Sanctions

generalsanctions

Compliance with sanctions requirements and the related regulations has always been a matter of major importance for serious and reputable businesses.

In light of the latest events in Ukraine and the subsequent avalanche of various new restrictive measures introduced by the EU, US and UK, among others, such compliance has become more challenging than ever.

In addition, Russia itself has introduced various limitations and measures, thereby contributing to a perfect legal storm.

Accordingly, we have dedicated a special team of experts from multiple jurisdictions which is ready to meet the needs of our clients with respect to the complex issues arising out of such a dramatically changing environment.

To this end we have created a centralized e-mail address dedicated specifically to requests regarding the matters above, i.e.: sanctions@peterkapartners.com.

Under this section, we will also publish relevant content aimed at keeping you up-to-date with major developments.

Updates

07

Belarus is continuing to adopt certain new measures in response to the introduction of restrictive measures by foreign countries.

1. New restrictions on the export of certain types of food products

The Resolution of the Council of Ministers No.224 as of 12 April 2022 was adopted in order to protect the internal market due to the increased demand in the border areas for groceries, which individuals purchase in commercial quantities for export outside the Republic of Belarus.

According to the Resolution, certain basic products such as salt, sugar, flour, pasta, etc., can be exported outside the EAEU only in very limited quantities.

The restriction does not apply to goods purchased in duty-free shops located at checkpoints on the national border.

2. Restrictive measures for cargo vehicles registered in the EU

From 16 April 2022, a ban on the entry into the territory of Belarus of cargo vehicles (trucks and tractors) registered in the European Union is introduced. The exception is crossing the national border through certain checkpoints to specially established places for carrying out cargo operations and transfers as follows:

Place for carrying out cargo operations and transfers

Checkpoint

Customs clearance point Brest-Beltamozhservice

Kozlovichi

Customs clearance point Brest-Beltamozhservice-2

Customs clearance point Berestovitsa-TLC

Berestovitsa

Waiting area of the electronic queuing system for vehicles to enter the Berestovitsa checkpoint (only transfer operations)

Customs clearance point Bruzgi-TLC

Bruzgi
Privalka
Berestovitsa

Waiting area of the electronic queuing system for vehicles to enter the Bruzgi checkpoint (only transfer operations)

Bruzgi

Customs clearance point Grodno-GAP-2

Privalka

Customs clearance point Lida-auto

Benyakoni

Waiting area of the electronic queuing system for vehicles to enter the Benyakoni checkpoint (only transfer operations)

Customs clearance point Kamenny Log-Beltamozhservice

Kamenny Log
Kotlovka
Vidzy

Waiting area of the electronic queuing system for vehicles to enter the Kotlovka checkpoint (only transfer operations)

Kotlovka

Waiting area for an electronic queuing system for vehicles to enter the Grigorovshchina checkpoint (only transfer operations)

Grigorovshchina

Waiting area for the electronic queuing system for vehicles to enter the Urbany checkpoint (only transfer operations)

Urbany
Vidzy

Customs clearance point Polotsk-Steklovolokno

Grigorovshchina
Urbany
Vidzy

Vehicles registered in the EU, carrying postal items, live animals, oversized, and humanitarian cargo, are allowed to move through the territory of Belarus without restrictions.

This restriction does not apply until 23 April 2022 to cargo vehicles registered in the EU that entered the territory of Belarus before 16 April 2022.

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The information above reflects the status as of 16 April 2022.

No information contained in this article should be considered or interpreted in any manner as legal advice and/or the provision of legal services. This article has been prepared for the purposes of general information only. PETERKA & PARTNERS does not accept any responsibility for any omission and/or action undertaken by you and/or by any third party on the basis of the information contained herein.

06

The next set of restrictive EU measures following the Russian invasion of Ukraine has already been put into effect. Most of the measures refer to Russia but there are additional restrictions on Belarus as well.

Here is our view of the main measures contained in this fifth sanctions package.

1. Energy

While the import of oil and natural gas from Russia has not been banned at this stage, the new rules prohibit the purchase, import, or transfer, directly or indirectly, of coal and other solid fossil fuels if they originate in Russia or are exported from Russia. The related assistance and services are also prohibited.

