Latest Updates To UK And EU Sanctions – International Law & More News Here – Upjobsnews

In response to Russia’s continued military invasion of
Ukraine, both the United Kingdom and the European Union have
implemented additional asset freeze and trade and
investment-related sanctions measures, issued a number of
corresponding general licenses or exemptions, and provided updates
to relevant corresponding guidance. This alert summarizes the key
further actions taken in the United Kingdom and the European Union
since our alert dated March 31, published here. For the latest update on United States
sanctions, see our alert dated April 8, 2022, published here.¹

United Kingdom

Asset Freezes

On April 6, 2022 the United Kingdom added eight (8) individuals and two (2)
entities to the asset freeze list. Notably, these additional
designations include Russia’s two largest financial
institutions: Sberbank² and the Credit Bank of
Moscow. Given the prominent role of these banks in Russia’s
financial sector, these asset freezes will have a significant
impact on individuals’ and entities’ ability to make or
receive payments with counterparties or affiliates operating in the
region. The April 6 designations also include Andrey Akimov, the
chief executive of Gazprombank, and Leonid Mikhelson, the founder
and chief executive of gas company Novatek.

On April 8, 2022, the United Kingdom added three (3) individuals to the asset
freeze list, including the two daughters of Russian President
Vladimir Putin and the daughter of Russian Foreign Minister Sergey
Lavrov.

On April 13, 2022, the United Kingdom added two hundred and six (206)
individuals to the asset freeze list, including Alexander
Ananchenko and Sergey Kozlov, described, by the Foreign Office,
respectively, as the self-styled Prime Ministers and Chairs of
Government of the so-called Donetsk and Luhansk People’s
Republics. The designations also include numerous family members
and associates of Russian oligarchs and government officials,
including Pavel Ezubov (cousin of Russian oligarch Oleg Deripaska),
Maria Lavrova (wife of Russian Foreign Minister Sergey Lavrov), and
Nigina Zairova (executive assistant to Russian oligarch Mikhail
Fridman).

On April 14, 2022, the United Kingdom added two (2) individuals to the asset
freeze list: Russian oligarch David Davidovich and Chelsea Football
Club director Eugene Tenenbaum. In the listing, OFSI identified
both individuals as associates of sanctioned Russian oligarch Roman
Abramovich.

Trade Restrictions

On April 14, the United Kingdom implemented sanctions restrictions on the
export of luxury goods to Russia or directly or indirectly to a
person connected with Russia for use in
Russia.³ The United Kingdom also implemented
prohibitions on the import of iron and steel products consigned
from or originating from Russia, as well as the supply or delivery
of iron and steel products from a place in Russia to a third
country. Both provisions provide a defence if the person did not
know and had no reasonable cause to suspect that the goods were, in
the case of luxury goods exports, destined (or ultimately destined)
for Russia, or in the case of steel and iron imports, that the
goods were from Russia.

General Licenses

The United Kingdom has also issued the following general
licenses:

• On April 1, 2022, the Office of Financial Sanctions
  Implementation (“OFSI”) issued a general license in relation to certain
  transactions with the Central Bank of Russia, the National Wealth
  Fund of the Russian Federation, and the Ministry of Finance of
  Russia (each of which were designated on March 1, 2022). The
  license replaced the previous general license in relation to these
  entities issued on March 4, 2022, which was set to expire on April
  3, 2022. The current license allows for the provision of financial
  services solely for the purposes of the receipt and onward transfer
  of non-rouble-denominated interest/coupon or maturity/principal
  payments for debt issued by the relevant entities before March 1,
  2022. The current license will expire on June 30, 2022.




• On April 6, 2022, OFSI issued a general license allowing for the
  wind-down of any transactions involving the Credit Bank of Moscow
  or its subsidiaries, including the closing out of any positions and
  any activity reasonably necessary to effect this. The license
  expires May 6, 2022.




• On April 12, 2022, OFSI revoked the general license that had
  previously been issued on March 25, 2022 (and amended on April 4,
  2022) in relation to GEFCO, a joint venture involving Russian
  Railways. The revocation is due to the sale of Russian
  Railway’s stake in the joint venture, which means the joint
  venture is no longer subject to the asset freeze sanctions.

Potential future sanctions

In an announcement on April 6, 2022, the United
Kingdom also indicated that the United Kingdom intends to ban all
new outward investment to Russia, and by the end of 2022, to end
all dependency on Russian coal and oil, as well as imports of
Russian gas.

On April 13, 2022, Liz Truss further stated that the United
Kingdom “will continue to target all those who aid and abet
Putin’s war,” indicating that we can expect the United
Kingdom to implement further measures as the conflict
continues.

European Union

On April 5, 2022, in response to atrocities committed by Russian
forces in Bucha and other parts of Ukraine, the European
Union announced a fifth package of sanctions
against Russia. On April 8, 2022, the European Union also released
a press release detailing a number of new
sanctions measures targeting Russia and Belarus, as well as FAQs specifically related to the latest
sanctions package.⁴ The associated implementing
legislation was also published on April 8, 2022.⁵

Asset Freezes

The European Union designated an additional two hundred
seventeen (217) individuals and eighteen (18) entities. The newly
designated individuals and entities fell into a number of different
categories, including:

• Large Russian banks, namely, Okritie FC Bank,
  Novikombank, Sovcombank, and VTB Bank (each of which had already
  been banned from the SWIFT system);




• Key Russian oligarchs and businesspeople,
  including those deemed by the European Union as
  “propagandists” supporting the Russian government or
  involved in economic sectors providing substantial revenue to the
  Russian government, as well as some associated family members;




• Government officials of the so-called People’s
  Councils of Donetsk and Luhansk, including leaders,
  chairpersons, ministers, and members of these
  governments;⁶




• Senior Russian government officials, including
  figureheads within the Russian Ministry of Defence;




• Family members of previously designated
  persons, including family members of Vladimir Putin,
  Mikhail Fridman, and Alisher Usmanov; and




• Other Russian businesses, including those
  supporting the Russian military through provision of vehicles,
  electronics, or weapons.

Trade Restrictions

The new European Union sanctions package also includes
additional trade restrictions against Russia. According to the
updated FAQs on Russia-related sanctions, the bans target an
estimated EUR ?10 billion worth of exports and EUR ?5.5 billion
worth of imports.

Included among the new trade restrictions are prohibitions
on:

• Coal and other solid fossil fuels imports exported from
  or originating in or exported from Russia into the European
  Union, including the provision of technical assistance,
  brokering or other services, or financing or financial assistance
  related to these imports. Contracts concluded before April 9, 2022
  may be carried out until August 10, 2022.




• Import of certain materials which generate significant
  revenues for Russia, as listed in Annex XXI to the
  regulation, and including certain food products, building products,
  chemicals, minerals, construction materials, and vessels, as well
  as the provision of technical assistance, brokering or other
  services, or financing or financial assistance related to these
  imports. The prohibition includes quotas allowing for the import of
  certain amounts of potassium chloride and other listed products.
  Other contracts concluded before April 9, 2022 may be carried out
  until July 10, 2022.




• Export of certain goods which enhance Russia’s
  industrial capabilities to Russia, as listed in Annex
  XXIII to the regulation, including a wide range of products used in
  industrial manufacturing, as well as the provision of technical
  assistance, brokering or other services, or financing or financial
  assistance related to these exports. Contracts concluded before
  April 9, 2022 may be carried out until July 10, 2022, and certain
  exemptions are available where the export relates to diplomatic or
  consular missions or for humanitarian aid.




• Russian-flagged vessels entering EU ports,
  including vessels which have changed their Russian flag or
  registration since February 24, 2022. Members States’ sanctions
  authorities may still authorize a vessel to access a port if
  necessary for (i) the import of certain raw materials, including
  gas, oil, refined petroleum, certain metals and chemicals; (ii) the
  transport of pharmaceutical, medical, agricultural, or food
  products; (iii) humanitarian purposes; (iv) the transport of goods
  necessary for civil nuclear capabilities; or (v) the import of coal
  or other solid fossil fuels (subject to the prohibition of new coal
  imports described below).




• Russian and Belarusian logistics and transportation
  businesses transporting goods by road in the European
  Union. However, the prohibition does not apply to goods in
  transit between the European Union and Kaliningrad or to certain
  “mail as a universal service” services. Contracts
  concluded before April 9, 2022 may continue until April 16, 2022.
  In addition, Member States’ sanctions authorities may authorize
  exemptions for (i) the import of natural gas, oil, and certain
  metals, pharmaceutical, medical, agricultural, or foods products;
  (ii) humanitarian purposes; (iii) the functioning of diplomatic and
  consular missions; or (iv) the export to Russia or cultural goods
  on loan to the European Union.

Investment Restrictions

• Provision of services to trusts with Russian
  beneficiaries, including providing a registered office,
  business address, or management services; registering; or acting as
  a trustee, nominee shareholder, director, or secretary for Russian
  nationals or natural persons residing in Russia; legal persons,
  entities or bodies established in Russia and entities owned or
  controlled by (or acting on behalf of) the foregoing. The
  prohibition does not apply where the beneficiary is a national of,
  or has residence in, a Member State. As of May 10, 2022, it is
  prohibited to act as a trustee, nominee shareholder, director,
  secretary or similar position, for a trust, or similar legal
  arrangement for a trust, with the categories of Russian persons set
  out in the first part of the prohibition. In addition, Member
  States’ sanctions authorities may authorize the prohibited
  services where necessary for humanitarian purposes or for civil
  society activities promoting democracy, human rights, or the rule
  of law in Russia.




• Sale of banknotes in any European Union official
  currencies to Russia or Belarus, excluding banknotes for
  personal use of EU persons travelling to Russia or Belarus, or for
  diplomatic or consular missions. According to the
  accompanying FAQ, this restriction concerns physical
  banknotes and does not extend to transfers via bank accounts, as
  long as these do not fall under other restrictions (e.g., transfers
  to listed persons or transfers through a listed bank).




• Sale of securities (or units in collective investment
  undertakings providing exposure to such securities) issued after
  April 12, 2022 denominated in an official EU member state currency
  to any Russian national or natural person residing in Russia or any
  legal person, entity or body established in Russia. This
  applies to both public and private securities. It excludes
  nationals or residents of EU Member States. The
  accompanying FAQs also state: “[s]trictly speaking,
  [the restriction] does not apply to entities owned by Russian
  nationals or natural persons residing in Russia when the entities
  are registered in a country other than Russia.” However, EU
  operators are instructed to “therefore exert enhanced due
  diligence to make sure that they are not selling securities
  denominated in the official currency of a Member State to an entity
  owned by a Russian national or a natural person residing in
  Russia.”




• EU-based central securities depositories providing
  services related to securities issued after April 12, 2022 to all
  Russian citizens or natural persons residing in Russia or to all
  legal persons, entities or bodies established in Russia.
  It does not apply to nationals of a Member State. The FAQ related
  to this restriction states that “[p]ractical issues relating
  to the fungibility of securities which are outside the prohibition
  with securities subject to the prohibition may arise. Market
  participants bear the onus of ensuring that any trade they enter
  into does not involve the banned securities.”




• Provision of crypto-asset wallet, account or custody
  services to Russian nationals or persons in
  Russian where the account exceeds EUR ?10,000 in
  value. This prohibition does not apply to the provision of these
  services to Russian persons who are nationals of, or resident in,
  an EU Member State, the European Economic Area, or Switzerland.
  According to the FAQs, EU crypto-asset wallet, account or custody
  services providers should put in place the “appropriate
  safeguards and remedies to avoid ending up servicing clients in
  breach of the prohibitions,” including taking into account the
  fact that crypto-asset values “can fluctuate substantially
  over a short period of time.”




• Awarding, or continuing the execution of, public
  procurement contracts to Russian persons. Various
  exemptions are available, including where the contract relates to
  critical industries, space programs, the provision of necessary
  goods and services, or diplomatic and consular missions, or are
  required for the import of natural gas, oil, or other solid fusel
  fuels.




• Provision of support to Russian State-Owned Enterprises
  (“SOEs”) through certain European programs,
  including the European Atomic Energy Community (“EAEC” or
  “Euratom”). Various exemptions are available, including
  for humanitarian purposes, veterinary programmes, intergovernmental
  cooperation in space programmes, nuclear-related purposes, climate
  and environmental programs, and diplomatic and consular
  missions.

Derogations and Humanitarian Exemptions

The European Union also introduced derogations from certain of
the new asset freeze measures, allowing Members States’
sanctions authorities to authorize certain dealings with:

• Bank Rossiya, Promsvyazbank, and VEB Bank,
  where necessary for the termination by August 24, 2022, of business
  relationships established with these banks prior to February 23,
  2022;




• Otkritie FC Bank, Novikombank, Sovcombank, and VTB
  Bank, where necessary for the termination by October 9,
  2022, of business relationships established with these banks prior
  to April 8, 2022; and




• Any persons designated under Regulation
  269/2014, where necessary to facilitate a sale or transfer
  by October 9, 2022, of ownership of EU entities owned by a
  designated person, provided the proceeds of such sale remain
  frozen.

Member States’ sanctions authorities are also permitted to
release funds frozen under Regulation 269/2014 (the asset freezing
regulation) to be used for the purposes of certain diplomatic or
consular missions.

On April 13, 2022, the European Union also introduced a number
of exemptions to its restrictive measures in
order to facilitate humanitarian activities in Ukraine. In
particular, organisations and agencies acting as humanitarian
partners of the European Union are exempted from the prohibition on
making funds or economic resources available to designated persons
and entities where the funds or resources are necessary for
exclusively humanitarian purposes in Ukraine. Certain categories of
humanitarian organisations are also exempted from the export
restrictions and related services prohibition related to Donetsk
and Luhansk where necessary for exclusively humanitarian purposes
in the non-government-controlled areas of the Donetsk and Luhansk
oblasts of Ukraine.

What Next?

The European Union’s FAQs on the fifth sanctions package
state that the European Union is “working on additional
proposals for possible sanctions, including on oil imports, and
[is] reflecting on some of the ideas presented by Member States,
with regards to taxes or specific payment channels, such as an
escrow account.” The FAQs further note that all possible
options for further sanctions are being considered. We therefore
expect further measures to be implemented in the future in response
to continued Russian actions in Ukraine.

Footnotes

1. For all of our recent client alerts related to
economic sanctions and export controls, please see our
website here.

2. Sberbank was previously subject to correspondent
banking restrictions and capital markets (sectoral)
sanctions.

3. Luxury goods are defined in Schedule 3A to the regulation including
specific values where relevant (generally over
£250).

4. A summary of some of the key points from the
previously published 
FAQs may be found in our previous alert here.

5. The relevant regulations are as follows:
Council Regulation (EU) 2022/580, amending
Regulation 269/2014: Creating derogations from certain asset
freezes upon authorization by Member States’ sanctions
authorities, primarily relating to wind-down of existing positions
with designated Russian banks. Council Regulation (EU) 2022/581, amending
Regulation 269/2014: Designating a further 216 individuals and 18
entities, including but not limited to four significant Russian
banks (VTB, Otkritie, Novikombank and Sovcombank), family members
of oligarchs, senior business leaders, and government officials in
Luhansk and Donetsk. Council Regulation (EU) 2022/576, amending
Regulation 833/2014: Implementing further import and export
controls, transport restrictions for Russian vehicles and vessels,
and a variety of targeted economic measures to restrict the Russian
economy.
Council Regulation (EU) 2022/577, amending
Regulation 833/2014: Implementing further measures against Belarus,
including the sale of certain transferable securities and transport
restrictions for Belarussian vehicles.

6. The majority of the newly designated individuals fall
within this category.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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