The European Union (EU) has gradually adjusted its response to the Ukrainian crisis by adopting targeted sanctions against Ukrainian and Russian individuals.
On March 5, 2014, the EU published a first set of sanctions against top Ukrainian government officials and their relatives. Council Regulation (EU) No 208/2014 lists 18 individuals from former Ukrainian President Yanukovych’s inner circle, which are held responsible for misappropriation of Ukrainian State funds and violation of human rights.
On March 17, 2014, the EU targeted 21 additional individuals. Council Regulation (EU) No 269/2014 lists both Ukrainian and Russian officials deemed accountable for actions undermining or threatening Ukraine’s territorial sovereignty. On March 21, 2014, the list was further extended by Council Implementing Regulation (EU) No 284/2014, to include 12 top Russian government officials and close allies of Russian President Putin, whose role in Crimea’s annexation was considered significant.
The above-mentioned sanctions cover different types of restrictive measures, including:
- The freezing of funds and economic resources belonging to, owned, held or controlled by the listed individuals;
- The prohibition to make funds or economic resources available to the listed individuals; and
- The prohibition to participate in activities the object or effect of which is to circumvent those obligations.
Although financial services firms are directly impacted by these sanctions, companies operating in seemingly unrelated sectors, such as pharmaceuticals, may also be affected. Thus, the indirect effect of these sanctions should not be underestimated. It is not sufficient to screen parties directly targeted by the sanctions, as the sanctions may also apply to non-listed entities that the listed parties own, hold or control. For example, if listed individuals control a non-listed bank, there will be a level of risk associated with transactions involving that bank.