ARTICLE ON 6th – 10th EU SANCTIONS PACKAGES

In reaction to Russia’s military intervention against Ukraine the European Union (EU) adopted sanctions against Russia. In particular, the EU has adopted a wide range of restrictive measures against Russian individuals and entities in order to cripple Russia’s ability to finance the war and to impose painful costs on Russia’s political elite responsible or otherwise instrumental for the realisation of this unprovoked military attack on its neighbouring nation.

Beyond individual asset freezes, travel bans and visa restrictions, these restrictive measures comprise far-reaching trade restrictions in a number of economic sectors, as well as restrictions for activities in the financial sector.

Several packages of economic sanctions have been passed over the last few weeks as the severity of the crisis has worsened and a list of the financial sanctions that have been adopted is provided below.

Note: The position is constantly evolving. Additional sanctions may be introduced in the coming days and these will be the subject of future articles.

This information is:

• of a general nature only and is not intended to address the specific circumstances of any particular individual or entity;
• not necessarily comprehensive, complete, or up to date;
• not professional or legal advice (if you need specific advice, you may consult us).

6^th SANCTIONS PACKAGE

On 3^rd June 2022, the 6^th sanctions’ package was adopted by the EU against Russia and Belarus principally through Council Regulation 2022/879 amending Council Regulation 833/2014.

The 6^th package contains, among others, the following measures:

1. OIL IMPORT RESTRICTIONS & OIL TRANSPORT SERVICES:

• The EU agreed to ban the direct or indirect purchase, import, or transfer into the EU of crude oil or petroleum products originating in Russia or being exported from Russia, subject to long transitional periods. The list of prohibited petroleum products is contained in Annex XXV and consists of goods falling under CN Codes 2709 00 (“Petroleum oils and oils obtained from bituminous minerals, crude”) and 2710 (“Petroleum oils and oils obtained from bituminous minerals, other than crude.
• The prohibition does not apply to the purchase, transfer or import of seaborne crude oil and petroleum products if they are only being loaded, departing from or transiting Russia, provided that the origin and owner of goods are non-Russian.
• As regards petroleum products, the prohibitions do not apply until 5 February 2023 to one-off transactions for near-term delivery, concluded and executed before that date, or the execution of contracts for the purchase, import, or transfer of goods falling under the relevant EU petroleum goods classification code, or of ancillary contracts necessary for the execution of those contracts. In each case, the relevant EU Member States must have notified the relevant contracts to the EU Commission by 24 June 2022, and one-off transactions for near-term delivery must be notified by the relevant EU Member States to the EU Commission within 10 days of their completion.
• The EU restrictions do not prohibit gas imports.
• Due to its specific geographical exposure, a special temporary derogation until the end of 2024 has been agreed for Bulgaria which will be able to continue to import crude oil and petroleum products via maritime transport. In addition, Croatia will be able to authorise until the end of 2023 the import of Russian vacuum gas oil which is needed for the functioning of its refinery.
• After a wind down period of 6 months, EU operators will be prohibited from insuring and financing the transport, in particular through maritime routes, of oil to third countries.

2. FINANCIAL & BUSINESS RELATED MEASURES:

• The EU has extended the existing prohibition on the provision of specialized financial messaging services (SWIFT) to three additional Russian credit institutions and one Belarussian will be removed from SWIFT as of 14 June 2022. The SWIFT removal will also apply to any legal person, entity, or body established in Russia whose proprietary rights are directly or indirectly owned for more than 50% by any of the abovementioned entities.
• The provision of certain business-relevant services – directly or indirectly – such as accounting, auditing, statutory audit, bookkeeping and tax consulting services, business and management consulting, and public relations services to the Russian government, as well as to legal persons, entities or bodies established in Russia are now prohibited.

3. CRIMINALISATION OF BREACHES:

• The EU now requires EU Member States to implement criminal penalties for breaches. Previously, the obligation on EU Member States was to provide for effective, proportionate, and dissuasive penalties, meaning that EU Member States were notionally permitted to classify sanctions violations as leading only to civil or administrative liability. There is also a new obligation to provide for appropriate measures to confiscate the proceeds of violations of sanctions rules.
• In Cyprus there already has been a criminalisation of breaches of sanctions since 2016 through the law of Provisions of the United Nations Security Council Resolutions or Decisions (Sanctions) and the European Union Council’s Decisions and Regulations (Restrictive Measures) Law 58(I)/2016.

4. OTHER PROHIBITIONS & SANCTIONED ACTIVITIES:

• The broadcasting activities of another three Russian State outlets – Rossiya RTR/RTR Planeta, Rossiya 24/Russia 24, and TV Centre International – have been suspended. They are among the most important pro-Kremlin disinformation outlets targeting audiences in Ukraine and the EU and disseminating propaganda in support of Russia’s aggression against Ukraine.

7^th SANCTIONS PACKAGE

On 21^st July 2022 the EU adopted further sanctions against Russia found in the amendments to Council Regulations 833/2014 and 269/2014 and to Council Decisions 2014/512/CFSP and 2014/145/CFSP.

The 7^th package contains, among others, the following measures:

1. NEW PROHIBITION TO PURCHASE, IMPORT, OR TRANSFER, DIRECTLY OR INDIRECTLY, GOLD:

• The import ban applies to gold and gold jewellery originating in Russia and exported from Russia to the EU or any third country (except for the jewellery listed in Annex XXVII) and has been exported from Russia after 22 July 2022. Products processed in a third country incorporating gold items found in Annex XXVI are also covered by the prohibition while only limited exceptions are applicable.

2. BROADER BAN ON ACCESS TO EU PORTS:

• The ban on providing Russian vessels access to EU ports will after 29 July 2022 also apply to sea locks in EU territory. The ban has been extended to EU locks to combat circumvention by Russian-flagged vessels through canals.

3. EXPANSION OF THE PROHIBITION ON ACCEPTING DEPOSITS:

• A ban of accepting deposits over the amount of €100,000.00 of Russian nationals, legal persons has now been expanded to include deposits from entities established in third counties which are majority owned by Russian nationals or natural persons residing in Russia.
• The acceptance of deposits for non-prohibited cross-border trade will be subject to prior authorisationby the national competent authorities.

4. DISCLOSURE REQUIREMENT OF EU ASSETS:

• Articles 8(1) and 9 of Regulation 269/2014, as replaced by Regulation 2022/1273 impose enhanced reporting obligations for all persons subject to EU jurisdiction to immediately report information on accounts and assets within EU jurisdiction belonging to or held/controlled by EU asset freeze parties regardless of whether they have been frozen or not to the European Commission and competent national authorities.

5. ADDITIONAL SANCTIONED ENTITIES AND PERSONS:

• The EU imposed additional asset freeze restrictions on a number of individuals and entities as from 21 July 2022. and specifically, the EU designated 58 individuals, various family members of Russian businesspersons, government officials and political and media figures, military and law enforcement members, and also further designated 11 entities including Sberbank, AVLITA Stevedoring Company and the FORSS Group of Companies.

8^th SANCTIONS PACKAGE

On 6^th October 2022, the EU adopted the eighth sanction package against Russia through Council Regulation 2022/1904 amending Council Regulation 833/2014.

The 8^th package contains, among others, the following measures:

1. IMPLEMENTATION OF G7 OIL CAP & PROHIBITION ON MARITIME TRANSPORT TO THIRD COUNTRIES OF CRUDE OIL AND PETROLEUM PRODUCTS FROM RUSSIA

• The EU now also bans the maritime transport (and related technical assistance, brokering services or financing or financial assistance to such maritime transport) to third countries of crude oil (as of 5 December 2022) or petroleum products (as of 5 February 2023) which originate in or are exported from Russia.
• The price cap, once implemented, would allow European operators to undertake and support the transport of Russian oil to third countries, provided its price remains under a pre-set “cap”. The prohibition on transportation shall not apply if the price per barrel of the transported product is at or below the cap.

2. CRYPTO ASSETS

• A complete prohibition on the provision of crypto-asset wallet, account or custody services to Russian nationals or natural persons residing in Russia, or legal persons, entities or bodies established in Russia, regardless of the total value of those crypto-assets (previously up to €10,000 was permitted).

3. PROFESSIONAL SERVICES:

• The package widens the scope of services that can no longer be provided to the government of Russia or legal persons established in Russia: these now include IT consultancy, legal advisory, architecture and engineering services. The aforementioned are subject to certain exemptions and derogations.
• A wind-down exemption allows the provision of the IT consultancy category of services if strictly necessary for the termination by 8 January 2023 of non-compliant contracts concluded before 7^th October 2022 (and any ancillary contracts necessary for their execution).
• Derogations (subject to prior authorisation) also exist for services that are necessary for humanitarian purposes, civil society activities that promote democracy, human rights or the rule of law in Russia, the functioning of certain diplomatic and consular representation of the EU, EU and partner countries in Russia, and ensuring critical energy supplies and infrastructure.

9^th SANCTIONS PACKAGE

On 16^th December 2022, the EU adopted the ninth sanction package against Russia through Council Regulation 2022/2475 amending regulation 833/2014.

The 9^th package contains, among others, the following measures:

1. EXPANDED BAN ON MANAGEMENT FUNCTIONS:

• As from 16 January 2023, any person falling within EU sanctions jurisdiction were prohibited from holding any post in the governing bodies of Russian entities (i) which are publicly owned or controlled, (ii) in which Russia, the Russian Government or Central Bank has the right to participate in profits or (iii) with which Russia, its Government or its Central Bank has other ‘substantial economic relationship.

