit/financial institutions to continue a correspondent banking relationship with Sberbank or a UK or non-UK credit or financial institution which is owned or controlled directly or indirectly by Sberbank;
- The UK financial regulatory authorities released a Joint Statement on 11 March 2022 to reiterate that the cryptoasset sector must comply with sanctions and circumventing sanctions through cryptoassets is a criminal offence;
- A ban on financial services for foreign exchange reserve and asset management to the Central Bank of the Russian Federation, the Russian National Wealth Fund and the Ministry of Finance, and persons owned or controlled directly or indirectly by them or acting on their behalf or direction;
- (To come) restrictions to cut off wealthy Russians’ access to UK banks including a £50,000 limits on bank accounts; and
- Selected Russian banks removed from the SWIFT messaging system.
- A ban on all Russia-owned or operated aircraft from UK airspace and landings, and on all Russia-owned or operated ships from UK ports;
- A ban on the sale, supply, transfer and export, to or for use in Russia, of all dual-use items and of a list of ‘critical industry’ goods and technology (similar to equivalent lists in the US and EU covering certain electronics, computers, telecommunications equipment and information security, sensors and lasers, marine-related items, aerospace and propulsion, quantum computing and advanced materials), and related financial and technical services, with limited exceptions;
- Similar bans apply to energy-related items and services (mainly related to oil production and oil refining), infrastructure-related items and services; and aviation and space items and services. A general licence permits certain vessels controlled under 8A992f, and related technology and services, to move to or from Russia with no change of ownership or operator;
- A ban on the provision of aviation and shipping technical assistance to, or for the benefit of, designated people/entities. A general licence permits the provision of such services in specified circumstances;
- A ban on most finance, shipping and trade with the non-government controlled areas of Ukraine, (including Crimea), with exceptions in certain situations for obligations under a contract concluded, in respect of Donetsk and Luhansk, before 23 February 2022;
- Denial of Most Favoured Nation treatment for key imports originating in Russia and Belarus, including vodka and antiques, and imposing a 35% tariff on specified products;
- A ban on the sale, supply, transfer and export, to or for use in Russia of luxury goods;
- A ban on the import or acquisition of iron and steel products from Russia;
- A formal exchange of letters to liberalise all tariffs on imports from Ukraine under the UK-Ukraine Free Trade Agreement; and
- Social media, internet services and app stores are required to block content from RT and Sputnik.
- Asset freezes on Ministers Andrei Burdyko, Victor Gulevich, Sergei Simonenko and Andrey Zhuk and on companies JSC 558 Aircraft Repair Plant and JSC Integral; Bank Dabrabyt Joint Stock Company; CJSC Belbizneslizing; Industrial-Commercial Private Unitary Enterprise Minotor-Service; JSC TransAVIAexport Airlines; Limited Liability Company Belinvest-Engineering; and OJSC KB Radar-Managing Company Holding Radar System;
- A General Licence indefinitely authorises a flight data provider to make payment directly or via a relevant institution to Belaeronavigatsia for aeronautical information publication data; and
- The ECJU has removed Belarus as a permitted destination from 9 open general export licences (OGELs).
Other key sanctions developments to note:
- An Economic Crime Act was adopted on 14 March. The key points relevant to sanctions are as follows – all of which point to substantially more robust enforcement of UK sanctions:
- Breach of sanctions will become strict liability offences, meaning that civil penalties can be imposed for breaches with no requirement to prove that the offender had knowledge or reasonable cause to suspect their activity breached sanctions;
- There is no in-built defence for sanctions offences. Under the Bribery Act 2010 there is a defence where the company can show that it had in place “adequate procedures” designed to prevent bribery from occurring on its behalf. Pursuant to section 149 of POCA the Treasury must issue guidance as to (a) the circumstances in which it will consider it appropriate to impose a monetary penalty under section 146 of 148 of POCA; and (b) how it will determine the amount of the penalty. We may well see Treasury update that guidance to allow for something akin to an 'adequate procedures' defence akin to that provided for in the Bribery Act. This would mirror the position in the US, where OFAC is responsible for enforcing a similarly strict liability offence for sanctions violations. OFAC's comparable guidance notes that the existence, nature and adequacy of a sanctions compliance programme is a factor it may consider in determining an appropriate enforcement response to a sanctions violation, including the level of any fine;
- HM Treasury can publicly “name and shame” organisations that have breached financial sanctions even where it has decided not to impose a penalty, the rationale being that the reputational risks will prove a deterrent;
- Government departments and relevant bodies will share information proactively with HM Treasury to facilitate its enforcement of sanctions;
- Foreign owners of UK property bought up to 20 years ago are required to reveal their identities, including those holding property in a trust or in shell companies; and
- Several measures enable the Government to designate sanctions targets more quickly, removing the statutory test of 'appropriateness' in designations, enabling designations by description, and creating a new urgent designation procedure, through which the UK can designate targets already sanctioned by the US, Canada, Australia or the EU.
