Our International Trade team have summarised the latest developments in global sanctions and how to navigate the implications on your business.

The information included is accurate at the time of drafting but given the fluid nature of the situation, the information should remain under constant review.

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This edition includes updates from the following jurisdictions:

Australia

This content was last updated on 4 March 2022.

Measures which have been implemented in Australia

On 24 February 2022, the Australian Government implemented its first sanctions against Russia.

  • On 24 February 2022, the Australian Government made the Autonomous Sanctions Amendment (Russia) Regulations 2022 (Regulations), which amended the Autonomous Sanctions Regulations 2011 to broaden the scope of individuals and entities on which Australia can impose targeted financial sanctions and travels bans. These sanctions now extend to:
  1. a person (or a member of their immediate family) or entity that the Minister is satisfied is, or has been, engaging in an activity or performing a function that is of economic or strategic significant to Russia; or
  2. a current former Minister or senior official of the Russian Government (or their immediate family members.
  • These amendments take effect to impose the following punitive measures on particular individuals and entities:
    • restrictions on trade in goods or services;
    • restrictions on engaging in commercial activities;
    • targeted financial sanctions (including asset freezes; and
    • travel bans.
  • The Autonomous Sanctions (Designated Persons and Entities and Declared Persons – Ukraine) List 2014 (List) was amended on 24 February 2022 to include the following members of Russia Security Council who had provided “advice and justification” to the Russian Government which led President Putin to recognise the breakaway republics:
  1. Dmitry Anatolyevich Medvedev;
  2. Yury Yakovlevich Chaika;
  3. Aleksander Vladimirovich Gutsan;
  4. Igor Anatolyevich Komarov;
  5. Anatoly Anatolyevich Seryshev;
  6. Igor Olegovich Shchegolev;
  7. Viktor Vasilyevich Zolotov; and
  8. Vladimir Vladimirovich Yakushev.
  • Sanctions were also imposed to prevent Australian individuals and entities from conducting business with the following banks (including freezing assets):
  1. Promsvyazbank;
  2. Industrial Savings Bank;
  3. Genbank; and
  4. Black Sea Bank for Development and Reconstruction.

Further sanctions were imposed on individuals and entities between 25 February 2022 and 27 February 2022.

  1. President Vladimir Vladimirovich Putin;
  2. Sergei Viktorovich Lavrov;
  3. Vladimir Kolokoltsev;
  4. Mikhail Vladimirovich Mishustin; and
  5. Sergei Kuzhugetovich Shoigu.
  • The Australian sanctions regime and the complete List pf individuals and entities sanctioned in connection with the Ukraine crisis can be found of the DFAT website accessible here.

Measures which have been announced but not yet implemented in Australia

  • The Australian Government is also making amendments to the Regulations to extend existing sanctions that apply to Crimea and Sevastopol to Donetsk and Luhansk. This will include sanctions prohibiting trade in the transport, energy, telecommunications, and oil, gas and mineral sectors in the regions of Donetsk and Luhansk. These sanctions measures will be in effect from 28 March 2022

This content was last updated on 4 March 2022.

Measures which have been and are due to be implemented in the EU

See articles dated 23 February 2022 and 1 March 2022 for measures prior to 2 March 2022.

  • The EU prohibits as of 12 March 2022 the provision of specialized financial messaging services used to exchange financial data (SWIFT) to seven Russian banks with the aim of disconnecting these banks from the international financial system and harm their ability to operate globally. 1
  • The seven banks are Bank Otkritie, Novikombank, Promsvyazbank, Rossiya Bank, Sovcombank, Vnesheconombank (VEB) and VTB Bank. The prohibition also targets any entity established in Russia and owned for more than 50% by one of the above listed entities.
  • The EU has also introduced a ban on:
    • investing, participating or otherwise contributing to future projects co-financed by the Russian Direct Investment Fund; and
    • selling, supplying, transferring or exporting euro banknotes to Russia or to any natural or legal person or entity in Russia.
  • Furthermore the EU has approved the suspension of the broadcasting activities in the EU of the outlets Sputnik and Russia Today as there are seen as propaganda under the direct or indirect control of the authorities of the Russian Federation and supporting the aggression against Ukraine and the destabilisation of its neighbouring countries. 2
  • On 2 March 2022, the EU has also imposed sanctions measures and export controls on Belarus:
    • In view of the Belarus participation in Russia´s action towards Ukraine, the EU has designated 22 members of the Belarusian military. 3
  • The EU has also introduced and expended the prohibition to sale, supply, transfer or export certain goods to any person/entity in Belarus or for use in Belarus. 4 This includes:
    • dual-use goods and technology listed in Annex I to Regulation (EU) 2021/821;
    • goods and technology which might contribute to Belarus´s military and technological enhancement or to the development of its defence and security sector;
    • goods used for the production or manufacturing of tobacco products, mineral products, potassium (potash) products, wood products, cement products, iron and stell products and rubber products; or
    • certain machinery.
  • The EU is also prohibiting certain services including technical assistance, brokering services, financing or financial assistance, provision of insurance and reinsurance in relation to certain goods.

