Foreign Trade / Compliance19.12.2022 Newsletter

EU adopts 9th sanctions package against Russia

In response to targeted attacks by Russia against civilians and civilian infrastructure in Ukraine, the European Union intends to increase pressure on Russia further with the ninth sanctions package. The package entered into force on 17 December 2022 and supplements the existing sanctions.

At first glance: what should companies do now?

  • Perform an up-to-date sanctions list check for all business partners.
  • Companies with business in Russia should immediately check whether and to what extent exporting goods, providing services or making investments are affected by the new sanctions.
  • Companies that provide services in the areas of market research and opinion polling as well as advertising should check whether the new service prohibitions apply to them.
  • Credit institutions must comply with their new notification obligation with regard to deposits exceeding EUR 100,000 of certain legal entities with a connection to Russia. Here, the respective ownership structure of the entities must be examined in detail, as indirect control by Russian nationals also triggers a notification obligation.

New sanctioning of persons, companies and organisations

The list of sanctioned persons in Annex I of Regulation (EU) No. 269/2014 has been expanded again: in total, nearly 140 people and 50 entities have been added to the list. The Russian armed forces, individual officers, members of the Duma and the Federation Council, and various political actors and parties are among those covered. In addition, the EU has sanctioned numerous defence industry companies that supply the Russian armed forces with weapons, ammunition and other equipment.

Assets of sanctioned individuals are frozen and EU persons must refrain from providing economic resources directly or indirectly to these persons and entities.

Exceptions

National authorities may approve an exemption from the ban on provision to sanctioned persons if funds are needed to purchase, import or transport agricultural and food products - including wheat and fertiliser - or to wind down existing business.

The background to this exemption provision is that Russian exports of food and fertilisers are exempt from the sanctions, but the listing of some entrepreneurs has made such deliveries more difficult. This is because the listed entrepreneurs were unable to draw on their assets in the EU, for example, to pay port dues in European ports.

Two more banks on the sanctions list

The EU has also added two more banks to its sanctions list: Credit Bank of Moscow and Dalnevostochny Bank. Accordingly, a general ban on doing business with these banks now applies over and above the previous financial market sanctions.

New export bans

The EU added further goods that could be used for warfare to the sanctions list. As a result, they are now also subject to export controls and bans. Specifically affected are further dual-use items such as aircraft engines and their components, generators, toy drones, laptops, hard drives, IT components, night vision and radio navigation equipment, cameras and lenses, nerve agents, and chemical raw materials.

It should be noted that there are no transition periods for the export of certain goods, such as drone propulsion systems and certain electronic components, as far as the winding-up of existing contracts is concerned.

New exception for reversing existing contracts

In order to facilitate the withdrawal of EU economic operators from the Russian market, a temporary exemption from import and export bans of Regulation (EU) No. 833/2014 has been introduced. This exemption is temporary and limited in scope, allowing the sale, supply or transfer of such goods or their importation into the Union until 30 September 2023, and applies only to goods still owned by EU persons and already physically located in Russia at the time of the entry into force of the prohibitions in question.

In order to take advantage of this exemption, a corresponding application for approval must be submitted to the competent national authority, which in Germany is the Federal Office for Economic Affairs and Export Control [Bundesamt für Wirtschaft und Ausfuhrkontrolle, BAFA].

Further measures

In order to target Russian propaganda, the EU revoked broadcasting licences of four new media channels. The media channels are also denied access to all alternative platforms.

The prohibition on providing certain services for the benefit of the Russian government and legal entities established in Russia is also being supplemented: Now, services in the areas of market research and opinion polling as well as advertising are also prohibited. However, exceptions exist for contracts concluded before 17 December 2022, among others. In addition, national authorities may authorise services in these areas for specific purposes, including the promotion of civil society activities to directly promote democracy.

Furthermore, the already existing ban on investing in the Russian energy sector has been expanded. From now on, investments in the Russian mining sector are also prohibited, with the exception of mining and quarrying activities involving certain critical raw materials.

From 16 January 2023 onwards it will be prohibited for Union nationals to hold positions on the governing bodies of all state-owned or state-controlled enterprises, as well as in Russian entities and in certain joint ventures and companies in the energy sector established in Russia. Exceptions are possible if, for example, the company in question is a joint venture of an EU company.

In addition, the EU has tightened the ban on conducting transactions with state-owned Russian entities. This prohibition also applies to transactions with the State Bank for Regional Development.

Finally, the EU has supplemented the notification requirements applicable to credit institutions: By 27 May 2023, credit institutions must provide the relevant national competent authority or the EU Commission with a list of deposits exceeding EUR 100,000 of legal persons, entities and bodies if they are established outside the Union and if more than 50% of their shares are directly or indirectly held by Russian nationals or natural persons resident in Russia. The list must be updated every twelve months.

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Mareike Heesing<br/>LL.M. (Köln/Paris I)

Mareike Heesing
LL.M. (Köln/Paris I)

Junior PartnerAttorney

Konrad-Adenauer-Ufer 23
50668 Cologne
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