On March 15, the Council of the EU proceeded to adopt the fourth package of sanctions against Russia over the continued military aggression of Ukraine. With these new sanctions, the EU seeks to address potential loopholes under the first three packages, such as by providing clarifications, to restrict certain derogations, and to expand the sanctions’ scope by targeting new sectors. In particular, the new sanctions target the energy sector, although significant carve-outs exist for coal, oil, and natural gas imports.

Following our review of the first, second and third sanctions package, we analyze below the latest restrictive measures which constitute the fourth package of sanctions.

For more information on how these developments could impact your organization, contact a member of Steptoe’s Economic Sanctions team in Brussels.

For additional resources can be found on Steptoe’s “Sanctions against Russia: Implications for Business and International Trade” page.

Continue Reading EU Adopts Fourth Package of Sanctions Against Russia

On March 7, 2022, the Financial Crimes Enforcement Network (FinCEN) of the US Department of the Treasury published guidance (Guidance) for US financial institutions warning about: (1) efforts of foreign actors to evade expanding US economic sanctions and trade restrictions related to the Russian Federation and Belarus and (2) increased risk of malicious cyber-attacks and related ransomware campaigns, following the invasion of and continued military action in Ukraine.  The Guidance provides instructive red flags and related advice for all US financial institutions to evaluate, and provides information of particular relevance for Money Services Businesses (MSBs) and other FinCEN-regulated institutions undertaking transactions in what the agency calls “convertible virtual currency” (CVC).

Most notably, FinCEN strongly encourages US financial institutions that have information about CVC flows, including exchangers or administrators of CVC to: (1) be mindful of efforts to evade expanded US sanctions and export controls related to Russia and Belarus, summarized by Steptoe here; (2) submit Suspicious Activity Reports (SARs) as soon as possible regarding such conduct; (3) undertake appropriate risk-based due diligence of customers, and where required, enhanced due diligence; (4) voluntarily share information with other financial institutions consistent with Section 314(b) of the USA PATRIOT Act; and (5) consider using tools to identify assets that must be blocked or frozen under applicable sanctions.

Continue Reading What US Financial Institutions Need to Know about FinCEN’s Russian Sanctions Evasion and Ransomware Guidance

Since the adoption of the first sanctions package against Russia, the Council of the EU and the European Commission (“Commission”) have been working closely together to adopt increasingly severe sanctions to force President Putin back to the negotiating table in view of reaching a ceasefire. Coordination with allies has also been intense. Following our review of the first and second sanctions package, we analyze below the latest restrictive measures.

For more information on how these developments could impact your organization, contact a member of Steptoe’s Economic Sanctions team in Brussels.

For additional resources can be found on Steptoe’s “Sanctions against Russia: Implications for Business and International Trade” page.

Continue Reading Update: EU Adopts Additional Sanctions Against Russia and Belarus over the War in Ukraine

Since March 8, 2022, the United Kingdom has continued to introduce and announce new sanctions and export controls measures in response to Russia’s invasion of Ukraine.  The new UK measures include the designation of hundreds of individuals, the introduction of new sanctions measures under the sixth amendment to The Russia (EU Exit) (Sanctions) Regulations 2019 (Russia Regulations), amendments to VTB Bank general licence INT/2022/1272278, removal of Belarus from nine open general export licences (OGELs), and the announcement of the UK’s intention to phase out Russian oil imports by the end of 2022.

Continue Reading Round Up of New UK Sanctions and Export Controls on Russia and Belarus

Since February 21, 2022, the United States has joined a coalition of countries imposing sanctions in response to Russia’s invasion of Ukraine. New US sanctions and export controls are wide ranging and complex, significantly impacting trade and related financial transactions between the US and Russia, as well as Belarus.  They also affect transactions and exports from outside the United States in many areas of commerce. The following is a high-level overview of recent US legal developments as of March 8, 2022.

For more information on how these measures could impact your organization, contact a member of Steptoe’s Economic Sanctions and Export Controls teams.