Japan

This content was last updated on 7 March 2022.

Measures which have been implemented in Japan

  • The Ministry of Foreign Affairs of Japan (MOFA), Ministry of Economy, Trade and Industry (METI) and Ministry of Finance Japan (MOF) have jointly announced sanctions measures on behalf of the Government of Japan (GoJ) to address the ongoing conflict in Ukraine.

Measures announced on 26 February 2022

  • The main target of the measures are individuals and organizations with ties to the so called Donetsk and Luhansk People’s Republics.

1. Freezing assets and related measures

a) Payments and receipt of payments made by those designated by MOFA’s notice shall require clearance by either the Head of MOF or METI in order to be executed. The list of designated individuals and an organization are here (individuals/organization)

b) Capital transactions (such as concluding deposit contracts, trust contracts, and facility loan contracts) with those designated by the MOFA’s notice shall require clearance by either the Head of MOF or METI in order to be executed. The list of designated individuals and an organization are same as above

Note that above measures for Bank Rossiya will be enforced on 28 March 2022.

2. Export and Import controls

  • Any imports are exports to or from the so called Donetsk and Luhansk People’s Republics are prohibited.

3. Regulations against the Government of the Russian Federation from issuing and circulating new securities in Japan

a) Regulations on the issuance and offering of securities

The issuance and offering of securities within Japan made by Government of the Russian Federation and its related agencies (the GoR) designated by the MOFA’s notice shall require clearance by the Minister of Finance.

b) Regulations on the acquisition or transfer of securities

Regarding securities newly issued by the Government, the issuance of securities made by Japanese resident and offering of securities made by non-resident shall require clearance by the Minister of Finance.

c) Regulations on service transactions

The provision of labor or services by residents for the issuance or offering of new securities in Japan by the Government shall require clearance by either the Head of MOF or METI in order to be executed.

4. Measures to prohibit certain banks of the Russian Federation from issuing securities in Japan

  • With respect to certain banks (designated in 2014 when the conflict in Crimea occurred)in the Russian Federation that are prohibited from issuing securities, etc. in Japan, securities with shorter redemption periods (more than 30 days) will require clearance by the Minister of Finance

5. Regulations on the prohibition of exports to the Russian Federation of items subject to the Multilateral Export Control Regime

  • With regard to exports and provision to the Russian Federation of goods and services subject to the Multilateral Export Control Regime, the screening procedures will be further tightened, and prohibition of exports will be introduced. Specifically, exports of goods and provision of technology to the Russian Federation are no longer subject to a blanket permit and now required a separate permit procedure.

Updates announced on 1 March 2022

1. Freezing assets and related measures

a) Payments and receipt of payments made by those designated by the MOFA’s notice shall require clearance by either the Head of MOF or METI in order to be executed. The list of designated individuals and an organization are here.

b) Capital transactions (such as concluding deposit contracts, trust contracts, and facility loan contracts) with those designated by the MOFA’s notice shall require clearance by the Minister of Finance. The list of designated individuals and an organization are same as above.

Note that above measures for the Promsvyazbank and Vnesheconombank will be enforced on 31 March 2022.

2. Regulations on the receipt of payments for exports

a) Receipts of payments for exports to certain organizations in the Russian Federation designated by the MOFA will require clearance by the Minister of Finance after 8 March 2022.

3. Export control (will implemented soon)

a) Introduce a ban on the export of general-purpose products that are considered to contribute to the strengthening of the military capabilities of the Russian Federation.

