The European Union and United States have adopted sanctions as a central part of their response to the political crisis in Ukraine. Members and assured with vessels calling at ports in Ukraine should ensure that no sanctioned individuals or entities are involved. The lists of parties sanctioned by the EU and US have been steadily expanding and it is essential to check the latest lists (see Links).
The US authorities adopt the approach that designations extend to any entity owned or controlled by designated persons. Similarly, EU Regulations apply to funds and resources "controlled by" listed persons and prohibit making funds available to such persons "directly or indirectly".
Members and assureds should also pay attention to the restrictions on the import into the EU of goods originating in Crimea or Sevastopol. In addition sectoral sanctions have been introduced targeting inter alia the energy sector with restrictions affecting the supply of certain services relating to oil exploration and production.
In view of the increasingly tense political climate, it is likely that sanctions will continue to be extended and the situation remains fluid.
The Association's Rules contain a standard exclusion for liability for liabilities, costs or expenses where payment by the Association or the provision of cover may expose the Association to the risk of being subject to a sanction, prohibition or any adverse action (Rule 30.4.6). Liability is also excluded when there is a shortfall due to an inability to recover reinsurance or pool contributions from other insurers or P&I Clubs which are themselves unable to pay due to sanctions legislation (Rule 32.6). The Association is also able to terminate cover where a Member has exposed or may expose the Association to the risk of being or becoming subject to a sanction, prohibition, restriction or other adverse action by a state or international organisation or competent authority (Rule 3.3.2a). Similar provisions exist in the Terms & Conditions for non-mutual covers.
As noted above, the EU restrictions on import of goods originating in Crimea and Sevastopol include a prohibition on insurance and reinsurance. Accordingly importing such goods in contravention of these restrictions may trigger the insurance exclusion.
Sanctions in response to Russia's invasion in Ukraine and recognition of Donetsk and Luhansk People Republics (DNR and LNR)
On 21 February 2022, the White House issued a new Executive Order imposing sanctions on the so-called Donetsk People’s Republic (“DNR”) and Luhansk People’s Republic (“LNR”) regions of Ukraine. These sanctions were imposed in response to the Russian Government’s decision to recognize the DNR and LNR as independent from Ukraine on the same day.
Previously, certain parties in these regions, including their purported governments, were designated on the SDN List but there were no sanctions imposed generally on the DNR and LNR.
The new Executive Order does not explain which parts of the Donetsk and Luhansk regions are subject to these US sanctions, leaving to the US Treasury and State Departments to define the “Covered Regions” now targeted.
As a result of the new Executive Order, it is now prohibited for US Persons (i.e., entities incorporated under US laws and their non-US branches; parties physically located in the United States; US citizens and permanent resident aliens wherever located or employed) to:
- Export, reexport, sell, or supply, directly or indirectly, any goods, services, or technology to the Covered Regions;
- Engage in new investments in the Covered Regions;
- Import into the United States any goods, services, or technology from the Covered Regions; and
- Provide any approval, financing, facilitation, or guarantee of a transaction by a non-US party where the transaction would be prohibited if performed by a US Person with respect to the Covered Regions.
The new Executive Order also provides authority for OFAC to designate to the SDN List parties that operate in the Covered Regions or provide “material” support to SDNs designated pursuant to the new Order.
OFAC also issued a number of General Licenses for the Covered Regions, as follows:
- Ukraine GL 17 to allow a wind-down of operations and contracts involving the DNR and LNR by 23 March 2022;
- Ukraine GL 18 for the export to the Covered Regions of agricultural commodities, medicine and medical devices and transactions related to the COVID-19 pandemic;
- Ukraine GL 21 to ensure personal remittances can continue to flow and the operation of bank accounts;
- Ukraine GL 19 to allow telecommunications and mail services to continue ;
- Ukraine GL 22 for internet services to remain operational; and
- Ukraine GL 20 to allow international organizations (e.g., United Nations, certain international development banks, Organization for Co-operation and Security in Europe) to engage in activities related to the Covered Regions.