- Breach of sanctions will become strict liability offences, meaning that civil penalties can be imposed for breaches with no requirement to prove that the offender had knowledge or reasonable cause to suspect their activity breached sanctions;
- The OFSI has provided new guidance on aggregation when considering whether a designated entity 'controls' another entity (in which case, sanctions also apply to the 'controlled' entity), and states that the UK sanctions regime will not aggregate the shareholdings of designated entities. Consequently, if each of the designated person's holdings falls below the 50% threshold in respect of share ownership and there is no evidence of a joint arrangement or that the shares are held jointly, the company would not be directly or indirectly owned by a designated person; and
- The UK Government has introduced various new restrictions aimed at tackling Russian disinformation, including requirements that social media services must take reasonable steps to prevent content being accessible on their service(s) which is generated from a designated person, and that internet access services, including broadband providers, must take reasonable steps to prevent users of the service in the UK from accessing websites provided by a designated person.
The EU is discussing - but has yet to agree on - a sixth package of sanctions which may include:
- an import ban on all Russian oil (crude oil would be phased out within six months and refined products by the end of 2022 – reportedly, some Member States are arguing to be allowed more time);
- the removal of Sberbank and two other banks from SWIFT;
- a ban on three Russian state-owned broadcasters; and
- an export ban on accountancy, consultancy and PR services; and designations of high-ranking military officers.
While a similar embargo on Russian gas is not reported to be under consideration, the EU Commission has clarified that complying in full with Moscow’s demand for gas payments to Gazprom to be denominated in roubles would breach existing sanctions.
- Now apply to a total of 877 individuals and 62 entities. There are exceptions for humanitarian operations in Ukraine;
- Banks include: VTB, VEB.RF; Rossiya Bank and Promsvyanzbank. It is intended to target “70% of the Russian banking market”;
- Entities: include the Internet Research Agency, SOGAZ; Rosneft Aero; JSC Rosoboronexport; JSC NPO High Precision Systems; JSC Kurganmashzavod; JSC Russian Helicopters; PJSC United Aircraft Corporation; JSC United Shipbuilding Corporation; JSC Research and Production Corporation Uralvagonzavod, and JSC Zelenodolsk Shipyard [A. M. Gorky Zelenodolsk Plant];
- The criteria for listing have been expanded to include "leading business persons" in economic sectors providing substantive revenue to the Russian government and a long and growing list of senior officials, oligarchs, defence companies, and disinformation proliferators;
- Individuals include: President Putin, Foreign Minister Lavrov, all members of the Duma, 146 members of the Russian Federation Council and 14 oligarchs: Alexander Pumpyansky; Alexander Vinokurov; Andrey Melnichenko; Dmitry Pumpyansky; Dmitry Mazepin; Galina Pumpyanskaya; Mikhail Oseevsky; Mikhail Poluboyarinov; Sergey Kulikov; Vadim Moshkovich; Vladimir Kiriyenko; Andrey Guryev; Dmitry Konov; Nikita Mazepin; Roman Abramovich; German Khan; Viktor Rashnikov; Alexey Kuzmichev; Alexander Mikheev; Alexander Shokhin; Andrey Ryumin; Armen Gasparyan; Artyom/ Artem Sheynin; Dmitry Kulikov; Konstantin Ernst; Marina Sechina; Suleyman Kerimov; Tigran Khudaverdyan; and Vladimir Rashevsky; and
- The EU has set up the “Freeze and Seize” Task Force to ensure the efficient implementation of EU sanctions across the EU. It will coordinate actions by Member States to seize and, where appropriate, confiscate assets of the listed oligarchs.
