On 12 September 2014, the EU expanded its regime of sector-wide
sanctions imposed on Russia on 31 July. Council Regulation (EU) No
960/2014 (“Regulation 960”) now imposes additional restrictions on
accessing European capital markets, supplying dual-use goods and
technology, providing financial assistance for military goods and
engaging in activities related to oil exploration and production.
This updated regime of sectoral sanctions constitutes the most
extensive package of Ukraine-related restrictive measures to date,
affecting entire sectors of the Russian economy, banking, energy and
defence industries. For further information, please see our Client
Update of 31 July.
A few hours after the new EU sanctions were announced, the US
Treasury Department also announced an expansion of its sectoral
sanctions programme targeting Russian Companies. A summary of
these new measures can be accessed here.
CAPITAL MARKET RESTRICTIONS
On 31 July, the EU prohibited the purchasing, selling, provision of
brokering services or assistance in the issuance of, or otherwise
dealing with, “transferable securities and money-market instruments with
a maturity exceeding 90 days” issued after 1 August by the five listed
Natalia A. Drebezgina
Alan V. Kartashkin
Alyona N. Kucher
Dmitri V. Nikiforov
Lord Goldsmith QC
Matthew Howard Getz
Satish M. Kini
state-owned banks (as well as their 50%-owned non-EU subsidiaries and any companies
acting on their behalf or at their direction).1
Regulation 960 has now introduced the following additional restrictive measures, further
expanding the existing capital market restrictions:
First, the EU reduced the maximum maturity period applicable to the prohibited dealings
in transferable securities and money-market instruments to 30 days.2 This applies to
financial instruments issued after 12 September. For financial instruments issued between
1 August and 12 September 2014, the maturity limit remains a period of 90 days.
Second, the EU expanded its list of entities subject to the latest capital market restrictions to
include not only state-owned financial institutions, but also the following six companies
(as well as their 50%-owned non-EU subsidiaries and any companies acting on their behalf
or at their direction):
■ OPK Oboronprom (excluding legal persons, entities or bodies acting in the space or
nuclear energy sectors);
■ United Aircraft Corporation (excluding legal persons, entities or bodies acting in the
space or nuclear energy sectors);
■ Uralvagonzavod (excluding legal persons, entities or bodies acting in the space or
nuclear energy sectors);
■ Transneft; and
■ Gazprom Neft.
Third, the EU has prohibited any direct or indirect involvement in the provision of loans or
credit with a maturity exceeding 30 days after 12 September to the listed entities.
Excluded from the scope of this prohibition is: (1) the provision of credit for the financing
of non-prohibited activities; and (2) the provision of emergency funding for subsidiaries
within the EU that are majority owned by Rosneft, Transneft, or Gazprom Neft.
1 The listed banks are (1) Sberbank; (2) VTB Bank; (3) Gazprombank; (4) Vnesheconombank (VEB); and (5)
Rosselkhozbank (aka Russian Agricultural Bank).
2 Regulation 960 redefines “brokering services” as “investment services”, which concept includes: receiving and
transmitting orders in relation to one or more financial instruments; executing orders on behalf of clients; dealing on
own account; portfolio management; investment advice; underwriting financial instruments and/or placing of financial
instruments on a firm commitment basis; placing of financial instruments without a firm commitment basis; and any
service in relation to the admission to trading on a regulated market or trading on a multilateral trading facility.
SUPPLY OF DUAL USE GOODS
The existing prohibition on the supply of dual use goods or technology, and on the
provision of technical assistance, financial assistance, or brokering services related to such
supply, has now been made expressly applicable to the following nine companies:
■ JSC Sirius;
■ OJSC Stankoinstrument;
■ OAO JSC Chemcomposite;
■ JSC Kalashnikov;
■ JSC Tula Arms Plant;
■ NPK Technologii Maschinostrojenija;
■ OAOWysokototschnye Kompleksi;
■ OAO Almaz Antey; and
■ OAO NPO Bazalt.