- Ukraine GL 24 to allow individuals resident in so-called Donets and Luhansk Republics to engage in all transactions related to civil marine services performed outside these Republics.
On 22 February 2022 OFAC made a number of new designations of various entities in the Russian financial sector pursuant to Executive Order 14024 (“E.O. 14024”). The designations target Foreign Economic Affairs Vnesheconombank (“VEB”) and Promsvyazbank Public Joint Stock Company (“PSB”), which OFAC has identified as critical participants in the Russian financial and defense sectors.
OFAC also issued General License 2 in relation to certain VEB bonds issued before 1 March 2022 and General License 3, which sets forth a wind down period until 24 March 2022, for transactions involving VEB. No similar General License was issued for transactions involving PSB.
42 of VEB’s and PSB’s respective subsidiaries were also designated to the SDN list.
Following PSB designation, OFAC also designated to the SDN list five vessels that are owned by PSB Lizing OOO, a designated subsidiary of PSB.
OFAC also updated Directive 1A replacing the previous one issued on 15 April 2021 expanding prohibitions against participating in the transactions related to Russia’s sovereign debt.
OFAC issued a new Russia-related General License 4 ,"Authorizing the Wind Down of Transactions Involving Nord Stream 2 AG" establishing that all transactions prohibited by Executive Order (E.O.) 14039 that are ordinarily incident and necessary to the wind down of transactions involving Nord Stream 2 AG, or any entity in which Nord Stream 2 AG owns, directly or indirectly, a 50 percent or greater interest are authorized until 2 March 2022.
On 24 February 2022 OFAC issued further sanctions against Russia including:
Directive 2 under Executive Order 14024 prohibiting from 26 March 2022 any US person to open or maintain correspondent bank accounts or processing any transactions involving sanctioned Russian banks including Sberbank.
Directive 3 under Executive Order 14024 prohibiting from 26 March 2022 any US person to engage with any new debt or new equity, provision of financing or other dealings in property or transactions of longer than 14 days for the following financial institutions: Credit Bank of Moscow, Gazprombank, Alfa-Bank, Russian Agricultural Bank, JSC Sovcomflot, Russian Railways, Alrosa, Gazprom, Gazpromneft, Rostelecom, Sberbank, Transneft.
General License 5, exempting from sanctions transactions of certain international organisations, including Red Cross and Red Crescent, EBRD.
General License 6B exempting from sanctions transactions ordinarily incident and necessary to the exportation or reexportation of agricultural commodities, medicine, medical devices, replacement parts and components for medical devices, or software updates for medical devices to, from, or transiting the Russian Federation; or the prevention, diagnosis, or treatment of COVID-19.
General License 7, permitting payments and services in connection with overflights of the Russian Federation or emergency landings in the Russian Federation by US aircraft (registered or owned/controlled by US).
General License 11, permitting until 26 March 2022 wind down of all ordinarily incident and necessary transactions involving Bank Otkritie; Sovcombank and VTB or any entity where these entities own or control 50 or more per cent.
General License 12 permitting US persons from 26 March 2022 to reject all transactions unless specifically authorised involving Bank Otkritie; Sovcombank and VTB or any entity where these entities own or control 50 or more per cent.
General License 13 permitting until 24 June 2022 US persons to pay taxes, fees, or import duties involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation, provided such transactions are ordinarily incident and necessary to such persons' day-to-day operations.
General License 14 permitting transaction involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation where these entities act solely as an operator of a clearing and settlement system.
In addition, OFAC has published new Frequently Asked Questions and updated several Frequently Asked Questions, highlighting that non US persons may also risk designations if they have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, certain activities, a person whose property and interests in property are blocked.
On 25 February 2022 OFAC designated Vladimir Putin, Sergey Lavrov and members of the Security Council.
US has further imposed stringent export controls on 49 Russian military end-users, which have been added to the BIS Entity List. See Final Rule. Additional export controls have been implemented through a policy of denial on sensitive technologies that support Russia's defence, aerospace and maritime sectors, including semiconductors, computers, telecommunications, information security equipment, lasers, and sensors. See Final Rule.