The prohibitions do 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.

2. Transport

  • No access to EU ports for vessels registered under the flag of Russia

After 16 April 2022, it is prohibited to provide access to ports in the territory of the Union to any vessel registered under the flag of Russia. This includes vessels that have changed the flag of Russia or their registration to the flag or register of any other State after 24 February 2022.

Exceptions are possible for certain products, e.g., agricultural and food products, humanitarian aid as well as for natural gas and oil, including refined petroleum products, titanium, aluminium, copper, nickel, palladium, iron ore, and certain chemical and iron products.

  • Ban on Russian and Belarusian road transport

The package includes a prohibition on any road transport undertaking established in Russia and Belarus to transport goods by road within the territory of the EU, including in transit. This prohibition does not apply to road transport undertakings transporting mail as a universal service.

Exceptions are possible for a number of products, such as pharmaceutical, medical, agricultural and food products, including wheat, and for road transport for humanitarian purposes as well as for natural gas and oil, including refined petroleum products, titanium, aluminium, copper, nickel, palladium, and iron ore.

3. Trade restrictions

Further trade restrictions are imposed both in terms of import to, and export from, Russia.

  • Import

The new rules prohibit the purchase, import, or transfer, directly or indirectly, of goods which generate significant revenues for Russia if they originate in Russia or are exported from Russia.

The respective goods are listed in Annex XXI to Regulation 833/2014 and, among others, these include certain foods, cement, glass, aluminium, furniture, fertilizers, tires, wood, paper, silver, lead, and alcohol.

Assistance and services related to such transactions are also prohibited.

The prohibitions shall not apply to the execution until 10 July 2022 of contracts concluded before 9 April 2022, or ancillary contracts necessary for the execution of such contracts.

  • Export

The sanctions further prohibit the sale, supply, transfer or export, directly or indirectly, to any natural or legal person, entity or body in Russia or for use in Russia of goods which could contribute to the enhancement of Russian industrial capacities.

The relevant products are listed in Annex XXIII; the range is very wide and it covers, e.g., textile products, rubber, paints, bricks, blocks, tiles, paper, rail locomotives, road tractors, trucks, furniture, accumulators, transformers, valves, tools, engines, motors, elevators, various other machines and machinery, etc.

Assistance and services related to such transactions are also prohibited.

As with the import restrictions above, the prohibitions do not apply to the execution until 10 July 2022 of contracts concluded before 9 April 2022 or ancillary contracts necessary for the execution of such contracts.

4. Public tenders and concessions

A completely new measure taken by the EU in the course of the crisis is the prohibition of awarding or continuing the execution of any public or concession contract to or with Russian nationals or legal persons, entities or bodies established in Russia and related persons/persons acting on behalf or at the direction of such persons, entities or bodies.

It’s worth noting that this applies in cases where the persons/entities above account for more than 10% of the contract value, subcontractors, or suppliers or entities whose capacities are being relied on.

The prohibitions do not apply to the execution until 10 October 2022 of contracts concluded before 9 April 2022.

Exceptions may be granted by the Member States in certain areas, e.g., the civil nuclear sector, cooperation in space programmes, as well as the purchase, import or transport of natural gas and oil, including refined petroleum products, and titanium, aluminium, copper, nickel, palladium and iron ore, from, or through, Russia into the EU.

5. Finance

  • Freezing of assets of four Russian banks

The EU broadened the list of companies and individuals subject to an assets freeze and a prohibition on making funds and economic resources available.

It’s interesting to note that the list now includes four Russian banks, i.e., Otkritie FC Bank, Novikombank, Sovcombank, and VTB Bank.

  • Public funding

The package introduces a prohibition on the provision of support, including financing and financial assistance or any other benefit, from a Union, Euratom or Member State programme to Russian publicly owned or controlled entities. Certain exceptions apply.

  • Further prohibitions on banknotes and transferrable securities

While such a measure has already been in place with respect to euro-denominated banknotes and transferable securities, the sanctions now also prohibit the export of banknotes and the sale of transferrable securities denominated in all official currencies of the Member States to Russia and Belarus, or to any natural or legal person, entity or body in Russia and Belarus.

