Application of EU sanctions against Russia and Belarus

Since the sanctions were imposed on February 2022 against Russia and Belarus following the Russian invasion in Ukraine, substantial number of new sanctions have been implemented by the European Union and United States to tackle economy and specific sectors of Russia and Belarus.

In the view of this we have prepared an updated overview of the specific economic and sectorial sanctions against Russia and Belarus.

Considering questions we have received in practice about implementation of sanctions, we have also developed a frequently asked questions (FAQ) section which includes answers to most common questions posed to us by clients.

We hope that you will find this overview and the FAQ section useful. Please feel free to reach out to us should you have any outstanding questions regarding the application of sanctions’ regulation.

The overview is presented as of 25 April 2022. For practical use purposes the sanctions that were introduced following our e-mail of 7 March have been written in italic.

We note that the content and scope of sanctions are constantly evolving and due to number of overall sanctions we have only indicated the most notable economic and sectoral sanctions below.

FREQUENTLY ASKED QUESTIONS

Overview of specific sanctions imposed by the EU

Economic sanctions

Freezing of assets

Obligations to freeze funds and economic resources belonging to, owned, held or controlled by the listed natural or related persons, entities or bodies selling, renting or mortgaging property). Among other things, transactions with the reserves of the Central Bank of Russia and the Central Bank of Belarus, including by persons acting in the name or under the management of the Central Bank of Russia and Central Bank of Belarus, are prohibited.

Central Depositories of the European Union are prohibited from providing depository services to any person from Russia (including natural persons residing there and legal persons, entities or bodies established there).

Restriction of access to capital markets

In order to restrict Russia’s and Belarus’ access to capital markets, it is prohibited to buy, sell or provide investment services in securities, including in the form of crypto-assets, and money market instruments issued by Russia, Belarus and their governments, the Central Bank of Russia or the Central Bank of Belarus and certain legal entities, entities and bodies affiliated with Russia or Belarus (including credit and financial institutions incorporated in Russia or Belarus). It is also prohibited to trade in such instruments or otherwise assist in their issuance.

It is prohibited to list the securities of legal entities, entities or bodies established in Russia or Belarus, more than 50% of which are state-owned, and to provide related services on trading venues recognized or registered in the European Union.

In addition, persons from Russia or Belarus (including natural persons or legal entities, entities or bodies domiciled in Russia or Belarus) are prohibited from selling securities denominated in euros issued after 12 April 2022 or units of funds investing in such securities.

Restrictions on funding

It is prohibited to enter into agreements granting new loans or credits to Russia or its government, the Central Bank of Russia or certain legal persons, entities or bodies associated with Russia. Participation in such agreements is also prohibited.

In addition, it is prohibited to invest in, participate in or otherwise contribute to projects co-financed by the Russian Direct Investment Fund.

Restrictions on taking deposits

It is prohibited to take deposits, including crypto assets, of more than EUR 100,000 per credit institution from Russian or Belarus citizens or natural persons residing in Russia or Belarus, or from legal persons, entities or bodies established in Russia or Belarus.

Restrictions on the exchange of financial data

The provision of special financial messages for the exchange of financial data (i.e. through the SWIFT system) to certain legal persons, entities or bodies or to legal persons, entities or bodies established in Russia or in Belarus which are sanctioned with 50% or more ownership is prohibited.

Restrictions on euro – denominated banknotes

It is prohibited to sell, supply, transfer or export euro banknotes to Russia or Belarus or to any natural or legal person, entity or body in Russia or Belarus, including the Government and the Central Bank of Russia or the Central Bank of Belarus, or for use in Russia or Belarus.

All of the sanctions described above are financial sanctions, which means that in addition to applying the sanction, the person must also notify the Financial Intelligence Unit in case there are doubts of sanction evasion or an attempt to do so.

Sectoral sanctions

Energy sector

The sale, supply, transfer or export of petroleum products and technology to any person, entity or body in, or for use in, Russia shall be prohibited. Also, the provision of services related to such products and technology are restricted, including:

• provision of technical assistance;
• provision of brokerage or other services;
• supply, production and maintenance.

Financing of the above actions is also prohibited.

It is prohibited to:

• acquire any new or extend any existing participation in any legal person, entity or body incorporated or constituted under the law of Russia or any other third country and operating in the energy sector in Russia;
• grant or be part of any arrangement to grant any new loan or credit or otherwise provide financing, including equity capital, to any legal person, entity or body incorporated or constituted under the law of Russia or any other third country and operating in the energy sector in Russia, or for the documented purpose of financing such a legal person, entity or body;
• create any new joint venture with any legal person, entity or body incorporated or constituted under the law of Russia or any other third country and operating in the energy sector in Russia.

