Sanctions adopted following Russia’s military aggression against Ukraine. In reaction to Russia’s military intervention against Ukraine the European Union (EU) adopted sanctions against Russia. In particular, the EU has adopted a wide range of restrictive measures against Russianindividuals and entities in order to cripple Russia’s ability to finance the war and to impose painful costson Russia’s political elite responsible or otherwise instrumental for the realisation of this unprovokedmilitary attack on its neighbouring nation. Beyond individual asset freezes, travel bans and visa restrictions, these restrictive measures comprise far-reaching trade restrictions in a number of economic sectors, as well as restrictions for activities in the financial sector. Several packages of economic sanctions have been passed over the last few weeks as the severity of the crisis has worsened and a list of the financial sanctions that have been adopted is provided below. Note: The position is constantly evolving. Additional sanctions may be introduced in the coming days and these will be the subject of future articles. This information is:
of a general nature only and is not intended to address the specific circumstances of any particular individual or entity;
not necessarily comprehensive, complete, or up to date;
not professional or legal advice (if you need specific advice, you may consult with us). 23 February 2022 Following the Council of the European Union’s announcement on February 23, a series of Council Decisions and Council Regulations were imposed on Russia which were published by the EU, including:
Council Implementing Regulation( EU) 2022/260: addition of various individuals and entities to the EU asset-freeze list, related to the recognition by Russia of Donestsk and Luhansk breakaway republics;
Council Implementing Regulation (EU) 2022/261: addition of 351 members of the Russian State Duma in relation to the voting on recognition of the independence of the DNR and LNR to the EU asset-freeze list;
Council Regulation (EU) 2022/262: amending Regulation (EU) No. 833/2014. New Article 5 a which relates to the prohibition of dealings with transferable securities and money-market instruments issued by, or extending credit to, the Russian government, the Central Bank of Russia, or anyone acting on their behalf; and
Council Regulation (EU) 2022/263: imposes restrictions similar to the Crimea embargo sanctions, and restricts trade with, and investment and tourism activities in, the Donetsk and Luhansk.
25 February 2022 The EU published on February 25, 2022, a series of Council Decisions and Council Regulations imposing a number of new sanctions on Russia, including: • Council Regulation (EU) 2022/328 (Regulation 2022/328): imposes a number of restrictive measures contained in Regulation (EU) 833/2014 (Regulation 833/2014) on various sectors of the Russian economy, i.e. defence, energy, aviation and finance. Restrictions on dealings with transferable securities and money-market instruments, and introduces a number of important new restrictions on the ability of Russian natural and legal persons to access the EU financial systems. Prohibitions on exports of dual-use goods andtechnology that might contribute to Russia’s technological enhancement, but also goods andtechnology in the oil refining, aviation, and space industries. Regulation 2022/328 also:
➢ expands the pre-existing capital and debt market sanctions, including by certainRussian entities’ access to the EU capital markets, and introduces new measures thatsignificantly restrict Russian natural and legal persons’ access to the EU financeindustry.
➢ imposes an export ban (including a ban on the provision of technical assistance and other related services as well as financing and financial assistance) covering goods and technology suited for use in the aviation and space industries and prohibits the provision of insurance and reinsurance and maintenance services in relation to those goods and technologies.
➢ prohibits the sale, supply, transfer, or export to Russia of specific goods and technologies for use in oil refining, together with restrictions on the provision of related services.
➢ prohibits the provision of public financing or financial assistance for trade with, or investment in, Russia, subject to certain exceptions.
➢ imposes further restrictions on exports of goods and technology considered to have“dual-use” functions and the provision of related services, and also restrictions on exports of certain goods and technology that might contribute to Russia’s technologicalenhancement.
➢ includes limited exemptions for legitimate and pre-determined purposes, including humanitarian purposes, health emergencies, and medical or pharmaceutical purposes. Expansion of definition “transferable securities” in both Regulation 2022/262 and Regulation 2022/328to include any securities “giving rise to a cash settlement determined by reference to transferable securities”. Expansion of scope of Article 5 of Regulation 833/2014 to prohibit dealings with any new transferable securities and money market instruments issued by the listed entities or their non EU subsidiaries after12 April 2022. The restrictions also prohibit extending “any new loans or credit” to these entities fromafter 26 February 2022 (subject to limited exemptions). The entities listed in respect of these restrictions are:
(Listed on the basis that they are “major credit institutions, or major institutions having an explicitmandate to promote competitiveness of the Russian economy, its diversification and encouragement of investment, established in Russia with over 50% public ownership or control as of 1 August 2014”.)