Additional resources can be found on Steptoe’s “Sanctions against Russia: Implications for Business and International Trade” page.

Continue Reading A Summary of New Ukraine-related US Sanctions and Export Controls on Russia and Belarus

On March 4, 2022, HM Treasury’s Office of Financial Sanctions Implementation (OFSI) published an updated version of its Russia guidance and issued two new general licences permitting the wind down of positions with Sberbank and involving Bank Otkritie, Promsvyazbank, Bank Rossiya, Sovcombank, and VEB.  The UK government also put forward a series of amendments to the Economic Crime (Transparency and Enforcement) Bill proponents say is needed to crack down on corrupt elites and ramp up pressure on President Putin’s regime.

Continue Reading Update: OFSI Publishes Updated Russia Guidance; Issues New General Licences; and UK Amends Draft Economic Crime Legislation to Move “Harder and Faster” with Sanctions

On March 1, 2022, four new amendments to The Russia (Sanctions) (EU Exit) Regulations 2019 (Russia Regulations) were laid before parliament and came into immediate effect.  The amendments revise the financial and investment restrictions provisions contained in Part 3, Chapter 2 and the trade sanctions provisions set out in Part 5.  New restrictions also have been introduced banning Russian ships from UK ports under Part 6 and introducing restrictions on the provision of financial services for the purpose of foreign exchange reserve and asset management.

Continue Reading Update: New UK Russia Sanctions Legislation Comes into Effect, Suspension of Export Licences for Dual-Use Items to Russia, Additional Designations and New General Licences

On February 28, 2022, the UK government announced the designation of a further three Russian banks under the Russia (Sanctions) (EU Exit) Regulations 2019 (Russia Regulations) determined to be involved in obtaining a benefit from, or supporting, the Government of Russia.  Two of the three banks already were sanctioned by the United States.  Additional banks, including Sberbank, are expected to be targeted in the coming days.  The UK government also issued three general licenses for winding down some newly sanctioned business in the UK.

The three banks targeted are:

  • VEB.RF;
  • Bank Otkritie Financial Corporation PJSC; and
  • PJSC Sovcombank.

The UK measures, which took effect immediately upon their announcement, impose asset freezes and prohibitions on making funds or economic resources available to – or for the benefit of – designated persons.  The prohibition on dealing with the funds or economic resources of the designated persons also extends to any legal entities they own or control, directly or indirectly, even if the particular entity is not itself listed by the UK as a designated person.

The Chancellor of the Exchequer, in coordination with the Governor of the Bank of England, also announced the UK Government’s intention to impose further sanctions targeting the Central Bank of the Russian Federation (CBR).  This action will be taken in concert with the United States and the EU, to prevent the CBR from deploying its foreign reserves in ways that undermine the impact of sanctions imposed by the UK and its allies, and to undercut its ability to engage in foreign exchange transactions to support the Russian rouble.  HM Treasury has stated that the UK Government will “immediately take all necessary steps to bring into effect restrictions to prohibit any UK natural or legal persons from undertaking financial transactions involving the CBR, the Russian National Wealth Fund, and the Ministry of Finance of the Russian Federation.”  The UK government intends to make further related designations later this week.

Foreign Secretary Truss also announced in a statement to the UK parliament that the UK government will be laying two new pieces of sanctions legislation.  The first will introduce a set of new powers against Russia’s financial sector, including powers to prevent:

  • Russian banks from clearing payments in Sterling; and
  • the Russian state from raising debt in the UK.

As soon as this legislation is in force, Foreign Secretary Truss has stated that it will be applied to Sberbank.  She also announced the UK government’s intention to bring in a full asset freeze on all Russian banks within days in coordination with the UK’s allies.

The second piece of legislation will ban exports to Russia across a range of critical sectors, including high-end technological equipment such as microelectronics, marine, and navigation equipment.  The Department for International Trade and HM Treasury will offer advice and guidance to affected UK businesses regarding the impact of these new measures.