2. PROFESSIONAL SERVICES:

• The prohibition on providing certain professional and business services was expanded to include the provision of “market research and public opinion polling services, technical testing and analysis services and advertising services” to legal persons, entities, or bodies established in Russia and to the Russian government (Article 5n(2a)) of Regulation 833/2014.
• The prohibition on providing certain professional and business services was expanded to include the provision of “market research and public opinion polling services, technical testing and analysis services and advertising services” to legal persons, entities, or bodies established in Russia and to the Russian government (Article 5n(2a)). 

3. AVIATION:
   

• The export ban covering goods and technology for use in Russia’s aviation and the space industry (which includes the provision of (re)insurance) has been expanded to include aircraft engines and their parts (Art 3c). This prohibition applies to both manned and unmanned aircrafts, meaning that it is banned to export drone engines to Russia and to any third country that could supply drones to Russia.

4. MINING:

• It is prohibited to acquire new, or extend existing, participation in any Russian entity or any third-country entity operating in the mining and quarrying sector in Russia, grant new loans or credit or other financing., including equity capital, to any Russian entity or any third-country entity operating in the mining and quarrying sector in Russia, or for the purpose of financing such an entity, create a new joint venture with any Russian entity or any third-country entity operating in the mining and quarrying sector in Russia; and provide investment services directly related to any of the aforementioned.
• The existing prohibition targeting new investments in the Russian energy sector (Art 3a) has been extended by prohibiting new investments in the Russian mining sector, with the exception of mining and quarrying activities involving certain critical raw materials.

5. DUAL-USE GOODS AND TECHNOLOGIES:

• New export restrictions have been introduced on dual-use goods and advanced technologies that can contribute to the technical advancement of Russia’s defence and security sector. This includes a ban on exporting drone engines, certain chemical and biological equipment, riot control agents and electronic components to Russia.

10^th SANCTIONS PACKAGE

On 25^th February 2023, the EU adopted the tenth sanction package against Russia through Council Regulation 2023/427 amending Council Regulation 833/2014.

The 10^th package contains, among others, the following measures:

1. NEW EXPORT AND TRANSIT RESTRICTIONS:

• Expansion of the list of goods and technology that may not be exported or provided to Russian persons or for use in Russia. This applies, in particular, to the lists of products and technology which (i) contribute to Russia’s military and technological enhancement, or the development of the defense and security sectors, and (ii) could contribute to the enhancement of Russian industrial capacities. At the same time, an exception was added for goods that are strictly necessary to produce titanium goods required in the aeronautics industry, for which no alternative supply is available.

2. NEW REPORTING OBLIGATIONS:

• Natural and legal persons must supply information within 2 weeks of acquiring it to their national competent authority on a. frozen funds and economic resources; or b. funds and economic resources within the EU belonging to, owned, held or controlled by designated persons/entities which have not been treated as frozen by the persons/entities obliged to do so, information funds and economic resources belonging to or controlled by designated persons/entities which were subject to any dealing/transfer/access/use etc in the 2 weeks before they became designated, including a. information identifying the natural or legal persons, entities or bodies owning, holding or controlling the frozen funds and economic resources, including their name, address and VAT registration or tax identification number, the amount or market value of such funds or economic resources at the date of reporting and at the date of freezing and c. the types of funds, broken down according to the specific categories identified in the definition of “funds” and “economic resources”, including crypto-assets.

3. NEW ASSET FREEZE LISTINGS:

• 87 individuals and 34 entities have been added to the EU’s Russian sanctions list such as Russian decision-makers, senior government officials and military leaders, proxy authorities installed by Russia in Ukraine e.g. members of the Federation Council of the Russian Federation, prosecutors of annexed regions under the authority of the Office of Public Prosecutor of the Russian Federation, and members of the State Duma and the newly listed entities also include Russian financial institutions and 2 media outlets

4. NEW BAN ON RUSSIAN NATIONALS/RESIDENTS IN GOVERNMENT BODIES OF CRITICAL EU COMPANIES:

• As from 27 March 2023, it will be prohibited to allow Russian nationals and residents to hold any post in the governing bodies of owners and operators of private and public entities operating in the European critical infrastructure and critical entities.
• The new prohibition supplements the existing restrictions on EU persons holding any posts in the governing bodies of Russian State Owned Enterprises (SOEs).

5. TRANSPORT RESTRICTIONS: AIR TRAVEL VIA RUSSIA:

• Aircraft operators of non-scheduled flights between Russia and the EU, operated directly or via a third country, shall notify all relevant information concerning the flight to their competent authorities prior to their operation, and at least 48 hours in advance.

Next Steps

Additional further restrictions are expected to be introduced by the EU within the coming days. MPC Legal monitors developments within the EU closely and expects that additional rounds of sanctions may be imposed as events unfold.

Authors

Marilou Pavlou Christodoulides | Partner

Nikos Agapiou | Senior Associate