New EU Russia sanctions package

The new measures do not cut-off Russian banks from SWIFT and do not impose asset-freezing measures on any Russian banks. But the expanded capital market restrictions prohibit completely trading with transferable securities issued by targeted banks and entities after 12 April 2022, and providing any credit or loan to them after 26 February 2022. 
 
The EU also adopted more sanctions on Belarus, which we expect to be published soon. 

Expansion of the Russia sanctions, Effective on 26 February 2022

Council Regulation (EU) 2022/328 amending Regulation (EU) No 833/2014

Export Controls and Defence

Complete export ban on all dual-use items and an export ban on listed goods and technology that might contribute to Russia’s military and technological enhancement or the development of the defence and security sector, in particular in the sectors of: (1) electronics, (2) computers, (3) information security (except mass market encryption and anti-virus software), (4) sensors and lasers, (5) marine, (6) aerospace and propulsion ("Targeted Goods").

It is also prohibited to provide technical assistance, brokering services, financing or financial assistance (including insurance, reinsurance and export credit insurance) related to Targeted Goods.

• Exemptions from the export bans apply for non-military use and for non-military end-users intended for: (a) humanitarian purposes; health emergencies and safety or the environment; (b) medical or pharmaceutical purposes; (c) temporary export of items for use by news media; (d) software updates; (e) use as consumer communication devices; (f) ensuring cyber-security and information security in Russia, except for its government and undertakings directly or indirectly controlled by the government; and (g) personal use of persons traveling to Russia and their families and not intended for sale.
• Authorizations can be granted to export Targeted Goods intended for non-military use and for a non-military end user destined for: (i) cooperation between the EU, Member States and Russia; (ii) nuclear and maritime safety; (iii) civilian telecommunications; (iv) use of subsidiaries and branches of EU and U.S. entities; (iv) diplomatic missions of the EU, its 27 Member States and the U.S.
• Authorizations can be granted for the execution of contracts concluded before 26 February 2022, or ancillary contracts necessary for the execution of such a contract, provided that the authorisation is requested before 1 May 2022.
• Member States cannot authorize exports of Targeted Goods if they have reasonable grounds to believe that the end-user is: (1) a military end-user, a party listed in Annex IV  (copy attached) or goods might have military end-use; or (2) goods or related assistance are intended for aviation or the space industry.
• Export of dual-use items to certain entities listed in Annex IV may only be authorised for the urgent prevention or mitigation of human health and safety or environment related events, or if obligations are due under contracts concluded before 26 February 2022 or ancillary contracts so long as authorisation is requested before 1 May 2022.

Trade Financing

• Prohibition to provide public financing or financial assistance for trade with or investment in Russia.
• Exemption of (1) commitments established before 26 February 2022; (2) public financing or financial assistance up to EUR 10,000,000 per project to EU-established SMEs; and (3) public financing or financial assistance for trade in food and for agricultural, medical or humanitarian purposes.

Trade in Goods: Energy and Transport Sectors

Energy Sector

• Export ban on certain goods and technology suited for use in oil refining listed in Annex X, (copy attached) whether or not originating in the EU, to any party in Russia or for use in Russia, and related technical assistance, brokering services, financing and financial assistance (including insurance, reinsurance and export credit insurance). Listed goods include machinery of Chapter 84 of the Combined Nomenclature
• Exemption of the execution until 27 May 2022 of contracts concluded before 26 February 2022 or ancillary contracts necessary for the execution of such contracts.
• Authorization may be granted  for the urgent prevention or mitigation of events likely to have a serious and significant impact on human health and safety or the environment.

Aviation Sector

• Export ban on goods suited for use in aviation and space industry, as listed in Annex XI, whether or not originating in the EU, to any party in Russia or for use in Russia, and the provision of related insurance and reinsurance, technical assistance, brokering services, financing and financial assistance. Annex XI covers  all goods in CN Chapter 88 (Aircraft, spacecraft and parts thereof). 
• Prohibition to provide overhaul, repair, inspection, replacement, modification or defect rectification of an aircraft or component, in relation to goods and technology listed, to any person, entity or body in Russia or for use in Russia, with the exception of pre-flight inspection. 
• Exemption of the execution until 28 March 2022 of contracts concluded before 26 February 2022 or ancillary contracts necessary for the execution of such contracts.