  • Crypto-wallets, account and custody services

Article 5b of Regulation 833/2014 has been revised with the main novelty being the prohibition of the provision of crypto wallet, account or custody services to Russian nationals or natural persons residing in Russia, or legal persons, entities or bodies established in Russia, if the total value of crypto-assets of the natural or legal person, entity or body per wallet, account or custody provider exceeds EUR 10,000. The rules for possible exceptions in other provisions of the regulation have been adjusted accordingly. 


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The information above reflects the status as of 8 April 2022.

No information contained in this article should be considered or interpreted in any manner as legal advice and/or the provision of legal services. This article has been prepared for the purposes of general information only. PETERKA & PARTNERS does not accept any responsibility for any omission and/or action undertaken by you and/or by any third party on the basis of the information contained herein.

 

05

Further to the restrictions introduced earlier this year, Belarus has recently adopted certain new measures.

1. List of Unfriendly Foreign Countries

Such list had to be adopted by the Council of Ministers in accordance with the Decree of the President of the Republic of Belarus of 14 March 2022 containing measures aimed at ensuring the stable functioning of the economy.

The list was fixed by the Resolution of the Council of Ministers No.209 as of 6 April 2022, and it includes the Member States of the EU as well as Albania, Australia, Canada, Iceland, Liechtenstein, Montenegro, New Zealand, North Macedonia, Norway, Switzerland, the United Kingdom, and the USA.

2. Suspension of enforcement proceedings

On 7 April 2022, the President signed Decree No.137 "On enforcement documents", which provides for the suspension of enforcement proceeding in favour of residents of Unfriendly Foreign Countries.

Accordingly, banks and other financial organizations are obliged to reject payment claims submitted by such residents under enforcement documents without the payer's consent.

The Decree does not contain provisions on the prohibition of initiating enforcement proceedings, that is, the claimant can still file an application. Then the bailiff must initiate enforcement proceedings (which will allow the claimant to be fixed in the queue of enforcement proceeding for the future) and immediately suspend them as required by the Decree.

At the same time, the Decree does not prohibit the voluntary fulfilment of obligations of residents of the Republic of Belarus to non-residents, including those from Unfriendly Foreign Countries.

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The information above reflects the status as of 7 April 2022.

No information contained in this article should be considered or interpreted in any manner as legal advice and/or the provision of legal services. This article has been prepared for the purposes of general information only. PETERKA & PARTNERS does not accept any responsibility for any omission and/or action undertaken by you and/or by any third party on the basis of the information contained herein.

 

04

In order to ensure the stable functioning of its economy in response to the introduction by foreign countries of restrictive measures, the Republic of Belarus has introduced a number of measures. Below, we present the key measures.

1. Measures aimed at ensuring the stable functioning of the Belarusian economy

The restrictive measures against unfriendly countries were established by Decree of the President of the Republic of Belarus dated 14 March 2022 No. 93 "On additional measures to ensure the stable functioning of the economy".

A list of unfriendly foreign countries will be determined by the Council of Ministers. As of yet, such a list has not been prepared.

When countries impose restrictive measures, including the actual “freezing” of investment projects being implemented in the territory of the Republic of Belarus, suspend financing, and make it technically impossible to pay public debts in a foreign currency, the Ministry of Finance, banks, and other legal entities by decision of the Council of Ministers (its Presidium) are provided with the right to ensure the fulfilment of obligations to such countries in the Belarusian national currency.

The Council of Ministers (its Presidium) has the right to impose a fee for early termination of contracts (credit, lease, etc.) initiated by foreign organizations or citizens from countries that have decided to impose restrictive measures on Belarusian legal entities and individuals.

In order to prevent the withdrawal of capital, shareholders of legal entities that are residents of unfriendly foreign countries cannot sell their shares in the authorized capital of legal entities.

As a response to the actions of such countries, the Council of Ministers (its Presidium) also has the right to suspend the implementation of international conventions for the avoidance of double taxation concluded between the Republic of Belarus and those countries.

2. Restrictions on import

Temporary embargo on food products from the EU, USA, Canada, Albania, the United Kingdom, Iceland, Macedonia, Norway, Montenegro, Liechtenstein, Serbia, and Switzerland.