(Listed on the basis that they are “major credit institutions, or institutions with over 50% public ownershipor control as of 26 February 2022 or credit institutions having a significant role in supporting the activitiesof Russia, its government or the Central Bank and established in Russia”.)
United Aircraft Corporation
(Listed on the basis that they are “legal persons, entities or bodies established in Russia predominantly engaged, and with major activities, in the conception, production, sales or export of military equipmentor services”.)
(Listed on the basis that they are “legal persons, entities or bodies established in Russia, which arepublicly controlled or with over 50% public ownership and having estimated total assets of over RUB 1 trillion (EUR 10,574,232,000) and whose estimated revenues originate for at least 50% from the saleor transportation of crude oil or petroleum products”.)
Novorossiysk Commercial Sea Port
Rostec (Russian Technologies State Corporation)
JSC PO Sevmash
United Shipbuilding Corporation
(Listed on the basis that they are “legal persons, entities or bodies established in Russia, which arepublicly controlled or with over 50% public ownership and in which Russia, its Government or Central Bank have the right to participate in profits or with which Russia, its Government or Central Bank have other significant economic relationships”.)
The restrictions targeting these entities also affect their non-EU subsidiaries that are “directly or indirectly owned [by] more than 50%” and any legal persons otherwise acting on their behalf or at theirdirection. Additionally, Regulation 2022/328 introduces several important new provisions into Regulation 833/2014:
➢ New Article 5(5) in Regulation 833/2014 prohibits “list[ing] and provid[ing] services asof 12 April 2022 on trading venues registered or recognised in the EU for the transferable securities of any legal person, entity or body established in Russia andwith over 50% public ownership”.
➢ New Article 5b in Regulation 833/2014 prohibits “accept[ing] any deposits from Russiannationals or natural persons residing in Russia, or legal persons, entities or bodies established in Russia, if the total value of deposits of the natural or legal person, entityor body per credit institution exceeds EUR 100,000”. This restriction on accepting deposits is subject to several exemptions and derogations — most notably,that it “shall not apply to nationals of a Member State or natural persons having a temporary or permanent residence permit in a Member State”.
➢ New Article 5e in Regulation 833/2014 prohibits EU central securities depositories from“provid[ing] any services (as defined in the Annex of Regulation (EU) No 909/2014) for transferable securities issued after 12 April 2022 to any Russian national or naturalperson residing in Russia or any legal person, entity or body established in Russia”. This restriction targets access to Euroclear and Clearstream, and will impact Russian financialinstitutions’ ability to access the EU clearing systems. The legislation exempts “nationals of a Member State” or “natural persons” with “a temporary or permanent residence permit” in a Member State.
➢ New Article 5f in Regulation 833/2014 prohibits “sell[ing] euro denominatedtransferable securities issued after 12 April 2022 or units in collective investment undertakings providing exposure to such securities to any Russian national or naturalperson residing in Russia or any legal person, entity or body established in Russia”.The legislation exempts “nationals of a Member State” or “natural persons” with “a temporary or permanent residence permit” in a Member State.
➢ New Article 5g in Regulation 833/2014 requires “credit institutions” to supply to their national competent authorities by no later than 27 May 2022 “a list of depositsexceeding 100,000 EUR held by Russian nationals or natural persons residing in Russia, or by legal persons, entities or bodies established in Russia”. The credit institutions are to provide “updates” on these deposit amounts “every 12 months”.
Council Regulation (EU) 2022/330: permitting persons to be added in the EU asset-freeze list for actions undermining or threatening the territorial integrity, sovereignty, and independence of Ukraine.
Council Regulation (EU) 2022/332 (implementing Regulation (EU) 269/2014): addition of a number of individuals and entities to the EU asset-freeze list, including President Vladimir Putin and Minister of Foreign Affairs Sergei Lavrov.
Council Regulation (EU) 2022/300 (implementing Regulation (EU) 756/2006) concerning restrictive measures in view of the situation in Belarus): addition of a number of individuals and entities to the EU asset-freeze list.