 Financing Restrictions

• The financing restrictions below on VEB, Bank Rossiya and PSB must be examined together with the asset-freezing measures imposed on 23 February 2022 which provide for an authorisation possibility for payments necessary for the termination by 24 August 2022 of operations, contracts or other agreements, including correspondent banking relations, concluded before 23 February 2022.  By contrast, Alpha Bank and Bank Otkritie are not subject to asset-freezing measures, but only to the financing restrictions described below.
• The financing restrictions have been expanded as follows: 
  • For Sberbank, VTB Bank, Gazprombank, VEB and Rosselkhozbank (or non-EU entities owned directly or indirectly for more than 50% by these banks, or by entities acting at their direction):
    • Prohibition to, directly or indirectly, purchase, sell, provide investment services for or assistance in the issuance of, or otherwise deal with transferable securities and money-market instruments with a maturity exceeding 90 days issued between 1 August 2014 and 12 September 2014; maturity exceeding 30 days issued between 12 September 2014 and 12 April 2022; or any transferable securities and money market instruments issued after 12 April 2022 by these banks.
    • Prohibition to make new loans or credit with a maturity exceeding 30 days to those banks after 12 September 2014 until 26 February 2022 to these banks.
    • Prohibition to make any new loan or credit after 26 February 2022 to these banks.
  • For Alfa Bank, Bank Otkritie, Bank Rossiya and Promsvyazbank/PSB (or non-EU entities owned directly or indirectly for more than 50% by these banks, or by entities acting at the direction of any of these banks):
    • Prohibition to, directly or indirectly, purchase, sell, provide investment services for or assistance in the issuance of transferable securities and money-market instruments issued after 12 April 2022 by these banks.
    • Prohibition to make any new loan or credit after 26 February 2022 to these banks.
  • For OPK Oboronprom, United Aircraft Corporation, Uralvagonzavod, Rosneft, Transneft and Gazprom Neft (or non-EU entities owned directly or indirectly for more than 50% by any of these entities, or by entities acting at the direction of any of these entities):
    • Prohibition to, directly or indirectly, purchase, sell, provide investment services for or assistance in the issuance of transferable securities and money-market instruments with a maturity exceeding 30 days issued after 12 September 2014 to 12 April 2022 or any transferable securities and money market instruments issued after 12 April 2022 by these entities.
    • Prohibition to make new loans or credit with a maturity exceeding 30 days to those banks after 12 September 2014 until 26 February 2022 to these entities.
    • Prohibition to make any new loan or credit after 26 February 2022 to these banks.
  • For Almaz-Antey; Kamaz; Novorossiysk Commercial Sea Port; Rostec (Russian Technologies State Corporation); Russian Railways; JSC PO Sevmash; Sovcomflot; and United Shipbuilding Corporation (or non-EU entities owned directly or indirectly for more than 50% by any of these entities, or by entities acting at the direction of any of these entities):
    • Prohibition to, directly or indirectly, purchase, sell, provide investment services for or assistance in the issuance of transferable securities and money-market instruments issued after 12 April 2022 by these entities.
    • Prohibition to make any new loan or credit to those banks after 26 February 2022 to these entities.
  • Prohibition to list and provide services as of 12 April 2022 on trading venues registered or recognised in the EU for the transferable securities of any entity established in Russia and with over 50% public ownership.
  • Prohibition to satisfy claims in connection with any contract or transaction the performance of which has been affected, directly or indirectly, in whole or in part, by the measures imposed under Regulation (EU) No 833/2014, if they are made by any of the entities listed above.
• Exemption of loans and credits (1) for financing of non-prohibited import or export of goods and non-financial services between the EU and third country; and (2) relating to drawdown and disbursements under pre-existing contracts.
• Prohibition to accept any deposits from Russian nationals or from persons residing in Russia or Russian entities if the total value exceeds 100,000 EUR per credit institution. There is a derogation  for EU nationals or temporary or permanent residents, and for deposits which are necessary for non-prohibited cross-border trade in goods and services between the EU and Russia. 
• Prohibition on EU central securities depositories to provide any services as defined in the Annex of Regulation (EU) No 909/2014 (securities settlement) for transferable securities issued after 12 April 2022 to any Russian national, resident in Russia or Russian entity. 
• Prohibition to sell EUR denominated transferable securities issued after 12 April 2022 or units in collective investment undertakings providing exposure to such securities to any Russian national, resident or Russian entities, except EU nationals and persons with a temporary or permanent residence permit in an EU Member State.

Expansion of the Crimea sanctions, Effective on 25 February 2022

Council Regulation (EU) 2022/330 amending Regulation (EU) No 269/2014

• Expansion of listing criteria under asset-freezing measures to include:
  • natural persons responsible for, supporting or implementing actions or policies which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine, or stability or security in Ukraine, or which obstruct the work of international organisations in Ukraine;
  • legal persons, entities or bodies supporting, materially or financially, actions which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine;
  • legal persons, entities or bodies in Crimea or Sevastopol whose ownership has been transferred contrary to Ukrainian law, or legal persons, entities or bodies which have benefited from such a transfer;
  • natural or legal persons, entities or bodies supporting, materially or financially, or benefiting from Russian decisionmakers responsible for the annexation of Crimea or the destabilisation of Ukraine;
  • natural or legal persons, entities or bodies conducting transactions with the separatist groups in the Donbas region of Ukraine;
  • natural or legal persons, entities or bodies supporting, materially or financially, or benefitting from the Government of the Russian Federation, which is responsible for the annexation of Crimea and the destabilisation of Ukraine; or
  • leading businesspersons or legal persons, entities or bodies involved in economic sectors providing a substantial source of revenue to the Government of the Russian Federation, which is responsible for the annexation of Crimea and the destabilisation of Ukraine.

Council Implementing Regulation (EU) 2022/332 amending Regulation (EU) No 269/2014

• Designation of 99 persons for purposes of asset-freezes, including:
  • President Vladimir Putin;
  • Minister of Foreign Affairs Sergey Lavrov;
  • Members of the Russian National Security Council who supported Russia’s immediate recognition of the two non-government controlled areas Donetsk and Luhansk as independent entities;
  • Remaining members of the Russian State Duma, who ratified the government decision of the Treaty of Friendship, Cooperation and Mutual Assistance between the Russian Federation and the two entities;
  • Individuals who facilitated the Russian military aggression from Belarus (Belarussian military and government officials).

Suspension of the application of the Agreement between the EU and Russia on the facilitation of the issuance of visas to the citizens of the EU and Russia

Council Decision (EU) 2022/333

• Suspension of certain types of multi-entry visas: diplomatic; business; members of the Government, Constitutional Court and Supreme Court; and for participation of Russian officials to intergovernmental organisations.
• Suspension of certain facilitation in the issuance of the above types of visas and the right of holders of diplomatic passports to enter the EU territory without a visa.
• This decision will not affect ordinary Russian citizens.

Authored by Lourdes Catrain, Eleni Theodoropoulou and Stephanie Seeuws.