From 1 January 2022, the Republic of Belarus has temporarily restricted the import of the following food products for a period of six months (until 1 July 2022):

  • cattle meat;
  • pork;
  • salted, dried or smoked meat;
  • milk and dairy products, with the exception of lactose-free milk;
  • fruits, vegetables and nuts;
  • sausages and similar products;
  • confectionery, including chocolate;
  • salt.

The ban does not apply to goods that will be imported for personal use. Also, the ban does not apply to goods that were imported into Belarus before the entry into force of the Resolution.

In order to ensure the protection of the national interests of the Republic of Belarus, Resolution of the Council of Ministers No. 240 dated 23 April 2021 introduced a ban on the import into the territory of the Republic of Belarus and the sale on its territory of the following goods:

1) perfumery, "BEIERSDORF" cosmetics (trademarks "NIVEA", "FLORENA", etc.);
2) "SKODA AUTO" passenger cars;
3) "LIQUI MOLY" chemical and petrochemical products.

The ban will be valid until 4 May 2022.

3. Restrictions on export

According to the Resolution of the Council of Ministers No. 125 dated 11 March 2022, it is prohibited to export cereals, seeds and grains (rye, barley, oats, corn, wheat, millet) to the EAEU, and to export them to third countries. The Resolution of the Council of Ministers No. 145 dated 19 March 2022 added grain products for animal feed and protein raw materials for the feed industry to the export ban list. The restrictions will be valid for the period of 6 months.

The Resolution of the Council of Ministers No. 137 dated 13 March 2022 introduced a temporary ban on the export of buckwheat (cereals, grains, food products) and wheat flour until June 16, 2022.

The Resolution of the Council of Ministers No. 147 dated 19 March 2022 relates to a ban on the export of certain industrial goods – 254 categories. The list includes a wide variety of products: plaster, materials for filling teeth, glasses, disinfectants, tights and stockings for people with varicose veins, steam boilers and boilers for central heating, pumps, compressors and fans, bulldozers and agricultural machines, railway and tram cars, milking machines, some production equipment and measuring instruments, sewing machines, vacuum cleaners, electric shavers, smartphones, video and audio recording equipment, etc. The restrictions will be valid for a period of 6 months.

There are some exceptions to these prohibitions. Such products can be exported for the provision of humanitarian assistance, as well as within the framework of international transit traffic.

A number of goods (products) can be exported only if there is a permit (licence) issued by an authorized body – the Ministry of Antimonopoly Regulation and Trade of the Republic of Belarus:

- pipe products – until 1 April 2022
- recycled paper or cardboard (waste paper) – until 5 July 2022
- apples, onions and cabbage – until 7 May 2022
- sugar – until 18 August 2022

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The information above reflects the status as of 22 March 2022.

No information contained in this article should be considered or interpreted in any manner as legal advice and/or the provision of legal services. This article has been prepared for the purposes of general information only. PETERKA & PARTNERS does not accept any responsibility for any omission and/or action undertaken by you and/or by any third party on the basis of the information contained herein.

 

03

The EU is continuing to ramp up the sanctions pressure on the Russian economy, and new measures have been taken by the Council effective as of 16 March 2022. 

We outline the main new restrictions below.

1. Energy Sector

  • Prohibition on new investments in the Russian energy sector

The measure prohibits the:

acquisition or extension of existing participation in
arrangements to provide financing, including equity capital, to
creation of any new joint venture with

persons or bodies from Russia or any third country operating in the energy sector in Russia as well as the provision of investment services related to the above.

By way of derogation from the said rule, the competent authorities may authorize any activity referred to above in exceptional cases, e.g., if it is necessary for ensuring critical energy supply within the Union.

  • Export restriction on equipment, technology and services for the energy industry

Furthermore, the approach existing before this last package on measures for prior authorization of sale, supply, transfer or export of equipment and technology for the energy industry in Russia has been replaced with a prohibition of such transactions and related services.

There are certain exceptions from this ban. Among them it is worth mentioning that the prohibition does not apply to goods or technology, or to the provision of technical or financial assistance, necessary for the transport of fossil fuels, in particular coal, oil and natural gas, from or through Russia into the EU. The prohibition also does not apply to the execution until 17 September 2022 of an obligation arising from a contract concluded before 16 March 2022.