Regulation 960 subjects the prohibition on supplying dual-use goods to the following three
exceptions: (1) the execution of contracts or agreements concluded before 12 September;
(2) the provision of assistance necessary to the maintenance and safety of existing civil
nuclear capabilities within the EU; and (3) the supply of dual use goods and technology
intended for aeronautics and space industry, given their non-military nature.
THE PROVISION OF FINANCIAL ASSISTANCE FOR MILITARY GOODS
On 31 July, the EU prohibited the provision of financial assistance in respect of the sale,
supply, transfer or export to Russia of arms and related material, and of dual-use goods
and technology for military use in Russia, or to Russian military end-users. This
prohibition applies to all items listed on the common military list of the EU, including
weapons, ammunition, military vehicles and paramilitary equipment, and all items on the
EU’s dual-use list.
The concept of “financial assistance” has now been expanded under Regulation 960 to
include “insurance and reinsurance”. This addition is significant as the original Decision
imposing the prohibition3 excluded these forms of financial assistance from its remit. The
3 Decision 2014/512/CFSP
UK government has previously issued guidance stating that the term “financial assistance”
did not cover either insurance or reinsurance.
Regulation 960 does not prohibit the import of military goods from Russia, nor does it
sanction the transport of such goods through the EU.
OIL EXPLORATION AND PRODUCTION
With regard to the restrictions imposed on deep water and arctic oil exploration and
production, as well as shale oil projects in Russia, the EU has now prohibited the direct or
indirect provision of the following related services: (1) drilling; (2) well testing; (3) logging
and completion services; and (4) the supply of specialised floating vessels.
These prohibitions do not apply to the execution of contracts and agreements concluded
before 12 September, nor to services necessary for the urgent prevention or mitigation of
events that are likely to have a serious impact on human health and safety, or on the
FURTHER DESIGNATIONS OF INDIVIDUALS AND ENTITIES
The EU has also added a further 24 individuals to its list of persons subject to asset
freezes.4 These individuals include leaders and senior members of separatist entities, close
associates of President Vladimir Putin and members of the State Duma, the lower house of
the Russian Federal Assembly.
The full list of designated individuals includes: (1) Alexander Zakharchenko; (2) Vladimir
Kononov/Aka ‘Tsar’; (3) Miroslav Vladimirovich Rudenko; (4) Gennadiy Nikolaiovych
Tsypkalov; (5)Andrey Yurevich Pinchuk; (6) Oleg Bereza; (7) Andrei Nikolaevich Rodkin;
(8) Aleksandr Karaman; (9) Georgiy L'vovich Muradov; (10) Mikhail Sergeyevich
Sheremet; (11) Yuri Leonidovich Vorobiov; (12) Vladimir Volfovich Zhirinovsky;
(13) Vladimir Abdualiyevich Vasilyev; (14) Viktor Petrovich Vodolatsky; (15) Leonid
Ivanovich Kalashnikov; (16) Vladimir Stepanovich Nikitin; (17) Oleg Vladimirovich
Lebedev; (18) Ivan Ivanovich Melnikov; (19) Igor Vladimirovich Lebedev; (20) Nikolai
Vladimirovich Levichev; (21) Svetlana Sergeevna Zhurova; (22) Aleksey Vasilevich
Naumets; (23) Sergey Viktorovich Chemezov; and (24) Alexander Mikhailovich Babakov.
4 Council Implementing Regulation (EU) No 961/2014
CIRCUMVENTION OF SANCTIONS
Regulation 960 continues to prohibit the knowing and intentional participation in activities
the object or effect of which is to circumvent the prohibitions established by the EU’s
This includes acting as a “substitute” for any of the designated entities, or using the
exception applicable to the provision of credit for the financing of non-prohibited activities
to fund such entities.
As with other EU sanctions, these sanctions apply within the territory of the EU, to EU
nationals and EU companies anywhere in the world, to business done in whole or part
within the EU, and onboard vessels or aircraft under the jurisdiction of an EU Member
We will continue to provide updates as the situation develops.
For updates on Ukraine-related sanctions and other sanctions developments, please
subscribe to the Debevoise & Plimpton LLP Sanctions Alert. The Sanctions Alert is a free,
semi-monthly e-mail summary of developments in the area of economic and trade
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September 15, 2014