Updates announced on 3 March 2022

1. Freezing assets and related measures

a) Payments and receipt of payments made by those designated by the MOFA’s notice shall require clearance by either the Head of MOF or METI in order to be executed. The list of designated individuals and an organization are here (Russia/Belarus/Donetsk and Luhansk).

b) Capital transactions (such as concluding deposit contracts, trust contracts, and facility loan contracts) with those designated by the MOFA’s notice shall require clearance by the Minister of Finance. The list of designated individuals and an organization are same as above.

Note that above measures for the newly designated organization as certain banks of the Russian Federation will be enforced on 2 April 2022.

2. Regulations on the prohibition of exports to Belarus of items subject to the Multilateral Export Control Regime

a) With regard to exports and provision to the Belarus of goods and services subject to the Multilateral Export Control Regime, the screening procedures will be further tightened, and prohibition of exports will be introduced. Specifically, exports of goods and provision of technology to Belarus are no longer subject to the blanket permit and now required a separate permit procedure.

This content was last updated on 4 March 2022.

Measures which have been implemented in New Zealand

  • New Zealand does not have an autonomous sanctions regime or general legislative power that allows the Government to impose unilateral trade and financial sanctions in the absence of a United Nations Security Council Resolution. New Zealand would implement any UNSC sanctions in the unlikely event these are issued.
  • There are a limited range of unilateral measures that New Zealand can impose – such as diplomatic sanctions, suspension of aid or refusal of entry visas.
  • Domestic measures announced by the New Zealand Ministry of Foreign Affairs and Trade to date are accessible here and here. In summary, as at 4 March 2022 they are:
  • Export controls
  • There is a prohibition on export of all goods intended for use by the Russian military/security/paramilitary/police/militia.
  • This applies to the end-user, independent of intermediaries. It also applies to dual-use technologies that may have a military application.
  • Travel bans
  • Certain (unnamed) individuals who have been banned from travel to NZ.
  • Foreign Ministry consultations
  • As a first step, New Zealand has suspended bilateral foreign ministry consultations with Russia until further notice.

Measures which have been announced but not yet implemented in New Zealand

  • There are no additional measures that have been announced but not yet implemented. However, the New Zealand Government has stated that it intends to introduce new legislation to facilitate further sanctions. This is being considered by Cabinet on Monday, 7 March 2022. The further changes signalled include:
  • Targeting of existing Russian investment in New Zealand including measures to target financial institutions and potentially Russian individuals;
  • Preventing foreign investment in Russia and Russian investment in New Zealand; and
  • Involvement of the Overseas Investment Office in specific cases.

This content was last updated on 7 March 2022.

Measures which have been implemented in Singapore

  • On 5 March 2022, Singapore’s Ministry of Foreign Affairs announced the details of the sanctions and export controls against Russia. The financial measures are targeted at designated Russian banks, entities and activities in Russia, and fund-raising activities benefiting the Russian government. The Singapore Government, under its Strategic Goods Control System, will impose a ban on the transfer of military and dual-use goods, including items that can contribute to offensive cyber operation, to Russia.

Singapore’s Financial Measures in Relation to Russia

  • Under these measures, all financial institutions in Singapore, including banks, finance companies, insurers, capital markets intermediaries, securities exchanges, and payment service providers are prohibited from:

a) Entering into transactions or establishing business relationships with the following four (4) Russian banks:

  • VTB Bank Public Joint Stock Company;
  • The Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank;
  • Promsvyazbank Public Joint Stock Company; and
  • Bank Rossiya.
  • Where there are existing business relationships, financial institutions must freeze any assets and funds of these four banks.

b) Providing financing or financial services in relation to the export from Singapore or any other jurisdiction of goods subject to Singapore’s export controls on Russia. These goods comprise all items in the Military Goods List and specified categories in the Dual-Use Goods List of the Strategic Goods (Control) Order 2021.

c) Providing financial services in relation to designated Russian non-bank entities which are involved in activities in (b). Where there are existing business relationships, financial institutions must freeze any assets and funds of these designated entities. Details on the designation of non-bank entities will be provided subsequently.

d) Entering into transactions or arrangements, or providing financial services that facilitate fund raising by:

  • the Russian government;
  • the Central Bank of the Russian Federation;
  • any entity owned or controlled by them or acting on their direction or behalf.
  • The prohibitions apply to buying and selling new securities, providing financial services that facilitate new fund raising by, and making or participate in the making of any new loan to the above entities. The Singapore Government and Monetary Authority of Singapore will also cease investing in newly issued securities of the above entities.

e) Entering into transactions or providing financial services in relation to the following sectors, in the breakaway regions of Donetsk and Luhansk

  • transport;
  • telecommunications;
  • energy; and
  • prospecting, exploration and production of oil, gas and mineral resources.

f) Entering into or facilitating any transactions involving cryptocurrencies, to circumvent any of the above prohibitions in (a) to (e). The prohibited cryptocurrency transactions cover all transactions that involve cryptocurrencies and extend to the payment and settlement of transactions that relate to digital assets (such as non-fungible tokens).