• Council Regulation (EU) 2022/259: introduces a derogation for certain new asset-freeze targets. It allows the competent authority of a Member State to authorise dealings with frozen funds in very limited circumstances. In relation to Bank Rossiya specifically, Promsvyazbank, and VEB (which were added to the EU asset-freeze list on 23 February 2022 via Council Implementing Regulation (EU) 2022/260), a competent authority of a Member State is allowed to: (i) authorise the release of certain frozen funds or economic resources belonging to these entities, or (ii) make available certain funds or economic resources to these entities, under such conditions as the competent authorities deem appropriate and after having determined that such funds or economic resources are necessary for the termination by 24 August 2022, of operations, contracts, or other agreements, including correspondent banking relations, concluded with those entities before 23 February 2022. 28 February 2022 The Council adopted the following restrictive measures:
Council Regulation (EU) 2022/334 (Regulation 2022/334): prohibition of Russian air carriers from entering EU airspace, and, prohibition of transactions related to the management of reserves as well as of assets of the Russian Central Bank.
Council Regulation (EU) 2022/336 (implementing Regulation (EU) 269/2014): addition of a number of ultra-high net worth Russian businessmen (oligarchs) to the EU asset-freeze list. 8 March 2022 • Council Regulation (EU) 2022/354 amending Council Regulation 833/2014 (Regulation 833/2014) introduces the following new prohibitions: ➢ RDIF: prohibit investment, participation, or contribution to projects co-financed by the RDIF. This also applies to projects in which RDIF holds minority stakes. This is subject to a limited exception in relation to an investment participation or contribution which is due under contracts concluded before 2 March 2022 or ancillary contracts necessary for the execution of such contracts. ➢ Euro Denominated Banknotes: prohibition relating to the sale, supply, transfer, or export of euro denominated banknotes to Russia or to any natural or legal person, entity, or body in Russia, including the government and the Central Bank of Russia, or for use in Russia. This prohibition does not apply where the banknotes are for the personal use of natural persons travelling to Russia or members of their immediate families travelling with them; or the official purposes of diplomatic missions, consular posts or international organisations in Russia that have immunities in accordance with international law. ➢ SWIFT Prohibition: prohibition to provide specialised financial messaging services, which are used to exchange financial data, to the below legal persons/entities/bodies or to any legal person/entity/body established in Russia whose proprietary rights are directly or indirectly more than 50% owned by one of the following entities:
- Bank Otkritie
- Bank Rossiya
- Vnesheconombank (VEB)
- VTB Bank
• Council Regulation (EU) 2022/350 amending Regulation 833/2014: prohibition on the broadcasting or to enable, facilitate, or otherwise contribute to broadcast any content by any of the below legal persons/entities/bodies, including through transmission or distribution by any means (such as cable, satellite, IP-TV, internet service providers, internet video-sharing platforms, or applications, whether new or pre-installed). Any broadcasting licence or authorisation, transmission, and distribution arrangement is now suspended by the following media outlets:
- RT- Russia Today English
- RT- Russia Today UK
- RT - Russia Today Germany
- RT - Russia Today France
- RT- Russia Today Spanish Belarus Council Regulation(EU) 2022/355 amending Council Regulation 765/2006 concerning restrictive measures in view of the situation in Belarus has introduced expanded prohibitions in relation to the export of dual-use goods and technology. Accordingly, the EU now prohibits the sale, supply, transfer, or export, directly or indirectly of any dual use goods and technology to “any natural or legal person, entity or body in Belarus or for use in Belarus”. Certain types of “technical” and “financial” “assistance” in relation to these goods and technology arealso prohibited. These prohibitions are subject to limited exemptions (e.g., for humanitarian purposes, pharmaceuticalpurposes, and the “personal use of natural persons travelling to Belarus” and “not intended for sale”), and limited “derogations” that can be granted by the competent authorities of EU Member States (suchas when intended by non-military users for the “safety of civil nuclear capabilities” or arising from contracts “concluded before 3 March 2022, or ancillary contracts necessary for the execution of such acontract, provided that the authorisation is requested before 1 May 2022”.). However, no derogation will be granted (unless for “urgent” prevention of disaster or where the dealings relate to contracts struck before 26 February 2022) where the competent authorities “have reasonable grounds to believe that”:
- The dual-use items might have a military end-use.
- The dual-use items are “intended for aviation or the space industry”.
- The end-user might be the Belarus Ministry of Defence. Next Steps Additional further restrictions are expected to be introduced by the EU within the coming days. MPC Legal monitors developments within the EU closely and expects that additional rounds of sanctions may be imposed as events unfold. Due to the complexity and the unprecedented wave of sanctions imposed by the European Union, specialist advice must be sought in relation to existing structures and proposed transactions before any actions are taken noting that even omission to act could render an entity or person liable to both criminal and/ or civil prosecution. MPC Legal's sanctions team is available to advise on all sanctions issues, from setting up compliance programs to advising on transactions and investigating potential breaches.