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Legal Alerts / 16 Mar 2022

Update on the New Sanctions Imposed on Russia by the EU and the US

Following the most recent developments in Ukraine with Russia’s military aggression, the EU and the US have swiftly announced new sanctions to be imposed on Russia that go well beyond those that were adopted earlier in terms of both volume and scope. Read our previous Legal Alert on the topic here for more information on the previous sanctions.

The European Union

Sectoral Sanctions

The EU has adopted on 25 February 2022 a new Regulation that will expand sectoral sanctions imposed against Russia. The Regulation will amend Council Regulation (EU) N:o 833/2014 by bringing new measures that consist of financial and export restrictions (cf. Council Regulation (EU) 2022/328). (See also additional measures that were adopted on 28 February and on 1 and 9 March 2022 (cf. Council Regulations (EU) 2022/334, (EU) 2022/345, (EU) 2022/350, and (EU) 2022/394). The European Commission has also published Frequently Asked Questions documents on 16 March on the application of the new export restrictions and on 21 March on aviation and customs related matters. The Commission also aims to provide further guidance updates.

We have provided a summary of the key measures in terms of these new sectoral restrictions:

Financial restrictions:

  • Public financing or financial assistance for trade with, or investment in, Russia is prohibited, with the exception of SME projects and trade in food, and for agricultural, medical or humanitarian purposes;
  • Dealing with any transferable securities and money market instruments issued after 12 April 2022 or making any loans for entities listed in the Regulation is prohibited;
  • It is prohibited to accept deposits exceeding EUR 100 000 from Russian nationals or legal persons established in Russia;
  • Prohibition to hold accounts of Russian clients with the EU Central Securities Depositories for Russian clients, and to sell euro-denominated securities to Russian natural and legal persons;
  • Provision of specialised financial messaging services (the SWIFT system) to seven Russian credit institutions, including their Russian subsidiaries, is prohibited;
  • Supply of euro-denominated bank notes to Russia is prohibited.

Export restrictions:

  • Prohibition on exports of dual-use goods and technology as listed in EU’s Dual-Use Regulation (EU) 2021/821 and related financial and technical assistance and brokering services;
  • Above-mentioned prohibition does not apply in limited cases where goods and related services are intended for:
    • humanitarian purposes, health emergencies, the urgent prevention or mitigation of an event likely to have a serious and significant impact on human health and safety or the environment or as a response to natural disasters;
    • medical or pharmaceutical purposes;
    • temporary export of items for use by news media;
    • software updates;
    • use as consumer communication devices;
    • ensuring cyber-security and information security for natural and legal persons, entities and bodies in Russia; or
    • personal use of natural persons travelling to Russia or members of their immediate families travelling with them.

In cases that fall within the scope of the above-mentioned categories, the exporter must declare in the customs declaration that the items are being exported under a relevant exception. The exporter must also report the Member State wherein the exporter resides or where he or she has established the first use of the relevant exception to the competent authority within 30 days from the date when the first export has taken place.

  • In addition, the competent authorities may authorise the export and provision of related services when they are:
    • intended for cooperation between the EU, the governments of Member States and the government of Russia in purely civilian matters;
    • intended for intergovernmental cooperation in space programmes;
    • intended for the operation, maintenance, fuel retreatment and safety of civil nuclear capabilities, as well as civil nuclear cooperation, in particular in the field of research and development;
    • intended for maritime safety;
    • intended for civilian telecommunications networks, including the provision of internet services;
    • intended for the exclusive use of entities owned, or solely or jointly controlled by a legal person, entity or body that is incorporated or constituted under the law of a Member State or of a partner country;
    • intended for the diplomatic representations of the EU, Member States and partner countries, including delegations, embassies and missions.
  • The competent authorities may also authorise an export due under contracts concluded before 26 February 2022, provided that the goods are not destined to a military end-user or to military end-use or to aviation or space industry.
  • In addition to the goods and technology covered by EU’s Dual-Use Regulation, new measures prohibit the exports of goods that might contribute to Russia’s technological and military enhancement or the development of its defence and security sectors. Items covered by the prohibition are listed in Annex VII of Regulation 833/2014. Exceptions are provided for the same purposes as for the export of Dual-Use goods described above, as well as for the provision of related services;
  • It is prohibited to sell, supply, transfer or export goods and technologies for the purposes of oil refining in Russia. These items are listed in Annex X of Council Regulation 833/2014. The prohibition does not apply to contracts concluded before 26 February 2022, provided that the export is executed by 27 May 2022. The competent authorities may authorize the export necessary for preventing or mitigating events likely to have a serious impact on human health and safety or the environment.
  • It is prohibited to export aircraft and other goods and technology for in the purposes of aviation and space industry. These items are listed in Annex XI of Council Regulation 833/2014. The prohibition does not apply to contracts concluded before 26 February 2022, provided that the export is executed by 28 March 2022.,
  • It is prohibited to export maritime navigation goods and technology, as listed in Annex XVI of Council Regulation 833/2014. The prohibition does not apply to civilian end-users and to exports contributing to the prevention of events that are likely to have a serious impact on human health or environment.

Other restrictions:

  • Russian aircraft is prohibited from landing in, taking off from, or overflying the territory of the EU;
  • Broadcasting activities of Russia Today and Sputnik are prohibited in the EU.

Additionally, on the Council has added several individual to the list of persons and entities subject to restrictive measures. These individuals are members of political, military and business elites of Russia. Listings also include Belarusian individuals that are responsible for the participation of the Belarus in the war against Ukraine. Cf. Council Implementing Regulations (EU) 2022/332, (EU) 2022/336, (EU) 2022/353.

EU sanctions concerning Belarus

On 2 March 2022, the EU has imposed similar restrictions on the export of dual-use goods and other sensitive technologies to Belarus to those it has previously introduced to Russia. Furthermore, new import bans on items from Belarus to the EU were imposed (cf. Council Regulation (EU) 2022/355). On 9 March 2022, the EU also imposed additional financial sanctions targeting Belarusian banking and investment sectors, which are in line with those targeted to Russia (cf. Council Regulation (EU) 2022/398).

We will continue to monitor the situation and provide timely updates on any further sanctions and how they could impact your business. Borenius lawyers are available to answer any questions you may have with regard to the situation in Ukraine.

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