New sanctions issued against Russia and Belarus by EU and UK | Pillsbury – Global Trade Law and Sanctions
The EU and UK have imposed additional export controls and sanctions on Russia and Belarus linked to the Russian invasion of Ukraine. Below is a summary of the main developments in recent days since our last blog post on EU and UK developments. [here]. This is a rapidly developing area and future blog posts will summarize further developments.
On February 28, 2022, the EU banned Russian air carriers, Russian-registered aircraft and non-Russian aircraft owned, chartered or controlled by Russian persons from landing, taking off or overflying any EU territory ( except in an emergency).
New financial restrictions imposed
The EU continued to impose sanctions targeting Russian financial systems. It is now prohibited to:
- Engage in transactions related to the management of assets or reserves of the Central Bank of Russia (“CBR”), including any transactions with counterparties acting on behalf of or at the direction of the CBR.
- Invest, participate or contribute to projects financed by the Russian Direct Investment Fund.
- To supply Euro-denominated banknotes to Russia, to anyone in Russia, or for use in Russia (subject to certain limited exceptions).
In addition, from March 12, 2022, it is prohibited to provide specialized financial messaging services to the following banks or any subsidiaries established in Russia owned directly or indirectly (50% or more) by these banks (i.e. i.e. a “SWIFT ban”): (i) Bank Okritie; (ii) Novikombank; (iii) Promsvyazbank; (iv) Rossiya Bank; (v) Sovcombank; (vi) Vnesheconombank (“VEB”); and (vii) VTB Bank.
The list of people subject to an asset freeze in the EU has continued to grow. Notable additions include: (i) SOGAZ; and (ii) Alisher Usmanov.
Operators are now prohibited from broadcasting (or facilitating the broadcasting) of any content from Sputnik or Russia Today (specifically – Russia Today: English, British, German, French or Spanish). The prohibition extends to transmission or distribution by any means, including via cable, satellite, IP-TV, Internet service providers, Internet video-sharing platforms or applications (whether whether new or pre-installed). Any broadcast license or authorization, transmission or distribution agreement with these entities is also suspended.
Asset freezes have now been imposed on specific Belarusian individuals following Belarusian assistance to the Russian invasion.
In addition, the existing import restrictions against Belarus (effective under the 2006 regulations) have been extended to cover other sectors, including the timber, cement, rubber, iron and steel. It is now prohibited to import (directly or indirectly) listed products that are in or originate in Belarus. The products concerned are listed in the annexes to the regulation (link).
A liquidation provision has been included which allows the performance until June 4, 2022 of contracts entered into before March 2, 2022, or ancillary contracts necessary for the performance of such contracts.
In addition, the supply of dual-use military and technological goods and technology listed in Belarus or intended for use in Belarus is also prohibited, as is the supply of listed machinery. The list of prohibited goods is appended to the regulations. There are limited exceptions and grounds for authorization related to this prohibition.
Additional asset freezes were imposed on a range of individuals and entities, including: VEB, Bank Otkritie; Sovocombank; and the Russian Direct Investment Fund (and its CEO).
The UK has implemented a number of previously announced restrictions on financial relations with Russia. It is now prohibited:
- Providing financial services for the purpose of managing reserves and assets or currency at the Central Bank of the Russian Federation; the National Wealth Fund of the Russian Federation; the Ministry of Finance of the Russian Federation (or any person owned/controlled by the foregoing or acting on its behalf) unless a license is obtained.
- To deal with transferable securities or money market instruments issued by the following entities (there are variations relating to maturities and issue dates):
- A UK entity owned by Sberbank, VTB Bank, Gazprombank, VEB, Rosselkhozbank, OPK Oboronprom, United Aircraft Corporation, Uralvagonzavod, Rosneft, Transneft and Gazprom Neft; Where
- The government of Russia, a natural person residing in Russia or an entity incorporated in Russia (unless domiciled outside Russia or a branch or subsidiary of an entity domiciled outside Russia), or any entity acting on their behalf.