Providing investment services directly related to the activities above is prohibited.

Restrictions do not apply to the performance of contracts concluded before 26 February 2022 until 27 May 2022. No new contracts may be concluded after 26 February 2022 and existing contracts may not be performed after 27 May 2022.

Transport sector

The sale, supply, transfer or export of goods and technology used in aviation and aerospace industry, including jet fuel and fuel additives, as well as maritime navigation goods and technology to or for use by any person, entity or body in Russia shall be prohibited. The provision of services related to such products and technology is also prohibited:

• provision of insurance and reinsurance;
• performing repairs, inspections, replacements, alterations or repair of defects (other than pre-flight inspections) of the aircraft or component;
• provision of technical assistance;
• provision of brokerage or other services;
• providing financing.

No new contracts may be concluded after 26 February 2022 and existing contracts may not be performed after 28 March 2022.

It is prohibited to provide access to ports in the territory of the European Union to any vessel registered under the flag of Russia.

Please note that a vessel means:

• a ship falling within the scope of the relevant international conventions;
• a yacht, of 15 meters in length or more, which does not carry cargo and carrying no more than 12 passengers;
• recreational craft or personal watercraft as defined in Directive 2013/53/EU.

Resource sector

It is prohibited to import, directly or indirectly, iron and steel products indicated in Annex XVII to Regulation 2022/428/EU of the European Parliament and of the Council here into European Union if they originate in Russia or have been exported from Russia. It is also prohibited to purchase, directly or indirectly, iron and steel products which are located, or which originated in Russia as well as to transport these products and provide, directly or indirectly, technical assistance, brokering services, financing or financial assistance, insurance and re-insurance related to these products.

It is prohibited to purchase, import, or transfer, directly or indirectly, coal and other solid fossil fuels, as listed in Annex XXII to Regulation 2022/576/EU of the European Parliament and of the Council here into the European Union if they originate in Russia or are exported from Russia. It is also prohibited to provide technical assistance, brokering services or other services related to coal and other fossil fuels and to the provision, manufacture, maintenance and use of those goods and technology, directly or indirectly in relation to this prohibition. It is also prohibited to provide financing or financial assistance related to these goods.

Restrictions to coal and other solid fossil fuels shall not apply to the execution until 10 August 2022 of contracts concluded before 9 April 2022, or ancillary contracts necessary for the execution of such contracts.

Luxury goods

It is prohibited to sell, supply, transfer or export, directly or indirectly, luxury goods, to any legal person, entity or body in Russia or for use in Russia. The prohibition applies to all luxury goods indicated in Annex XVIII to Regulation 2022/428/EU of the European Parliament and of the Council here insofar value of such goods exceeds EUR 300.

Credit rating services

It is prohibited to provide credit rating services to any Russian national or natural person residing in Russia or any legal person, entity or body established in Russia. The same applies to provision of any subscription services related to credit rating services.

Administrative service sector

It is prohibited to register, provide a registered office, business or administrative address as well as management services to, a trust or any similar legal arrangement having as a trustor or a beneficiary to:

• Russian nationals or natural persons residing in Russia;
• legal persons, entities or bodies established in Russia;
• legal persons, entities or bodies whose proprietary rights are directly or indirectly owned for more than 50 % by a sanctioned person
• legal persons, entities or bodies controlled or acting on behalf of any natural or legal person, entity or body mentioned above.

Technology sector

The sale, supply, transfer or export of certain technology to any person, entity or body in, or for use in, Russia is prohibited. An overview of the authorized technology can be found in Annex I to Regulation 2021/821/EU of the European Parliament and of the Council here.

The sale, supply, transfer or export of technology to or for use in Russia that may contribute to Russia’s military and technological improvement or to the development of its defense or security sector shall also be prohibited.

In addition to the above, the following are prohibited:

• Reserve and asset management transactions of the Central Bank of Russia or the Central Bank of Belarus.
• to authorize a Russian air carrier, aircraft registered in Russia or any other aircraft owned by a Russian person, entity or body to land, take off or fly over the territory of the European Union;
• allow certain natural persons entering the European Union;
• public funding and financial assistance for trade with and investment in Russia or Belarus.

Further information about sanctions in regard to Russia’s military invasion of Ukraine (including a list of persons subject to restrictions) can be found in the following Council of Europe instruments: