Sanctions tracker – latest UK and EU sanctions developments

This briefing summarises the latest UK and EU sanctions developments in response to the conflict in Ukraine.

UK

Publication of new sanctions legislation

On 30 March, the Russia (Sanctions) (EU Exit) (Amendment) (No. 7) Regulations 2022 (the "Amending Regulations") were published, amending the UK's principal Russia sanctions legislation: the Russia (Sanctions) (EU Exit) Regulations 2019 (the "Russia Regulations"). The Amending Regulations came into force at 5pm on 30 March.

The principal changes introduced by the Amending Regulations are summarised below.

• The Amending Regulations introduce the possibility for the Secretary of State to designate persons by description, rather than by name, for the purposes of the asset freeze and various other restrictions contained in the Russia Regulations.
• The Amending Regulations expand the existing UK sanctions relating to Crimea such that they also apply to "non-government controlled Ukrainian territory" which includes Crimea, and non-government controlled areas of the Donetsk and Luhansk oblasts (determined by reference to a decree issued by the President of Ukraine) (Regulation 3 of the Amending Regulations). Provision is also made for "grandfathering" exemptions from certain of the trade sanctions applying to these areas in respect of pre-existing contracts, although the time limits during which these exemptions are valid vary from restriction to restriction (Regulation 60ZA of the Russia Regulations).
• The Amending Regulations introduce a new prohibition on the provision of technical assistance relating to aircraft or ships, where that assistance is provided to or for the benefit of a designated person, subject to exemptions relating to technical assistance required for safety reasons.

The UK government press release announcing the Amending Regulations notes that the above restrictions on the provision of technical assistance have been applied to Eugene Shvindler and Oleg Tinkov. As a reminder (and given the range of new sanctions powers being introduced), when checking the UK sanctions list, it is increasingly important to refer to the "sanctions imposed" field to confirm whether an individual/entity is subject to the UK asset freeze and/or is a "designated person" for the purposes of other restrictions in the Russia Regulations, such as the new technical assistance restrictions.

On 24 March, the UK also published the Customs (Additional Duty) (Russia and Belarus) Regulations 2022 which introduce the export tariff increases relating to Russia and Belarus announced earlier this month (and discussed in our previous blogpost).

New UK General Licences

The Office of Financial Sanctions Implementation ("OFSI") has issued several new general licences ("GLs").

• GL INT/2022/1424277 relates to Bank Dabrabyt and any entities that it owns or controls ("subsidiaries"). Any person (other than Bank Dabrabyt or a subsidiary) may wind down transactions involving Bank Dabrabyt/a subsidiary, including the closing out of any positions. The GL also permits activity reasonably necessary to effect this, although it does not authorise any act which the person carrying out the act knows or has reasonable grounds for suspecting will result in funds or economic resources being dealt with or made available in breach of the UK's Belarus sanctions regime (save as permitted under licences). This GL expires on 23 April 2022.
• GL INT/2022/1424276 applies to the following designated banks: Alfa Bank, Gapzrombank, Rosselkhozbank, SMP Bank and Ural Bank for Reconstruction and Development (together the "Banks") and their subsidiaries. Any person (other than a Bank or a subsidiary) may wind down transactions involving a Bank/a subsidiary, including the closing out of any positions. The GL also permits activity reasonably necessary to effect this, although it does not authorise any act which the person carrying out the act knows or has reasonable grounds for suspecting will result in funds or economic resources being dealt with or made available in breach of the Russia Regulations (save as permitted under licences). This GL expires on 23 April 2022.
• GL INT/2022/1438977 relates to GEFCO (a joint venture owned by Russian Railways and Stellantis (the "JV")). It authorises the continuation of business operations involving the JV or its subsidiaries including payments to or from the JV/subsidiaries under any obligations or contracts, or payments to or from any third party necessary to the continuation of any obligations or contracts. The GL also authorises the processing of such payments and provides that subsidiaries may make payments for their basic needs and reasonable fees/service charges arising from the routine holding and maintenance of frozen funds/economic resources. The GL will expire on 23 May 2022.
• GL INT/2022/1469378 is a wind-down GL relating to Sovcomflot and its subsidiaries. Any person (other than Sovcomflot or a subsidiary) may wind down transactions involving Sovcomflot/a subsidiary, including the closing out of any positions. The GL also permits activity reasonably necessary to effect this, although it does not authorise any act which the person carrying out the act knows or has reasonable grounds for suspecting will result in funds or economic resources being dealt with or made available in breach of the Russia Regulations (save as permitted under licences). This GL expires on 15 May 2022.

Finally, on 24 March, OFSI amended an existing GL (GL INT 2022/1381276), which applies to the Central Bank of the Russian Federation, the National Wealth Fund or the Russian Federation and the Ministry of Finance of the Russian Federation. The amendment extends the provisions of the GL to subsidiaries/persons acting on behalf of or at the direction of the above entities (so that the scope of the GL matches the scope of the restrictions imposed on these entities under Regulation 18A of the Russia Regulations).

New UK designations

On 31 March, the Foreign Secretary announced further designations of individuals and entities involved in Russian state media, military and Strategic Culture Foundation. OFSI has published a notice listing the 12 individuals and two entities who have been listed and who are now subject to asset freezing measures. Seven of these individuals were sanctioned under the UK's "urgent procedure" on the basis that they have recently been subject to Australian sanctions.

EU

Additional EU guidance

The European Commission has continued to expand its frequently asked questions on the Russian sanctions (discussed in our previous blogpost).

In recent days, the Commission has added new FAQ documents on euro-denominated banknotes and Donetsk and Luhansk as well as expanding upon the existing FAQs relating to the asset freeze and deposit restrictions.