In response to the developments in Ukraine, the EU, US, UK, and Japan, among others, have imposed a very broad range of sanctions and additional export controls against Russia and Belarus. It is expected that further measures will follow. Although the new sanctions have been coordinated, there are differences in prohibitions and applicability across the different jurisdictions. This article focusses on the sanctions introduced by the EU.
The first new package of EU sanctions was adopted on February 23rd, introducing new targeted sanctions against 351 members of the Russian State Duma and 27 individuals. Furthermore, economic sanctions were introduced against the areas of Donetsk and Luhansk, as well as restrictions on Russia’s access to the European capital and financial market.
On February 24th and 25th, the EU announced a further package of sanctions, in response to the military aggression by Russia against Ukraine. As part of the additional package of sanctions, the assets of Vladimir Putin and Sergey Lavrov have to be frozen. Furthermore, additional economic sanctions are announced, which impacts the financial sector, energy and transport sector, technology sector, export control and financing, export of dual-use goods, the visa policy and new sanctions against Russian individuals.
On February 28th, the EU announced new measures, banning transactions with the Russian Central Bank. In addition, flights of Russian carriers through the EU airspace are banned.
In total, currently 680 people and 53 entities are subject to an asset freeze and a travel ban. This list is being under a constant development and is subject to renewals by the European Council.
The European Commission also implemented a new regulation (Regulation (EU) 2022 / 263), imposing restrictions on the (in)direct provision of financing or financial assistance, as well as (re)insurance on the import of the goods originated from the non-government controlled areas of Donetsk and Luhansk. Furthermore, the regulation prohibits trade in goods and technologies in certain sectors, as well as providing services in the transportation, telecommunication and energy sectors. The regulation lists the specific goods and technologies in its Annex. Finally, it is also prohibited to explore and produce oil, gas and mineral resources, as well as the offering of tourism activities.
What does this mean?
It is important to investigate whether these new EU sanctions or sanctions from other relevant jurisdictions apply to you, your organization, your products and activities, your clients, or any other business relationships. In case they do, the applicable prohibitions should be strictly complied with. This requires careful screening of parties and majority owners against sanctions lists, understanding of the financial flows, and accurate product classifications.
If your client or business relationship is mentioned on the EU sanction list, they are subject to an asset freeze and a travel ban. Furthermore, when exporting goods or technology to Russia or Ukraine, it is important to establish whether the export of these goods is not subject to any of the prohibitions in accordance with the recently announced sanctions. This also applies to providing financial services to clients established in Russia, Belarus, or certain parts of Ukraine.
If you need more information on what these sanctions may mean for your business, please contact your trusted advisor at RSM Netherlands Business Consulting or send an email to [email protected].