- A ban on the provision of SWIFT services to: Bank Otkritie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank, VEB, Sberbank and VTB Bank, and to any entity established in Russia and owned (directly or indirectly) more than 50% by them;
- A ban on the sale supply, transfer or export of euro banknotes to or for use in Russia;
- A ban on investment, participation or contribution to projects co-financed by the Russian Direct Investment Fund (RDIF), except where these activities are due under contracts concluded before 2 March 2022;
- A ban on all transactions with Russia's central bank and a freeze on all its assets; Exceptionally, transactions may be authorized if strictly necessary for the financial stability of the EU or a Member State;
- A ban on providing credit rating services, or access to any subscription services in relation to credit rating activities, to any Russian national or natural person residing in Russia or any legal person, entity or body established in Russia;
- A ban on new investments in the Russian energy sector;
- PSB, Bank Rossiya, Alfa-Bank, Bank Otkriti, Almaz-Antey, Kamaz, Novorossiysk Commercial Sea Port, Rostec, Russian Railways, Sevmash, Sovcomflot and United Shipbuilding Corporation are now subject to capital market sanctions: dealings in transferable securities (including crypto-assets) or money-market instruments of any maturity issued by these and the previously listed entities are prohibited and no new loans/credit (of any maturity) may be granted to them (certain exceptions apply);
- A ban on the listing and provision of services in relation to shares of Russian state-owned entities on EU trading venues;
- Bans on any deposits from Russian nationals or legal persons if the total value exceeds 100,000 EUR; excludes nationals and residents of EEA member states and Switzerland;
- EU central securities depositories may no longer provide services for transferable securities issued after 12 April 2022 to any Russian persons;
- No euro denominated transferable securities issued after 12 April 2022 may be sold to Russian persons or entities, subject to certain exceptions;
- The Russian Maritime Register of Shipping has been added to the list of state-owned enterprises subject to financial restrictions;
- The exclusion of all financial support to Russian public bodies;
- An extended prohibition on deposits to crypto-wallets; and
- An extended prohibition on the sale of banknotes and transferrable securities denominated in any official currencies of the EU member states to Russia and Belarus, or to any natural or legal person, entity or body in Russia and Belarus.
- Expanded export restrictions on equipment, technology and services for the energy industry in Russia (with the exception of the nuclear industry and the downstream sector of energy transport);
- A ban on all transactions with certain state-owned companies which are already subject to refinancing restrictions;
- A ban on the import, directly or indirectly, on certain unfinished iron and steel products;
- A ban on the export of certain luxury goods, including passenger vehicles valued at over EUR 50,000 and their spare parts;
- The closure of EU airspace to all Russian-owned, Russian registered or Russian-controlled aircraft;
- A ban (as of 27 May 2022 for contracts concluded before 26 February) on the sale, supply, transfer or export of specific goods and technologies, and related services (financing or financial assistance, brokering services, technical assistance, and repair) in oil refining. Exceptions for pre-existing contracts and cases of emergency apply;
- A ban (for contracts concluded before 26 February) on the sale, supply, transfer or export of goods and technology, and related financial and technical services, for use in the aviation and space industry, including aircraft and aircraft parts and technology, insurance, inspection and maintenance;
- A ban on the sale, supply, transfer or export, and related technical and financial services, to Russia or for use in Russia of all dual-use goods and technology. Exceptions apply for the case where such goods are used for non-military use, subject to a registration in the customs declaration as well as a declaration to the competent authorities of the first use;
- A ban on the sale, supply, transfer or export, and related technical and financial services, to Russia or for use in Russia of a list of other goods and technology which is effectively the same as the UK’s and US’ equivalent lists. Similar exemptions and related notification and authorisation requirements generally apply as for dual-use items, but exemptions are very limited for 64 Russian entities in the defence, aviation and technology sectors;
- With respect to the non-government controlled areas of the Donetsk and Luhansk separatist regions: an import ban on all goods and related services; restrictions on trade and investment related to certain economic sectors; a prohibition on supplying tourism services; and an export ban on goods and technology suited to the transport, telecommunications, energy or oil, gas and mineral sectors; and a ban on the provision of technical assistance, brokering, construction or engineering services to infrastructure in the regions and within the aforementioned sectors. There are exceptions for humanitarian operations;
- It is prohibited to sell, supply, transfer or export, directly or indirectly, maritime navigation goods and technology and related services to any natural or legal person, entity or body in Russia, for use in Russia, or for the placing on board of a Russian flagged vessel;
- On a national basis, Germany has suspended certification of the Nord Stream 2 gas pipeline;
- A prohibition on the purchase, import or transfer of coal and other solid fossil fuels into the EU if they originate in Russia or are exported from Russia, from August 2022;
- A prohibition (with certain derogations) on providing access to EU ports to vessels registered under the flag of Russia or Russian-operated vessels;
- A ban on any Russian and Belarusian road transport transporting goods by road within the EU, including in transit (with certain derogations);
- Export bans targeting jet fuel and other goods such as quantum computers and advanced semiconductors, high-end electronics, software, sensitive machinery and transportation equipment;
- Import bans on products such as: wood, cement, fertilisers, seafood and liquor;
- A ban on the participation of Russian companies in public procurement in member states; and
- The removal of Russia as a permitted destination for dual-use general export authorisations.