  • The Monetary Authority of Singapore will issue directions to all financial institutions shortly, setting out the details of the above measures (a)-(f).

Singapore’s Export Controls Measures on Russia

  • The Singapore Strategic Goods Control System regulates the transfer (export, transit, and transshipment) of strategic goods which are generally military weapons or their parts as well as high technology goods which could be used for both commercial and military purposes. Items subject to strategic goods control are listed in the Strategic Goods (Control) Order (SGCO) 2021.
  • In order to constrain Russia’s capacity to conduct its war in Ukraine and cyber aggression, all permit applications to Russia involving (a) all items on the List of Military Goods under the SGCO; and (b) all category codes under Category 3 - Electronics, Category 4 - Computers and Category 5 – Telecommunications and “Information Security” on the List of Dual-Use Goods under the SGCO will be rejected. Please refer to the SGCO for the descriptions of the items in the affected category codes.

This content was last updated on 4 March 2022.

Measures which have been implemented in South Korea

  • On 28 February 2022, the government of South Korea announced that it would join international sanctions against Russia. To that end, on 1 March 2022, the Ministry of Economy and Finance of South Korea announced the details and substance of the sanctions which were determined based on close consultation with the U.S. Department of Treasury.
  • These sanctions prohibit South Korean financial institutions, both public and private, from:
  1. transacting with seven major Russian banks (Sberbank, Vnesheconombank (VEB), Promsvyazbank (PSB), VTB Bank, Bank Otkritie, Sovcombank, Novikombank and their affiliated entities) subject to the U.S. wind-down periods and the U.S. General Licenses applicable to each entity;
  2. investing in Russian treasury bonds; and
  3. executing transactions with Russian banks using the SWIFT messaging system by implementation of the sanctions that would be imposed by the EU. In addition, the Ministry of Trade, Industry and Energy announced that it would implement ban Korean companies from exporting strategic materials to Russia.
  • Given the unprecedented nature of these measures, financial institutions, businesses and persons in South Korea are advised to take all necessary steps to ensure that these measures can be effectively implemented including providing prior notification to customers, setting up of and managing internal controls procedures and transactions monitoring systems, and performing customer due diligence.

This content was last updated on 4 March 2022.

Measures which have been implemented in the UK

See articles dated 23 February 2022 and 1 March 2022 for measures prior to 2 March 2022.

The UK Government has implemented a range of additional sanctions measures since 1 March 2022, summarised below:

  • Asset freezing measures have been imposed on a number of additional individuals, including IS Bank, Bank Rossiya, the Russian Direct Investment Fund, Promsvyazbank, Alisher Usmanov and Igor Shuvalo.
  • Existing measures prohibiting dealing with transferable securities or money market instruments have been extended to include instruments issued after 1 March 2022 by any entity or individual that is “connected with Russia” (including Russian incorporated entities and residents), the Government of Russia and specified entities (including Sberbank, Gazprombank, United Aircraft Corporation, Rosneft, Transneft and Gazprom Neft). These measures now also apply to the UK-incorporated subsidiaries of these entities.
  • Measures prohibiting the making available of loans or credits with a maturity of at least 30 days have been extended to any entity or individual that is “connected with Russia” (including Russian incorporated entities and residents), the Government of Russia and specified entities (including Sberbank, Gazprombank, United Aircraft Corporation, Rosneft, Transneft and Gazprom Neft). These measures now also apply to the UK-incorporated subsidiaries of these entities.
  • UK credit and financial institutions are prohibited from establishing or continuing a correspondent banking relationship with a ‘designated person’ (being financial institutions subject to UK asset freezing measures and Sberbank), or a (UK or non-UK) credit or financial institution owned or controlled by a ‘designated person’. The UK Government has issued general licences to allow the wind-down of certain activities and processing caught by these controls.
  • UK persons are prohibited from providing “financial services” to the CBR (or any entity owned or controlled by it or acting on its behalf or direction) where the financial services “are for the purpose of foreign exchange reserve and asset management”.
  • Russia has been removed as a permitted destination from numerous UK open general export licences (OGELs) and the UK government has suspended the approval of new export licences for dual-use items to Russia.
  • The scope of an existing prohibition on the export, supply and delivery, making available and transfer of military goods and technology to and for use in Russia has been expanded to include “critical-industry goods” and technology and dual-use goods and technology, and military goods and technology. The probation includes the provision of technical assistance, financial services, funds and brokering services to these additional categories of goods/technologies.
  • “Critical industry goods” includes specified equipment used in the telecommunications, electronic, computer, information security, navigation and avionics, marine and aerospace sectors.
  • Legislation been introduced to target trade through shipping ports and there is a prohibition on Russian ships and other ships specified by the Secretary of State, from entering ports in the United Kingdom. These measures also apply to ships on the UK Ship Register which are owned, controlled, chartered or operated by a designated person or persons connected with Russia.
  • Further measures, not yet in legislation, have been announced. Specifically, the Government has set out its intention to UK-based insurance and reinsurance providers from transacting with Russian entities in the aviation and space sectors.

