EU imposes 10th sanctions package and new sanctions from US and UK.
We refer to our previous sanctions updates which can be found here.
On Friday 24th February, one year after Russia’s invasion of Ukraine, the Council decided to impose a 10th sanctions package against Russia. The package includes additions to the sanction list of key figures involved in kidnapping of Ukrainian children to Russia, organisations and individuals spreading disinformation, individuals in Iran involved in elaboration of drones supporting Russia’s military and members and supporters of the Wagner group and its activities in other parts of the world, such as Africa. The sanctions package covers the following measures:
• Export bans on critical technology and industrial goods, such as electronics, specialised vehicles, machine parts, spare parts for trucks and jet engines, as well as goods for the construction sector such as trucks, other heavy vehicles, construction machines, pumps, antennas and cranes
• Import bans on additional goods which generate significant revenues for Russia such as asphalt/bitumen and synthetic rubber
• Restrictions for Russian nationals to hold any position in the governing bodies of EU critical infrastructures
• More detailed reporting obligations on funds and economic resources belonging to listed individuals and entities which have been frozen or were subject to any move shortly before the listing
• New reporting obligations to the Member States and to the Commission on immobilized reserves and assets of the Central Bank of Russia
• Prohibition for Russian nationals and entities from booking gas capacity in gas storages in the EU
• 137 entities have been added to EU’s asset freeze list, which now comprise of 1473 individuals and 205 entities as far as sanctions against Russia are concerned. The additions include Alfa-Bank, Rosbank, and Tinkoff Bank, the National Wealth Fund of the Russian Federation, and the Russian National Reinsurance Company
• 96 additional entities associated to Russia's military-industrial complex, bringing the total of military end-users that are listed to 506. This includes for the first time seven Iranian entities that have been using EU components and providing Russia with military "Shahed" drones to attack civilian infrastructure in Ukraine
• A third country shipping company, suspected of helping Russia circumvent sanctions on oil exports, has also been listed
• A transit ban for dual-use goods and advanced technology and firearms via the Russian territory
• Measures to facilitate the divestment from Russia by EU operators have been introduced
This package is less comprehensive than what several Members States wanted. Future sanctions packages are to be expected.
Further information can be found here: https://ec.europa.eu/commission/presscorner/detail/en/qanda_23_1187
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L:2023:059I:TOC
In one of its most significant sanctions actions to date, US Treasury has recently announced a new determination targeting the metals and mining sector of the Russian Federation economy under Executive Order 14024 and is also imposing sanctions on 22 individuals and 83 entities. Since February 2022, the US Treasury has reportedly implemented more than 2,500 sanctions in response to Russia’s war. The new round of sanctions include:
• Designations of over 30 third-country individuals and companies connected to Russia’s sanctions evasion efforts, including several German, Swiss and Italian nationals
• Designating over a dozen financial institutions in Russia, including Credit Bank of Moscow which is one of the top-ten largest banks by asset value
• The identification of the metals and mining sector of the Russian Federation which allows for sanctions to be imposed on any individual or entity determined to operate or have operated in that sector. The action complements existing provisions for sanctions against those that operate or having operated in the quantum computing, accounting, trust and corporate formation, management consulting, aerospace, marine, electronics, financial services, technology, and defense and related materiel sectors of the Russian Federation
• The Bureau of Industry and Security is expanding the scope of existing Russian and Belarusian industry sector restrictions relating to oil and gas production, commercial and industrial items, chemical and biological precursors, as well as certain luxury goods
Further information about the US sanctions can be found here: https://www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3227-2023-02-24-bis-press-release-additional-russia-invasion-response-actions/file
Also UK has announced a new package of sanctions which encompasses the following:
• Export ban of products found used by Russia on the battlefield comprising of hundreds of goods including aircraft parts, radio equipment and electronic components
• Import ban of 140 goods including iron and steel products processed in third countries
• Extension of existing measures against Crimea, and non-government controlled territory in Donetsk and Luhansk oblasts restricting their access to UK trade and finance
• Designation of numerous individuals including senior executives at Russian state-owned nuclear power company Rosatom, Nord Steam 2, Gazprom and Aeroflot
Information about the UK sanctions can be found here:
https://www.gov.uk/government/news/new-sanctions-ban-every-item-russia-is-using-on-the-battlefield
There are more and more media reports about Russia obtaining and exporting sanctioned goods by way of circumvention. As of July 2022, trade between Russia and China, Turkey, Belarus and Kazakhstan had increased roughly in the same proportion as trade between Russia and EU/US had decreased.
US Treasury Deputy Secretary Wally Adeyemo recently told the Wall Street Journal that the US would go directly to Chinese companies and banks and make clear to them they will face sanctions for providing support to Russia. Also EU and UK has said it will focus on combatting sanctions circumvention and G7 is set to create new tool to bolster enforcement of Russia sanctions. The instrument, tentatively called the “Enforcement Coordination Mechanism” aims to bolster information sharing and other actions, including regarding countries and firms anywhere in the world suspected of aiding Russia’s war in Ukraine by evading or undermining sanctions. The choice to businesses is clear; “do business with a coalition representing half of the global GDP, or provide material support to Russia".
In addition, on 23 February, the EU organized the first Sanctions Coordinators Forum in Brussels, gathering international partners and Member States, to strengthen enforcement efforts. Among those present were the U.S, the UK, Japan, Canada, Australia, New Zealand, Norway, Switzerland and Ukraine.
The important takeaway for businesses is that ignorance about these matters can easily result in an unintended sanctions breach and, consequently, unintended support to Russia to wage its war. Any company exporting products subject to Russian sanctions to customers in third countries, in particular Russia-friendly countries, needs to take robust actions to ensure that the products are not re-exported to Russia.