“Energy sector” within the meaning of the regulation does not cover civil nuclear related activities.

2. Further trade restrictions 

  • Iron and steel

Import, purchasing and transport of iron and steel products, listed in an annex, that originate or are exported from Russia are prohibited.

Related technical assistance, brokering services, financing or financial assistance, including financial derivatives, as well as insurance and re-insurance are also prohibited.

Execution until 17 June 2022 of contracts concluded before 16 March 2022, or ancillary contracts necessary for the execution of such contracts are not affected.

  • Luxury goods

The new package also bans the sale, supply, transfer or export of luxury goods, listed in an annex to the regulation, to any person or body in Russia or for use in Russia.

As a rule, this applies to goods with a value exceeding EUR 300 per item.

The list of products concerned is long and includes horses, caviar, cosmetics, clothes, leather products, carpets, jewellery, vehicles (exceeding EUR 50,000 each), works of art, etc.

3. Prohibition of all transactions with certain entities

The new package bans any new transaction with particular persons or bodies established in Russia that are publicly owned or related to Russia, its Government or Central Bank as well as persons or bodies established outside the EU and owned by the listed persons. Persons or bodies acting on behalf or at the direction of the entities referred to in the preceding sentence are also covered by the ban.

The execution until 15 May 2022 of contracts concluded before 16 March 2022 or ancillary contracts necessary for the execution of such contracts are not affected by the ban. Further exceptions apply to the purchase, import or transport of fossil fuels and certain raw materials to the EU.

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The information above reflects the status as of 16 March 2022.

No information contained in this article should be considered or interpreted in any manner as legal advice and/or the provision of legal services. This article has been prepared for the purposes of general information only. PETERKA & PARTNERS does not accept any responsibility for any omission and/or action undertaken by you and/or by any third party on the basis of the information contained herein.

02

Following the introduction of various sanctions by EU, US, UK etc., the Russian Federation has enacted a number of measures affecting both Russian residents and foreign businesses. We are present below some of the main ones.

List of Unfriendly States established by Government Decree as of March 5, 2022 No. 430-r

The List of Unfriendly States includes the member states of the EU, as well as Australia, Albania, Andorra, the United Kingdom (including Jersey, Anguilla, the British Virgin Islands and Gibraltar), Iceland, Canada, Liechtenstein, Micronesia, Monaco, New Zealand, Norway, the Republic of Korea, San Marino, North Macedonia, Singapore, the USA, Taiwan, Ukraine, Montenegro, Switzerland, and Japan.

Restrictions on payments in foreign currency instructed by Order of the President of the Russian Federation as of March 5, 2022 N 95 "On the temporary procedure for the fulfilment of obligations to certain foreign creditors" (“Order No. 95”).

A temporary procedure was introduced for the fulfilment of payment obligations by Russian residents, as well as the Russian Federation. It affects obligations from loans and borrowings, and financial instruments to foreign creditors from Unfriendly States (with the exception of those registered in the Russian Federation).

Restrictions:

  • Relates only to loans and borrowings, and financial instruments;
  • Only affects obligations of Russian residents in excess of 10 million rubles per calendar month (or foreign-currency equivalent);
  • Russian residents have the right to fulfil their obligations by transferring Russian rubles to special ruble “C” accounts opened in the name of a foreign creditor in a Russian bank. The procedure for opening such accounts will be determined by a decision of the Central Bank;
  • Payments in foreign currency are possible only on the basis of a special permit.

Restrictions do not apply to foreign creditors from Unfriendly States which are:

  • under the control of Russian legal entities or individuals (end beneficiaries are the Russian Federation, Russian legal entities or individuals), including if this control is exercised through foreign legal persons associated with such foreign states; and
  • information on control over them is disclosed by Russian legal entities or individuals by the persons mentioned above, to the tax authorities of the Russian Federation in accordance with requirements of the legislation of the Russian Federation.