- To provide loans or credits to the above entities (there are variations relating to maturity periods).
- For UK financial or credit institutions to have a correspondent banking relationship with Sberbank or to process any sterling payment to, from or through Sberbank.
The United Kingdom’s Office of Financial Sanctions Implementation (“OFSI”) has issued a number of licenses which allow otherwise prohibited activities to continue if certain conditions are met. The OFSI has so far issued:
- A license for the FCA, FSCS, PRA and the Bank of England (and any other financial services authority) to engage with VTB Bank’s UK subsidiaries until 1 March 2023 for the purposes of their prudential supervision or to protect, maintain or enhance the stability of the UK financial system.
- A license allowing UK branches of VTB Bank to make payments for “basic needs” until March 1, 2023 (and UK financial services institutions to process such payments and UK individuals to receive such payments). “Basic needs” include payments for: (i) insurance premiums; (ii) property management; (iii) wages; (iv) taxation; (v) mortgage and utility payments; (vi) costs arising from the routine holding and management of frozen funds or economic resources; and (vii) legal fees.
- A license to deal in securities or money market instruments, make certain loans that would otherwise be prohibited or process payments related to such transactions until March 8, 2022.
- A license to maintain a correspondent banking relationship with Sberbank and process payments related to it until 23:59 on March 31, 2022.
- A license to process payments in sterling relating to Sberbank or non-UK financial institutions under its ownership or control until 24 June 2022 for the purpose of making crude oil, petroleum products or gas available in the UK United.
Current trade restrictions have been extended. In addition to military and dual-use goods and technologies, the prohibitions now also apply to “critical” goods and technologies (subject to some limited exceptions). This is listed in the appendix to the regulations (link) and concerns the following categories of goods: (i) electronic devices/components and related equipment; (ii) computers and related equipment; (iii) telecommunications and information security equipment; (iv) sensors and lasers; (v) navigation and avionics equipment; (vi) vessels and marine equipment; and (vii) aerospace and propulsion equipment, including engines and aircraft.
The UK government has also confirmed that all current licenses for the export of dual-use goods to Russia have been suspended and that Russia has been removed as an authorized destination from nine open general export licenses from the UK. .
In addition to the current airspace ban, the UK has also implemented regulations prohibiting ships from entering UK ports where they are owned, controlled or chartered by: (i) a designated person ; (ii) a person (or group of persons) ordinarily resident in Russia; or (iii) an entity incorporated or located in Russia, or otherwise where the vessel is registered in Russia, or flying the flag of Russia.
Under the new regulations, the government has the power to order these vessels to enter or leave a port, to go to a specific place or to stay where they are.
The UK government also has the power to designate individual vessels that will be subject to the same restrictions.
The asset freeze has been extended to the Belarusian defense companies JSC 558 Aircraft Repair Plant and JSC Integral, as well as senior Belarusian military and Ministry of Defense officials, namely: (i) Andrei Burdyko; (ii) Viktor Vladimirovich Gulevitch; (iii) Sergei Simonenko; and (iv) Andrey Zhuk. A number of other companies and individuals in Belarus are already subject to historic sanctions in the UK. The current list can be viewed on the government website (link).
The EU has announced that new asset freezes will be imposed, targeting the yachts, cars and luxury properties of the oligarchs, and new sanctions will be targeted against the Lukashenko regime in Belarus.
The United Kingdom has announced that British persons will be prohibited from transactions involving the CBR or the Ministry of Finance of the Russian Federation and that a deposit limit will apply to Russian nationals of £50,000 (similar to the limit €100,000 currently imposed by the EU). The UK continues to push forward its accelerated timetable for the Economic Crimes Bill aimed at improving transparency in relation to UK assets held by foreign persons and entities.
On March 3, 2022, the British government further announced that Russian companies in the aerospace industry would not be allowed to directly or indirectly use UK-based insurance or reinsurance services. Further details on the legislation will be available in due course.
We will continue to monitor these updates.