- Asset freezes on 22 high ranked members of the Belarusian military;
- A ban on transactions with the Central Bank of Belarus related to the management of reserves or assets;
- A block on SWIFT services for Belagroprombank, Bank Dabrabyt, the Development Bank of the Republic of Belarus, as well as their Belarusian subsidiaries;
- Financial and air traffic sanctions;
- A ban on the listing and provision of services in relation to shares of Belarus state owned entities on EU trading venues;
- A €100,000 cap on deposits from Belarusian nationals or residents, or entities established in Belarus;
- A ban on the sale of euro dominated transferable securities issued after 12 April 2022 to Belarusian nationals or residents, or entities established in Belarus;
- A ban on the provision of services by EU central securities depositories (CSDs) to Belarusian nationals or residents, or entities established in Belarus;
- A ban (with limited exceptions) on the sale, supply, transfer or export, directly or indirectly, to or for use in Belarus all dual-use goods, all the newly listed goods restricted for supply to Russia, certain machinery, and related financial and technical services; and
- An expansion of existing bans on imports from Belarus into the EU of goods for producing tobacco products and the following products: minerals, wood, cement, iron and steel, rubber, and potash, and related financial and technical services.
Other key sanctions developments to note:
- The EU has updated its guidance to state that (unlike with the UK regime) the EU will aggregate the shareholdings of designated entities in the context of assessing whether an entity is 'controlled' by designated entities (and therefore whether sanctions also apply to that 'controlled' entity). Therefore, if the aggregated ownership of a company by listed persons meets the 50% threshold, the company is considered jointly owned and controlled by listed persons. This applies, for example, if one listed person owns 30% of the company and another listed person owns 25% of the company.
The US has announced that the Administration will propose a new legislative package that would include:
- a streamlined process for the forfeiture of US property that is owned by listed Russian oligarchs and linked to specified unlawful conduct;
- using forfeited property proceeds to “remediate harms” caused to Ukraine by Russian aggression;
- rendering unlawful the knowing or intentional possession of proceeds directly obtained from “corrupt dealings” with the Russian government;
- expanding the forfeiture authorities to encompass property used to facilitate sanctions violations;
- adding sanctions evasion to the definition of “racketeering activity”;
- allowing for extended pursuit of money laundering prosecutions (and post-conviction forfeitures) based on foreign offences by extending the statute of limitations from 5 to 10 years; and
- facilitating the enforcement of foreign restraint and forfeiture orders for criminal property.
- Banks: include VTB (and 20 subsidiaries); Bank Otkritie (and 12 subsidiaries); Sovcombank (and 22 subsidiaries); Novikombank; Vnesheconombank (VEB, and 25 subsidiaries); Promsvyazbank (PSB, and 17 subsidiaries); SMP Bank; Sberbank; Alfa Bank; and Transkapitalbank. General licences provide for certain wind-down periods;
- Entities: include Nord Stream 2 (and its CEO Matthias Warnig); Atlant S and Inspira Invest A; the Russian Direct Investment Fund (RDIF); JSC RDIF; LLC RVC; AO ABR Management; OOO Volga Group and OOO Transoil; a number of disinformation outlets; and a substantial number of defence-related entities, many of which are said to have produced weapons used as part of Russia's invasion of Ukraine, including: Russian Helicopters; Tactical Missiles Corporation JSC (KTRV); JSC NPO High Precision Systems; NPK Tekhmash OAO; Joint Stock Company Kronshtadt; Alexsong Pte Ltd; AO NII Vektor; Djeco Group Holding Ltd; Invention Bridge SL; Mikron JSC; Majory LLP; Malbert Limited; Maltarent Ltd; Molecular Electronics Research Institute JSC; OOO Foton Pro; OOO Nauchno-Tekhnicheskii Tsentr Metrotek; OOO Serniya Engineering; OOO Sertal; Photon Pro LLP; Quantlog OY; SCI Griber; Serni-Film Co, Ltd; T-Platforms; Garantex Europe; Hydra Market; Alrosa; United Shipbuilding Corporation; five ships linked to Alfa-Lizing; Promtekhnologiya; Oboronlogistika OOO; SC South LLC; Joint Stock Company Northern Shipping Company; Transmorflot LLC; M Leasing LLC; Marine Trans Shipping LLC; and Nord Project LLC Transport Company; and Obshchestvo S Ogranichennoi Otvetstvennostyu Fertoing;