Residents and other states which have not joined the sanctions

On one hand, Order No. 95 applies exclusively to the debts owed to creditors from Unfriendly States (and creditors controlled by persons from such countries), and also for debts that were assigned to such creditors from Unfriendly States (non-residents). On the other hand, according to the Clarifications of the Central Bank, creditors who are residents of states that have not joined the sanctions shall also receive payments in rubles at the exchange rate at the time of payment. Whether these clarifications mean that Order No. 95 covers residents of countries that have not joined the sanctions is not clear at the moment.

Ban and restrictions on the export of certain products and raw materials from the Russian Federation introduced by Order of the President of the Russian Federation No. 100 dated March 8, 2022 "On the Application of Special Economic Measures in the Sphere of Foreign Economic Activity for the Purpose of Ensuring the Security of the Russian Federation" and following Government Decree as of 9 March 2022 No. 311, 312, 313, following Government Decree as of March 6, 2022 No. 302

The list includes technological, telecommunications, medical equipment, vehicles, agricultural machinery, electrical equipment – more than 200 items in total, including railway cars and locomotives, containers, turbines, metal and stone processing machines, monitors, projectors, consoles, and panels.

The export of these goods is temporarily restricted to all foreign countries, with the exception of the member states of the EAEU, Abkhazia, and South Ossetia. In relation to the latter, a permitting procedure for export will apply, providing that permits for the export of goods to the EAEU countries, Abkhazia, and South Ossetia will be issued by the Ministry of Agriculture, the Ministry of Transport, the Ministry of Industry and Trade, the Ministry of Digital Development, and the Ministry of Natural Resources.

In addition, the Government Decree temporarily restricted the export of certain types of timber from Russia. It is banned in states that have committed “Unfriendly Actions”, according to the approved list.
Among other things, Russia has introduced a temporary ban on the export of foreign medical devices from the country, i.e., medical devices that were delivered from states that joined the sanctions and are now in the warehouses of importers or are undergoing customs procedures.

Additionally, the Government of the Russian Federation determined a list of goods and equipment previously imported into Russia from abroad, which are temporarily prohibited from being exported from the country until the end of 2022.

A procedure for certain previously frozen transactions with foreign counterparties is established by Decree of the Government of the Russian Federation No. 295 dated 06.03.2022 "On Approval of the Rules for Issuing Permits by the Government Commission for Control over Foreign Investments in the Russian Federation for the Transactions Conducted by Residents with Foreign Persons in order to Implement Additional Temporary Economic Measures for ensuring the financial stability of the Russian Federation and amending the Regulations on the Government Commission for Control over Foreign Investments in the Russian Federation" Government Decree as of March 6, 2022 No. 431-r

As mentioned in a previous Legal Alert, on 1 March 2022, the Russian President signed Order No. 81, which stipulates the need to obtain permission from the Government Commission for Control of Foreign Investment in Russia (the “Commission”) for certain transactions and operations between Russian residents and residents of Unfriendly States. Such transactions include, inter alia, provision of loans and credits, and transactions related to transfer of ownership to securities and real estate.

On 6 March 2022, the Russian Government defined the procedure for issuing approvals for the above transactions.

An application for permission to conduct a transaction or a group of transactions is sent to the Russian Ministry of Finance by the Russian party to the transaction or by residents of Unfriendly States. The application shall contain, in particular, information on the purpose, subject matter, content and essential conditions of the transaction (operation), on the planned validity period of such permission, and other information.

The application must be accompanied by a document confirming the state registration of the applicant; constituent documents of the applicant – a legal entity; a document containing information about beneficiaries, beneficial owners, a person exercising control over a person of a foreign state who is a party to the transaction (participating in the transaction); balance sheet of the resident as of the last reporting date and other documents. The application and documents are drawn up in Russian. If the original documents are in a foreign language, they are submitted with a certified translation (with an apostille of the competent authority of the state in which this document was drawn up). A description of the submitted documents is attached to the application. The application and documents may be submitted on paper or in an electronic form, including in the form of electronic documents signed using an electronic digital signature.

The Russian Government does not specify the timeframe for reviewing an application. If the application is processed with a positive outcome and the authorization is issued, the Commission has the right to determine the conditions of the transaction and/or the period of validity of the authorization at its own discretion.