This content was last updated on 3 March 2022.

Measures which have been implemented in the US

Designated Persons / SDNs (individuals and entities subject to asset freezing i.e. blocking measures)

  • On February 22, over 50 parties were designated to the SDN List, including 44 entities, 3 individuals, and 5 vessels. The complete list of entities targeted can be found here. The individuals are:
  • Denis Aleksandrovich Bortnikov
  • Petr Mikhailovich Fradkov
  • Vladimir Sergeevich Kiriyenko
  • The entities designated include the following and their related companies:
  • Promsvyazbank PJSC
  • State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank
  • The vessels designated include the following:
  • Baltic Leader
  • Fesco Magadan
  • Fesco Moneron
  • Linda
  • Pegas
  • On 23 February Nord Stream 2 AG was designated pursuant to PEESA along with its CEO:
  • Nord Stream 2 AG (NS2, pipeline owner/operator)
  • Matthias Warnig (NS2 CEO)
  • On 24 February OFAC designated a number of entities and individuals. The complete list of entities can be found here. This includes 4 Russian banks and their related companies:
  • VTB Bank
  • Otkritie
  • Novikom
  • Sovcom
  • Other Russian entities that were designated include:
  • Joint Stock Commercial Bank Novikombank
  • LLC Atlant S
  • LLC Inspira Invest A
  • The US designated 7 Russian individuals:
  • Yuriy Alekseyevich Soloviev
  • Sergei Sergeevich Ivanov
  • Andrey Patrushev
  • Ivan Igorevich Sechin
  • Alexander Aleksandrovich Vedyakhin
  • Andrey Sergeyevich Puchkov
  • Galina Olegovna Ulyutina
  • The US designated 16 Belarusian entities:
  • Belinvestbank
  • Belbizneslizing
  • Belinvest-Engineering
  • Bank Dabrabyt
  • Minsk Wheeled Tractor Plant
  • State Authority for Military Industry of the Republic of Belarus
  • State Owned Foreign Trade Unitary Enterprise Belspetsvneshtechnika
  • OJSC KB Radar-Managing Company Holding Radar System
  • 558 Aircraft Repair Plant
  • Integral
  • Industrial-Commercial Private Unitary Enterprise Minotor-Service
  • Oboronnye Initsiativy
  • OKB TSP Scientific Production
  • Synesis
  • 24x7 Panoptes
  • Sokhra
  • The US also designated 8 Belarusian individuals:
  • Aliaksei Ivanavich Rymasheuski
  • Aliaksandr Piatrovich Vetsianevich
  • Dmitry Aleksandrovich Pantus
  • Viachaslau Yevgenyevich Rassalai
  • Aliaksandr Yauhenavich Shatrou
  • Viktor Gennadievich Khrenin
  • Aleksandr Grigorievich Volfovich
  • Aliaksandr Mikalaevich Zaitsau
  • On 25 February the U.S. designated 4 high-level members of the Russian government. They include:
  • Vladimir Putin
  • Sergei Lavrov
  • Valery Gerasimov
  • Sergei Shoigu
  • On 28 February the U.S. designated one of Russia’s most important sovereign wealth funds, its affiliates, and CEO. Entities and individuals designated include:
  • The Russian Direct Investment Fund
  • JSC Management Company of the Russian Direct Investment Fund
  • LLC RVC Management Company
  • Kirill Dmitriev
  • On 2 March the U.S. announced that it would designate 22 Russian defense-related entities.