- Individuals include: President Putin and two of his daughters, Katerina Tikhonova; Maria Vorontsova; Mikhail Mishustin; Foreign Minister Lavrov and two family members, Maria Lavrova, Yekaterina Vinokurova; “elites close to Putin” including VTB Bank’s management board; Members of the Russian State Duma; 16 members of the Security Council of the Russian Federation; Dzhabrail Akhmatov; Aleksey Krivoruchko; Timur Ivanov; Yunus-Bek Evkurov; Dmitry Bulgakov; Yuriy Sadovenko; Nikolay Pankov; Ruslan Tsalikov; Gennady Zhidko; Viktor Zolotov; Dmitry Shugaev; Alexander Mikheev; Yuri Kovalchuk; Boris Viktorovich Obnosov; Herman Gref; Gennady Nikolayevich Timchenko; Elena Petrovna Timchenko; Natalya Browning; Ksenia Gennadevna Frank; Gleb Sergeevich Frank; Evgeniya Bernova; Sergei Bobkov; Viacheslav Dubrovinskiy; Evgeny Gladkikh; Yevgeniy Grinin; Anton Krugovov; Konstantin Malevanyy; Irina Nikolaeva; Yevgeniya Podgornova; Tamara Topchi; Sergey Yershov; Andrey Zakharov; and executives of designated banks including Sberbank and Gazprombank; Alisher Usmanov has been added but with an exclusion for entities that he directly or indirectly owns (e.g. Yandex); Deputy Governors of the Bank of Russia, Mikhail Alekseev and Ksenia Yudaeva; Board members of Bank Otkritie; Konstantin Malofeyev; Khusein Khutaev; Nurid Salamov; and Dzhabrail Akhmatov; and
- The US government has launched an interagency initiative, ‘Task Force KleptoCapture’, to co-ordinate work on sanctioning oligarchs.
- A ban on all transactions involving the Central Bank of the Russian Federation; the National Wealth Fund of the Russian Federation; and the Ministry of Finance of the Russian Federation, and dealing in bonds issued by them after 1 March. A General Licence authorises until 24 June 2022 certain energy-related transactions with the Central Bank;
- Sberbank and 25 foreign subsidiaries are subject to correspondent and payable-through account sanctions;
- A ban on dealing in new debt of over 14 days maturity and new equity of strategic entities: Sberbank, AlfaBank, Credit Bank of Moscow, Gazprombank, Russian Agricultural Bank, Gazprom, Gazprom Neft, Transneft, Rostelecom, RusHydro, Alrosa, Sovcomflot, and Russian Railways. General Licences authorise certain transactions related to international organisations, food and medicines, emergency landings, energy, certain debt or equity, derivative contracts, and transactions with certain blocked persons;
- General Licences authorise, among other things: the wind down of transactions involving Sberbank Kazakhstan, Sberbank Europe AG or Sberbank (Switzerland) AG, and their subsidiaries, until 12 July 2022; the wind down of transactions involving Amsterdam Trade Bank NV and its subsidiaries until 12 July 2022; the wind down of transactions involving Gazprom Germania GmbH and its subsidiaries until 30 September 2022; the wind down of transactions involving debt, equity or other holdings in GAZ Group until 25 May 2022; and the wind down of transactions involving GAZ Group and its subsidiaries until 25 May 2022;
- A ban on new US investment in Russia;
- A ban on the export and supply of dollar-denominated banknotes to the Russian Government or any person located in Russia;
- The publication of new Treasury guidance on sanctions compliance, including in relation to virtual currency;
- A new E.O. providing for future investment restrictions in any sector of the Russian economy;
- Selected Russian banks removed from the SWIFT messaging system;
- New investment by a US person in any sector of the Russian economy, as may be determined by the Secretary of the Treasury; and
- The export, re-export, sale or supply of USD denominated banknotes to the Russian government or any person located in Russia.
