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European and UK Sanctions Update – Further Measures Imposed

The EU and UK have imposed further sanctions in response to the invasion of Ukraine and the recognition by Russia of the Donetsk and Luhansk People’s Republics (DNR and LNR) of Ukraine as independent territories.

European Union (EU) response
The latest round of designations includes three Russian commercial banks: Bank Rossiya, Promsvyazbank and VEB, as well as key individuals in the Russian regime, and allies of Mr. Putin. Individuals and entities currently subject to an asset freeze (and travel ban in the case of individuals) can be identified by searching the EU’s Sanctions Map (link).

In addition to the asset freezes and travel bans, the EU has also imposed wide-ranging additional sanctions, namely:

  • An import ban on all goods from the DNR and LNR into the EU, coupled with a prohibition on the direct or indirect financing of such imports. An exemption has been included for goods originating in these regions which have been made available to the Ukrainian authorities for examination and for which a certificate of origin has been issued in accordance with the EU-Ukraine Association Agreement.
  • Restrictions on trade and investment, including prohibitions on the acquisition (or extension of ownership) of real estate and legal entities. It is also prohibited to participate in loans, financing arrangements, or joint ventures in the DNR and LNR.
  • A prohibition on the supply of services related to tourism in the DNR and LNR.
  • An export ban on goods and technologies listed in Annex II to Regulation (EU) 2022/263 (link) to the DNR and LNR. The list includes raw materials, vehicles, aircrafts, gold, and various other goods and equipment.
  • A ban on technical assistance, brokering, construction or engineering services relating to the transport, telecommunications, energy, oil, gas and mineral resources sectors in the DNR or LNR.
  • A prohibition on directly or indirectly dealing with transferable securities and money-market instruments issued after March 9, 2022, by the Russian government, the Central Bank of Russia, or a legal person acting on behalf of the aforementioned entities. It is further prohibited to make (or be part of any arrangements to make) any new loans or credit to Russia, its government, and the Central Bank (except in relation to loans or credit for the financing of unrestricted imports and exports of goods and (non-financial) services between the EU and other countries).

The above restrictions are in some cases subject to wind-down provisions that allow for obligations that arose under contracts concluded before February 23, 2022. Where a wind-down provision is relied on, a long stop date may apply depending on the particular activity. In many cases, where a wind-down provision is relied on, this requires notification to the relevant competent authority in the EU.

UK response
Similar measures have been announced in the UK, although many are yet to be formally implemented.

Eleven further individuals and entities were designated under UK’s Russian sanctions on February 24, 2022, bringing the current total of persons subject to invasion-response sanctions in the UK up to nineteen, with many more expected to follow.

Those currently subject to sanctions in the UK can be found by searching the Consolidated List, accessed here (link).

A number of Russian banks have been designated by the UK, including VTB Bank, Rossiya Bank, IS Bank, GenBank, Promsvyazbank, and the Black Sea Bank. Designated companies include those involved with the production of military equipment, as well as United Aircraft Corporation and United Shipbuilding Corporation.

In addition to the measures being introduced by legislation, Aeroflot, Russia’s national airline, is currently prohibited from flying in UK airspace. Russia has retaliated to the Aeroflot ban in kind, by prohibiting British airlines from landing at Russia’s airports or crossing its airspace.

Dual-use licences to Russia issued by the UK Export Control Joint Unit have been suspended with immediate effect.

Further measures are expected early next week. In particular:

  • Asset freezes against further key Russian entities and individuals.
  • Restricting Russian access to UK debt and capital markets.
  • A restriction on the clearing of payments through the UK.
  • Limiting Russian nationals from holding more than £50,000 in UK bank accounts.
  • A prohibition on a range of exports, including those that generate wealth for much of Russia’s elite. This will include high end and hi-tech exports, as well as critical equipment and components in the extractive, electronics, telecommunications, and aerospace sectors.
  • An extension of the sanctions levied against Belarus as a result of its decision to cooperate with Russia with respect to the invasion of Ukraine.

A further blog will be published once the final text of the legislative act is published.

Wind-down provisions are also expected in the UK sanctions to assist companies with respect to existing obligations.