Additional Measures Imposed (i.e., territorial and sectoral sanctions, export controls)

  • On 21 February the US announced an immediate and near complete economic embargo of the Donetsk and Luhansk regions, including a prohibition on trade, investment or financing with or in the Donetsk and Luhansk regions.
  • On 22 February the US prohibited participation by US financial institutions in the secondary market for ruble or non-ruble denominated bonds issued after 1 March.
  • On 24 February The US prohibited transactions and dealings, by US persons or within the United States, in new debt of longer than 14 days maturity and new equity for the following 13 entities:
  • Sberbank
  • Gazprombank
  • Russian Agricultural Bank
  • Gazprom
  • Gazprom Neft
  • Transneft
  • Rostelecom
  • RusHydro
  • Alorsa
  • Sovcomflot
  • Russian Railways
  • Alfa-Bank
  • Credit Bank of Moscow
  • The US imposed correspondent and payable-through account sanctions on Sberbank and its subsidiaries.
  • The US announced newly expanded export controls to restrict most exports, reexports, and transfers of US goods, software and technology to Russia. Major changes include:
  • Expanded export license requirements for items subject to the EAR including products relating to semiconductors, IT data processing, healthcare, motor vehicles, and the marine and aviation sectors. The US will institute a default policy of denying license requests except in limited circumstances.
  • Restrictions on transactions of goods with military end users. Products of R&D facilities in third countries may now require a license to send goods to military end users in Russia if the goods are made with US technology or equipment.
  • Restrictions on exporting to specified Russian state-owned enterprises and aerospace and defense companies.
  • A near-total ban on exports to the Donetsk People’s Republic and Luhansk People’s Republic.
  • On February 26, the US and leaders of the European Commission, France, Germany, Italy, the United Kingdom, and Canada announced additional measures that are expected to be implemented soon. These include:
  • Removing select Russian banks from the SWIFT messaging system. The EU has voted to remove, as of March 2, VTB Bank, Bank Otkritie, Novikombank, Promsvyazbank, Rossiya Bank and Sovcombank, and VEB.RF, from SWIFT.
  • Limiting the sale of citizenship (i.e., golden passports) by the EU countries to wealthy Russians
  • Launching a transatlantic task force to identify and freeze assets of sanctioned entities
  • On 28 February the U.S. prohibited U.S. persons from engaging in any transaction with, or on behalf of, large Russian financial entities. These include:
  • Central Bank of the Russian Federation
  • National Wealth Fund of the Russian Federation
  • Ministry of Finance of the Russian Federation
  • On 2 March the U.S. announced it would take a number of steps to further restrict exports to Russia and Belarus. These include:
  • Export controls on oil and gas extraction equipment in order to degrade Russia’s oil refining industry
  • Adding entities that have been involved with or supported the Russian and Belarusian security services or defense sectors to the Entity List
  • Extending previous restrictions put in place on Russia on February 24 (described above) to Belarus
  • The U.S. also announced that it would close off American air space to all Russian flights, including aircraft certified, operated, registered, or controlled by any person connected with Russia.

Legal source / reference

Comments

  • A general license has been issued that authorizes the wind-down of operations and certain limited activities in the Donetsk and Luhansk regions, expiring 23 March.
  • OFAC also issued 5 additional licenses authorizing certain other activities involving the region, such as transactions in medical goods.
  • OFAC has issued 2 general licenses allowing certain activities impacted by Directive 1A. A general license has been issued authorizing the wind-down of transactions involving Nord Stream 2, which expires 2 March.
  • OFAC has issued 10 general licenses authorizing various activities (including official business of certain organizations and entities, overflight payments, and exports of agricultural products).
  • Additionally, a license has been issued exempting certain transactions related to energy with certain entities whose assets were frozen. Entities exempted include the Central Bank of the Russian Federation, VTB Bank PJSC, PJSC Sberbank of Russia, Sovcombank OJSC, PJSC Bank Financial Corporation Otkritie, and State Corporation

Divergence

  • The US sanctions targeting the Donetsk and Luhansk regions are more far-reaching than corresponding EU measures. The US measures constitute a near complete economic embargo on the regions, whilst at present, the EU measures have focused on an import ban on goods from the regions, and a prohibition on certain investment and an export ban limited to certain sectors.
  • The US and UK have both targeted VTB Bank with asset freezing measures.