- A ban on the import into the US of Russian-origin fish, seafood, and preparations thereof, alcoholic beverages and non-industrial diamonds;
- A ban on the export, re-export, sale or supply of luxury goods to any Russia-based person, including certain: alcoholic beverages; tobacco products; beauty products; leather products; textiles; designer clothing; footwear; diamonds; pearls; precious gems and metals; and vehicles, subject to certain General Licences;
- General Licences authorise, among other things: overflight payments, emergency landings, and air ambulance services; certain transactions in connection with a patent, trademark, copyright;
- The removal of Russia’s Most-Favoured-Nation (MFN) status;
- A ban on the import of Russian crude oil, gas, coal and related products;
- A ban on the export of luxury goods to any person located in Russia including high end-watches, apparel and alcohol, as well as luxury vehicles, jewellery, and other goods frequently purchased by “Russian elites”;
- A ban the import of goods from “signature” sectors of the Russian economy, including seafood, spirits/vodka, and non-industrial diamonds;
- A ban on Russian aircraft (owned, chartered or operated) from US airspace;
- New export licensing requirements for items not previously controlled for Russia (listed in Categories 3-9 of the Commerce Control List; effectively the same list of items as for the UK and the EU) expanding US scrutiny of transactions to almost any sensitive dual-use technology, software, or commodities that could be used to support Russia’s war effort, and a policy of denial of all export licences to Russia, with some exceptions (e.g. humanitarian);
- Expansion of controls on foreign-made (non-US) direct products of US technology for military end-use and users in Russia;
- A ban on all supply of ECCN 5A002 or 5D002 encryption products and software to Russia and Belarus. License exception ENC is no longer available for those items except for exports to US or close-ally-country companies’ operations. This ban includes software updates, upgrades, patches, and other technical support relating to that software. A Consumer Communications Devices (CCD) license exception applies to mass market products under ECCN 5A992 or 5D992;
- Another 91 (in addition the previous 49) Russian military end users have been added to the Entity List and thus are subject to a comprehensive export ban;
- Comprehensive sanctions on the Donetsk and Luhansk separatist regions, prohibiting new investment and the import or export of goods, services or technology (directly or indirectly). General Licenses provide exclusions for: food, medicine, medical devices; telecommunications and mail services; international organizations; personal remittances; and personal internet communications; certain transactions related to the provision of maritime services performed by individuals ordinarily resident in the separatist regions; certain journalistic-related activities in the separatist regions and the Crimea;
- A policy of denial on items related to the Russian deep-water oil and gas industries, which have been subject to export controls since 2014. In addition, licence requirements have been added for the export, re-export or transfer (in-country) to or within Russia of items needed for oil refining;
- The Nuclear Regulatory Commission will suspend GLs for exports of source material, special nuclear material, byproduct material and deuterium to Russia.
- A ban on the export of goods similar to the EU’s list of “goods which could contribute in particular to the enhancement of Russian industrial capacities” (Article 3k and Annex XXIII of Council Regulation 833/2014) including containers, machinery, tools, industrial engines and motors, goods vehicles, and equipment for refrigeration, elevators, construction, printing, textiles, valves, bearings, seals, electrical, radio, railways and testing.
- A ban on accountancy, management consultancy, and PR services exports to Russia, with a general licence providing for the wind-down of activities until 7 June 2022, and a general licence for various credit rating or auditing services to 20 August 2022; and
- A ban on US advertising and sales of equipment to three government-controlled television stations (Channel One, Russia-1 and NTV), with general licences providing for the wind-down of activities until 7 June 2022.
- Asset freezes: 26 Belarusian individuals and entities including: President Alyaksandr Lukashenka and his wife; Dzmitry Paulichenka; Yury Sivakov; Viktar Sheiman;Belinvestbank; Bank Dabrabyt; and companies in the defence and security sectors;
- Export controls: the same measures as apply to Russia, including those on luxury goods. The addition to the Entity List of entities related to the defence and security sectors; and
- Visa restrictions: on 17 people, including officials from state-owned factories and universities, said to be responsible for undermining democracy in Belarus.
Fieldfisher's experienced multi-disciplinary sanctions and export control team includes lawyers who have negotiated and drafted EU and UN sanctions regimes in Government and regularly sanctions advice to businesses operating around the world in a wide variety of sectors. We work closely with US partners to provide coordinated, comprehensive and practical advice to help business understand and manage the impact of sanctions. For more information please contact Andrew Hood (Partner, International Trade): Andrew.email@example.com +44(0)330 460 6568
* The contents of this notice do not constitute legal advice and are provided for general information purposes only.
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