Further legislation is expected to follow in the coming weeks to sanction Russian-occupied territories in the Donbas, extend more sanctions to Belarus, and limit Russian deposits in UK banks.

In the early hours of March 1, 2022, the UK government issued three new general licences under Regulation 64 of the Russia Regulations, ahead of the anticipated laying of further Russia sanctions legislation in parliament later the same day:

  • INT/2022/1277777provides a wind down period in respect of sovereign debt, loans and money market instruments measures that will expire on March 8, 2022.
  • INT/2022/1277778 – provides a wind down period in respect of clearing and correspondent banking prohibitions that will expire on March 31, 2022. The licence permits UK credit or financial institutions to –
  • continue a correspondent banking relationship with Sberbank; and
  • process a sterling payment to, from or via Sberbank, a non-UK credit or financial institution that is owned or controlled directly or indirectly by Sberbank, or a UK credit or financial institution that is owned or controlled directly or indirectly by Sberbank.

Relevant Institutions also may process GBP payments made in accordance with the permissions above.

  • INT/2022/1277778 – adds additional days to INT/2022/1277778 to provide a wind down period until the June 24, 2022 in respect of clearing and correspondent banking prohibitions where the payments relate to making so-called “Relevant Energy Products” (e., crude oil, gas, and petroleum products as defined in the licence) available for use in the UK.

For information on the US sanctions announced between February 24 and 26, 2022, see this Steptoe blog post.

For information on EU sanctions announced on February 25, 2022, see this Steptoe blog post.

Visit this link to sign up to receive a recording of Steptoe’s recent webinar “Possible Sanctions Against Russia: What You Need to Know.”

For more information on how these developments could impact your organization, contact the author of this post, Alexandra Melia, in Steptoe’s Economic Sanctions team in London.

Following Russia’s invasion of Ukraine, the EU has adopted a much more severe sanctions package against Russia than the measures adopted on February 23, 2022 (see our previous previous blog post). The new measures provide for various restrictions, including additional targeted restrictions against specified individuals; expanded financial measures aiming at cutting Russia’s access to the EU capital markets; trade restrictions targeting the energy and aviation sectors and banning most exports of dual-use items, as well as certain semiconductors and cutting-edge technologies from the EU to Russia.

The key aspects of the new sanctions imposed by the EU are summarized below. Unless otherwise specified, references to Annexes in the below overview refer to Annexes to Council Regulation (EU) No 833/2014 (as amended or inserted by Council Regulation (EU) 2022/328 of February 25, 2022).

Continue Reading Update: EU Adopts Far-Reaching Sanctions following Russian Invasion of Ukraine

The United States government has continued to impose numerous economic sanctions and export controls measures following Russia’s invasion of Ukraine.  On February 24, 2022, the US Commerce Department’s Bureau of Industry and Security (BIS) significantly expanded export controls applicable to Russia.  On February 25, 2022, the US Treasury Department’s Office of Foreign Assets Control (OFAC) added Russian President Vladimir Putin and others to the Specially Designated Nationals (SDN) List.  It also imposed significant economic sanctions measures targeting Russia’s financial system — including by imposing sanctions on Russia’s largest financial institutions and limiting the ability of certain Russian state-owned and private entities to raise capital.  Together, OFAC’s actions, which were taken pursuant to Executive Order (EO) 14024 following Russia’s invasion of Ukraine, are estimated to affect nearly 80 percent of all banking assets in Russia.

Finally, on February 26, 2022, the United States and European Union countries, together with the United Kingdom and Canada, announced an agreement to block certain Russian banks from access to SWIFT (with Japan also agreeing the following day), to impose sanctions on Russia’s Central Bank, and to limit the ability of certain Russian nationals connected to the Russian government to obtain citizenship in their countries. They further agreed to ensure effective transatlantic coordination in implementing sanctions, including by sanctioning additional Russian entities and persons, and by working together and with other governments around the world to identify and freeze sanctioned Russian assets.

Continue Reading Biden Administration Imposes Sweeping Financial Sanctions, Export Controls after Russian Invasion of Ukraine