This content was last updated on 1 March 2022.

Measures which have been implemented as countermeasures by Russia

  • On 28 February 2022, the President of the Russian Federation signed an Order on Application of Special Economic Measures in Connection with the Unfriendly Actions of the United States of America and Foreign States and International Organisations which have sided with the United States (Order).
  • According to the preamble to the Order, the Order was adopted in connection with the actions of the US and other foreign states imposing restrictive measures against Russian citizens and legal entities.

Restrictive measures

  • The Order establishes the following restrictive measures:

1. Mandatory sale of foreign currency proceeds

  • Russia imposed a requirement on the mandatory sale of foreign currency proceeds of 80% of foreign currency credited to Russian residents' accounts with authorised banks under foreign trade contracts concluded with non-Russian residents for provision of goods, services and work to non-residents and for transfer of intellectual property to non-residents, including the exclusive rights to such property.
  • The mandatory sale of foreign currency proceeds must be carried out by the following deadlines:
  • in respect of the foreign currency credited to the accounts of residents (participating in foreign economic operations) starting from 1 January 2022, within three working days after 28 February 2022; and
  • in respect of the foreign currency credited to the accounts of residents (participating in foreign economic operations) on or after 28 February 2022, within three working days after the date of such receipt.
  • The procedure for the sale of foreign currency proceeds will be established by the Central Bank of the Russian Federation.

2. Restrictions on certain transactions

  • The Order prohibits the following transactions of Russian residents with effect from 1 March 2022:
  • foreign currency transactions relating to provision of foreign currency by residents to non-residents under loan agreements; and
  • residents crediting foreign currency to their accounts (deposits) with banks and other financial market institutions located outside the Russian Federation and making money transfers without opening a bank account using e-payment systems operated by foreign payment service providers.
  • A resident who performs such transactions in violation of the prohibition may be held administratively liable, which might lead to imposition of an administrative fine equal to between 75% and 100% of the amount of the illegal currency transaction or moneys transferred without opening a bank account using e-payment systems operated by foreign payment service providers.1
  • In our view, "resident" in the Order means resident within the meaning of the Federal Law on Currency Regulation and Currency Control, including:
  • individuals who are citizens of the Russian Federation;
  • foreign nationals and stateless persons permanently residing in the Russian Federation under a residence permit provided under the laws of the Russian Federation; and
  • legal entities established under Russian laws (except for foreign legal entities registered under the Federal Law On International Companies and International Foundations2) and the branches, representative offices and other subdivisions of such legal entities located outside of the Russian Federation.3

Relaxation of regulatory requirements on certain issues

  • The Order relaxes regulatory requirements on the following issues:

1. Buyback by a public joint-stock company of its outstanding shares

  • A public joint-stock company may, until 31 December 2022 inclusive, repurchase its outstanding shares (except for the repurchase of outstanding shares in order to reduce their total number) admitted to organised trading. The repurchase can take place if certain conditions are present, including if the weighted average price of the shares to be acquired (the value of the main stock market index calculated by the market operator) determined for any three months starting from 1 February 2022 has decreased by 20% or more compared to such weighted average price (the value of the main stock market index calculated by the market operator) for the three months starting from 1 January 2022.
  • Information on the repurchase by a public joint-stock company of its own shares doesn't have to be disclosed in the form of a statement of a material fact if so provided under a resolution of its board of directors or supervisory board on the repurchase of outstanding shares.
  • The Order contains a provision that certain provisions of Article 72 of the Federal Law on Joint-Stock Companies apply to the repurchase by a public joint-stock company of its outstanding shares.4 It appears unclear whether this implies that other provisions of Article 72 would not apply to such buybacks, for instance, the restriction on the buyback by the company of its shares if the nominal value of the company's outstanding shares will become less than 90% of the charter capital of the company.

2. Opening a bank account (deposit) without the individual's physical presence

  • The Order provides that credit institutions are entitled to open bank accounts/deposits for individuals without the need for them to be physically present in a situation where such individuals transfer funds from their bank accounts/deposits opened with one credit institution to another credit institution. This is possible if the credit institution that opens the new account/deposit is provided with the individual’s details established during their identification procedure.
  • We would be happy to advise you on how the provisions of this Order may affect your business.