Dividend payments provided by Instruction of the Central Bank No. 018-34-3/1202 dated February 28, 2022

According to an instruction of the Central Bank, it is prohibited to “transfer payments” on securities to any foreign legal entities and individuals. This applies to payments such as dividends and interest on bonds. It is not yet entirely clear whether this applies to income from the sale of shares. Apparently, this rule should not apply to LLCs.

Temporary ban on the export of grain to the EAEU, as well as on the export of white sugar and raw cane sugar to third countries by Decree of the Government of the Russian Federation Nos. 361, 362 dated 14.03.2022
Russia introduced a temporary ban on the export of grain to the EAEU, as well as on the export of white sugar and raw cane sugar to third countries. Restrictions on grain will be valid until June 30, and on sugar until August 31, 2022.

The grain ban applies to wheat and meslin, rye, barley, and corn.

There are a number of exceptions for the export of sugar and grain. Thus, the supply of these products outside of Russia will be possible, including for the provision of humanitarian assistance, as well as within the framework of international transit traffic.

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The information above reflects the status as of 15 March 2022.

No information contained in this article should be considered or interpreted in any manner as legal advice and/or the provision of legal services. This article has been prepared for the purposes of general information only. PETERKA & PARTNERS does not accept any responsibility for any omission and/or action undertaken by you and/or by any third party on the basis of the information contained herein.

01

Since 2014, the crisis in Ukraine has triggered the EU to introduce various restrictive measures (sanctions) on Russia and Russian owned/controlled entities.

By the end of 2021, the main restrictions can be summarized in a simplified manner as follows:

  • prohibition of import and export of arms and related material from/to Russia and related services;
  • ban on exports of dual use goods and technology for military use in Russia or to Russian military end users and to specified persons, entities or bodies as well as related services;
  • limitations on certain financial instruments issued by publicly owned/controlled Russian credit institutions and their subsidiaries outside the EU, military and energy companies as well as new loans or credits to such entities;
  • export of certain energy-related equipment and technology to Russia requires prior authorization, and certain related services are prohibited;
  • travel restrictions and freezing of assets of individuals and legal entities or bodies as well as a prohibition on making directly or indirectly funds or economic resources available to or for the benefit of such persons.

Sanctions on Belarus or Belarusian owned/controlled entities have also existed for years, though before 2022 they have not been linked to Ukraine. Some of them are similar to the ones above, e.g., restrictions on the trade of arms, dual-use items and access to capital markets, but there are also country specific sanctions such as:

  • prohibition of sale, supply, transfer or export of equipment, technology or software intended primarily for use in the monitoring or interception by, or on behalf of, the Belarusian authorities of the internet and of telephone communications on mobile or fixed networks;
  • restrictions concerning petroleum products, potassium chloride (“potash”) and goods used for the production or manufacturing of tobacco products;
  • certain prohibitions on the European Investment Bank in relation to projects in the public sector.

 
DEVELOPMENTS IN 2022

We outline below the main newly introduced sanctions.

1. Finance

The longest list of new measures adopted shortly before and after the Russian invasion of Ukraine, and arguably the heaviest ones, relate to the financial sector.

  • Prohibition to finance the Russian Federation and its government and prohibition of transactions with the Russian and Belarusian Central Banks

It is now prohibited to purchase or sell directly or indirectly or otherwise deal with transferable securities and money-market instruments issued after 9 March 2022 by Russia and its Government, the Russian Central Bank or persons/entities/bodies acting on their behalf or at their direction. The same is true for any new loans or credit arrangements after 23 February 2022. Drawdowns or disbursements made under a loan or a credit contract concluded before 23 February 2022 are not covered under certain conditions.

With respect both to the Russian and the Belarusian Central Banks, the EU also banned any transactions related to the management of reserves and assets, including transactions with any person, entity or body acting on behalf of or at the direction of the banks.

  • SWIFT

As of 12 March 2022, it is not allowed to provide specialized financial messaging services, which are used to exchange financial data to seven Russian banks, i.e., Bank Otkritie, Novikombank, Promsvyazbank, Rossiya Bank, Sovcombank, Vnesheconombank (VEB), and VTB Bank and to any legal entity or body established in Russia directly or indirectly owned by more than 50 % by the said banks.

