Australia's sanctions in relation to Ukraine have now commenced.
In March and May 2014, the Australian Government announced it would impose targeted financial sanctions and travel bans against particular individuals and entities in Russia and Ukraine. A link to our earlier alert is here.
On 19 June 2014 the list of designated persons and entities was updated to include a Ukraine List. Some 50 individuals and 11 entities have been named in the Ukraine List (including banks, a soft drink company and infrastructure and construction companies). The list can be viewed here.
As the list reflects, a range of individuals and entities in the political, financial, resource and industrial sectors are caught by the Ukraine sanctions. Australian businesses with overseas interests should be cognisant of these developments, particularly if they have or may have dealings involving people or businesses from Russia or Ukraine.
Australian businesses operating within other jurisdictions need to be aware of the sanctions laws applying in those jurisdictions, and whether those laws apply to their business activities.
Baker & McKenzie has set up a unique blog concerning the broader sanctions being applied in other jurisdictions, which can be accessed here.
Ukraine List financial sanctions and travel bans
The financial sanctions are far reaching and prohibit (without a valid permit):
- the use of, or dealing with, an asset owned or controlled by a person or entity designated on the Ukraine List; or
- directly or indirectly making an asset available to, or for the benefit of, a person or entity designated on the Ukraine List.
Breach is a strict liability offence. Penalties can include up to 10 years' imprisonment and/or substantial fines.
"Asset" is broadly defined by the Autonomous Sanctions Act 2011 (Cth) as:
- an asset of any kind or property of any kind, whether tangible or intangible, movable or immovable, however acquired; and
- a legal document or instrument in any form (including electronic or digital) evidencing title to, or interest in, such an asset or such property.
The note to the definition of "asset" points out that some examples of documents and instruments described in paragraph (b) are bank credits, travellers cheques, bank cheques, money orders, shares, securities, bonds, debt instruments, drafts and letters of credit.
This means that "asset" includes just about anything of value whether in tangible or intangible form.
The travel bans imposed prohibit entry into Australian territory by a declared person listed on the Consolidated List maintained by the Department of Foreign Affairs and Trade.
Businesses that may be impacted by the sanctions should:
- Exercise sufficient diligence when conducting transactions involving Ukraine or Russian interests.
- Ensure their transaction screening processes are comprehensive and kept up to date. Screening processes need to enable identification of individuals that may be a sanctioned designated person or entity, and of entities that may be owned or controlled by a designated person.