The Russian Federation's President announced a military operation in Ukraine on February 24, 2022, and Russian armed forces launched an attack on Ukraine.
In this publication, we provide an overview of all EU-Russia Sanctions. The EU Russia Sanctions include a ban on all transactions with Russia's Central Bank and a ban of Russian airlines flying over EU airspace and landing at EU airports. The exclusion of key Russian banks from the SWIFT system, the world's most widely used financial messaging system, is also included in the new measures. The Council took additional restrictive measures in light of the gravity of the situation.
- Council Decision (CFSP) 2022/265 & Council Implementing Regulation (EU) 2022/260, which designate 22 people, including members of government, senior military personnel, people working for “pro-Russian” media and businesspeople, and Bank Rossiya, PROMSVYAZBANK, VEB.RF.
- Council Regulation (EU) 2022/259, which implements a derogation mechanism were making available funds is necessary for the termination of contracts/operations by 24 August 2022.
- Council Decision (CFSP) 2022/267 & Council Implementing Regulation (EU) 2022/261, which designate 336 members of the Russian State Duma.
- Council Decision (CFSP) 2022/264 & Council Regulation (EU) 2022/262, which imposes a sectoral prohibition on financing Russia and its government, the Central Bank of Russia, or any entity acting on behalf of or at the direction of the Central Bank of Russia, subject to certain conditions.
By way of the above restrictive measures, the EU imposed sanctions on members of the Russian Federation's National Security Council and the Russian State Duma for supporting Russia's recognition of the self-proclaimed "republics" of Donetsk and Luhansk. The EU also froze the assets of Russian President Vladimir Putin and Foreign Minister Sergey Lavrov.
In response to the military action against Ukraine, the Council also agreed on a further package of individual and economic sanctions. These sanctions apply to the following industries::
- finance
- energy
- transport
- technology
- visa, travel bank and asset freeze to certain persons
EU Sanctions on Russian Dual-use Products and Technology
Regulation 833/2014 includes a blanket prohibition on the supply of dual-use equipment to Russia or for use in Russia. The new regulations also make it illegal to export a wide range of products that are not on the Dual-Use List. There are some exceptions to the list, including exports for personal use. This list also contains "mass market encryption" goods that would normally be exempt from EU dual-use export rules.
Energy Sanctions
Regulation 833/2014 prohibits the supply of additional items that are "suited for use in oil refining". There are also limitations on related services, financing, and financial assistance. For contracts signed before February 26, 2022, there is a wind-down provision that expires on May 27, 2022.
Capital Markets Sanctions
Restrictions on dealings with "transferable securities and money-market instruments," as well as 8 Russian state-owned companies (Almaz-Antey, Kamaz, Novorossiysk Commercial Sea Port, Rostec, Russian Railways, JSC PO Sevmash, Sovcomflot, and United Shipbuilding Corporation) These restrictions will go into effect on April 12, 2022. EU trading venues registered or recognized in the EU will be barred from listing or providing services for transferable securities of any Russian entity with more than 50% public ownership.
EU Sanctions on Public Financing
Public financing and financial assistance for trade with and investment in Russia has been banned as part of the EU's response to the Russian Federation's annexation of Crimea. Exemptions are available for binding commitments made before February 26, 2022 and financing for EU-established SMEs of up to EUR 10 million per project.
EU Sanctions on Russian Aviation
The EU is closing its airspace to Russian-owned, Russian-registered, or Russian-controlled aircraft (including private jets). Exporting aircraft, spare parts, and equipment to Russian airlines and the Russian space sector is now prohibited. All items listed in Annex XI are prohibited from being exported to or used in Russia.
On 1 March 2022, the EU adopted Council Decision (CFSP) 2022/346 & Council Regulation (EU) 2022/345, prohibiting:
- as of March 12, 2022, the provision of SWIFT services to the following entities: Bank Otkritie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank, VNESHECONOMBANK (VEB), and VTB BANK; or to any entity established in Russia and owned (directly or indirectly) by more than 50% by one of the above entities.
- The sale, supply, transfer, or export of euro banknotes to Russia or any person or entity in Russia (including the Russian government) for use in Russia.
The EU has designated additional 160 people under its Russia sanctions regime, see Council Decision (CFSP) 2022/397 & Council Implementing Regulation (EU) 2022/396:
- 146 members of the Russian Federation Council who ratified the Treaties of Friendship, Cooperation and Mutual Assistance between the Russian Federation and the Donetsk People's Republic and the Luhansk People's Republic; and
- 14 people, said to be "oligarchs and prominent business people" and their family members: Alexander Dmitrievich Pumpyansky; Alexander Semenovich Vinokurov; Andrey Igorevich Melnichenko; Dmitry Alexandrovich Pumpyansky;Dmitry Arkadievich Mazepin; Galina Evgenyevna Pumpyanskaya; Mikhail Eduardovich Oseevsky; Mikhail Igorevich Poluboyarinov; Sergey Alexandrovich Kulikov; Vadim Nikolaevich Moshkovich; Vladimir Sergeevich Kiriyenko; Andrey Andreevich Guryev; Dmitry Vladimirovich Konov; and Nikita Mazepin.
The EU-Russia Sanctions have sanctioned 15 individuals, including Russian oligarchs, as well as 9 entities involved in Russian aviation, military, shipbuilding, and machine building (Council Implementing Regulation (EU) 2022/427). Clients should be aware that if an individual is listed, an ownership and control analysis should be performed to determine any impact on a linked company.
Other measures (Council Regulation (EU) 2022/428 amending EU Regulation no. 833/2014) include:
- Prohibition on the sale, supply, transfer, or export of equipment or technology listed in Annex II to a person or entity in Russia or for use in Russia (whether or not originating in the EU). Annex II contains goods and technology suited to specific types of exploration and production projects.
- There are also restrictions against the provision of technical or financial assistance (which includes insurance or reinsurance) in connection with these activities. This ban, however, does not apply to the transport of fossil fuels into the EU, specifically coal, oil, and natural gas from or through Russia. There is an exemption until 17 September 2022 for the performance of contracts concluded before 16 March 2022 if the competent authority of the EU member state is given five working days' notice.
- A prohibition on new investments in the Russian energy sector, including the formation of any new joint venture with a Russian-incorporated or constituted entity or any other third country.
- Importation of iron and steel products listed in Annex XVII into the EU, as well as transportation of such products to the EU or any other country, is prohibited if they originated in Russia or were exported from Russia. This includes a prohibition on offering insurance or reinsurance. There is, however, an exemption until 17 June 2022 for contracts concluded before March 16, 2022.
- Transactions with certain state-owned Russian companies listed in Annex XIX are prohibited. Performance of contracts concluded before March 16, 2022, is exempt until May 15, 2022. This prohibition does not apply to:
- Prohibition on the sale, supply, transfer, or export of luxury goods listed in Annex XVIII from the EU to Russia, either directly or indirectly.
EU sanctions apply in the following circumstances: within the Union's territory, including its airspace; on board any aircraft or vessel under the jurisdiction of a Member State; to any person inside or outside the Union who is a national of a Member State; to any legal person, entity, or body, inside or outside the Union, which is incorporated or constituted under the law of a Member State; to any legal person, entity, or body, inside or outside the Union, which is incorporated or has involvements within the Union.
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Our Risk and Compliance practice provides expert advise on the application of EU-Russia Sanctions in private client and business client scenarios.