The same restriction applies as of 20 March 2022 to three Belarusian banks, namely Belagroprombank, Bank Dabrabyt, and the Development Bank of the Republic of Belarus, as well as their Belarusian subsidiaries.

  • Expansion of financial restrictions on other credit institutions and persons

The access to capital markets and financing through new loans or credits has been further limited to include prohibitions on additional institutions and entities and new measures.

As of 12 April 2022, the listing and provision of services on EU trading venues for the transferable securities of any legal entity or body established in Russia or Belarus and with over 50% public ownership is also prohibited.

On a related note, the notion of “transferable securities” has also been clarified so as to include crypto-assets, and thus ensure the proper implementation of the related restrictions.

  • Public financing or financial assistance for trade with, or investment in Russia and Belarus

It is prohibited to provide public financing or financial assistance for trade with, or investment in, Russia or Belarus.

There are a few exceptions to this rule among which are the provision of public financing or financial assistance up to the total value of EUR 10,000,000 per project benefiting small and medium-sized enterprises established in the Union.

  • Financial inflows from Russia and Belarus to the EU

New measures have been introduced which prohibit the acceptance of deposits exceeding the total value EUR 100,000 from Russian or Belarusian nationals or residents or legal entities or bodies established in Russia or Belarus. This does not apply to deposits which are necessary for non-prohibited cross-border trade in goods and services between the EU and Russia, respectively the EU and Belarus.

Further, the provision of services by the EU central securities depositories, as well as the selling of euro-denominated transferable securities issued after 12 April 2022 or units in collective investment undertakings providing exposure to such securities to Russian or Belarusian nationals or residents or any legal entity or body established in Russia or Belarus is also prohibited.

  • Euro banknotes

It is also prohibited to sell, supply, transfer or export euro denominated banknotes to Russia or Belarus or to any natural person or legal entity or body in Russia or Belarus, including the government and central banks of both countries or for use in Russia or Belarus.

This does not apply where necessary for the personal use of natural persons travelling to Russia or Belarus or members of their immediate families travelling with them or the official purposes of diplomatic missions, consular posts or international organizations in Russia or Belarus enjoying immunities in accordance with international law.

2. Other sectoral sanctions

  • Technology

Further restrictions are introduced on exports of dual-use goods and technology and related services. Restrictions are also imposed on exports of certain goods and technology which might contribute to Russia’s or Belarus’s military and technological enhancement or the development of the defence and security sector. The latter covers a wide range of equipment and technology, including computers and other electronics, telecommunications equipment and technology, information security, sensors and lasers, etc. Related technical assistance and other services are also prohibited.

  • Transport

Export of goods and technology to Russia in the aviation and space industry is also banned as is the provision of technical and financial assistance, insurance and reinsurance and maintenance services related to those goods and technology.

  • Energy

Additional sanctions cover the sale, supply, transfer or export to Russia of specific goods and technologies in oil refining and related services.

  • Maritime navigation

This is the latest addition to the list of sectors in Russia covered by sanctions. Thus, the sale, supply, transfer or export of maritime navigation goods and technology to any person, entity or body in Russia, for use in Russia, or for the placing on board of a Russian-flagged vessel is prohibited. Related services are also prohibited.

  • Other sectoral sanctions on Belarus

Further restrictions are introduced on the trade of goods used for the production or manufacturing of tobacco products, mineral products and potassium chloride (“potash”) products and related services.

In addition, import, purchase, transport of wood products, cement products, iron and steel products and rubber products from Belarus as well as related services are also prohibited. The prohibitions shall be without prejudice to the execution until 4 June 2022 of contracts concluded before 2 March 2022.

3. Expansion of lists of sanctioned persons

The lists of individuals and entities sanctioned by travel restrictions,  asset freezes, and prohibitions on making directly or indirectly funds or economic resources available to or for the benefit of such persons have been supplemented several times.

***

The information above reflects the status as of 11 March 2022.

No information contained in this article should be considered or interpreted in any manner as legal advice and/or the provision of legal services. This article has been prepared for the purposes of general information only. PETERKA & PARTNERS does not accept any responsibility for any omission and/or action undertaken by you and/or by any third party on the basis of the information contained herein.

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