On 28 February 2022 OFAC issued Russia-related Directive 4 under EO 14024 prohibiting any transaction (incl assets transfer or FX) involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation.
On 3 March 2022 The State Department designated SMP Bank, 19 individuals and 7 connected entities pursuant to E.O. 14024.
On 8 March 2022 US President Biden signed an Executive Order which bans:
- importation into the US of Russian: crude oil; petroleum; petroleum fuels, oils and products of their distillation; liquefied natural gas; coal; and coal products;
- new investment in Russia's energy sector by a US person/entity; and
- any approval, financing, facilitation or guarantee of a transaction by US person/entity of a transaction by a foreign person/entity that would be prohibited under this E.O. if made by a US person/entity, or within the US.
OFAC issued Russia-Related General Licence (GL) 16, which authorises until 22 April 2022 all transactions prohibited the by the new E.O. that are ordinarily incident and necessary to the importation into the US of Russian crude oil; petroleum; petroleum fuels, oils, and products of their distillation; liquefied natural gas; coal; and coal products if done under contracts entered before 8 March 2022. OFAC also published FAQs clarifying the new E.O.
On 11 March 2022, President Biden issued a new Executive Order that imposes further trade and financial sector restrictions relating to Russia prohibiting:
- Importation into the US of fish, seafood, and preparations thereof, alcoholic beverages; and non-industrial diamonds of Russian Federation origin:
- Exportation, reexportation, sale, or supply, directly or indirectly, from the US, or by a US person, of luxury goods (such as high end-watches, luxury vehicles, high-end apparel, jewellery and other goods frequently purchased by Russian elites).
- New investment in any sector of the Russian Federation economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State, by a US person (note that no sectors yet of the Russian economy blocked from investment under this EO);
- Exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a US person, of US dollar-denominated banknotes to the Government of the Russian Federation or any person located in the Russian Federation.
OFAC has also issued Russia-related General Licence (GL) 17, GL 18 and GL 19 which authorise certain activities prohibited under the new E.O. It also issued Ukraine-related GL 23, which authorises certain NGO activities prohibited by E.O. 14065.
On 31 March 2022 US Treasury Secretary as issued a Determination which extends the application of Section l(a)(i) of Executive Order (E.O.) 14024 to the aerospace, electronics and marine sectors of the Russian economy. OFAC has also designated 17 entities and 10 people pursuant to this Determination for involvement in sanctions evasion networks and technology companies operating in military and defence sector.
On 6 April 2022 OFAC has issued Russia-related General licenses:
- General License 8C, which amends and replaces previous license 8B, extending allowed transactions "related to energy" with certain Russian banks until 5 December 2022.
- General License 9B, which amends and replaces General License 9A authorising transactions that are ordinarily incident and necessary to dealings in debt or equity involving certain sanctioned banks, including Alfa-Bank within scope until June 30, 2022.
- General License 10B, which amends and replaces General License 10A, authorising transactions ordinarily incident and necessary to the wind down of certain derivative contracts involving certain sanctioned banks adding Alfa-Bank until June 30, 2022.
- General License 22 authorising to engage in transactions necessary to wind down activities involving Sberbank until April 13, 2022. This General License does not authorize transactions prohibited by Directive 2 under Executive Order 14024.
- General License 23 authorising to engage in transactions necessary to the wind down activities involving Alfa-Bank, or any entity in which Alfa-Bank until May 6, 2022.
On 7 April 2022 OFAC under EO 14024 designated Alrosa, the world's largest diamond mining company, and redesignated United Shipbuilding Corporation as well as its subsidiaries and board members.
OFAC has also issued Russia-related General licenses:
- General License 21A authorises the wind down of Sberbank CIB USA, Inc. and Alrosa USA, Inc. until 7 June 2022.
- General License 24 authorises the wind down of transactions involving Public Joint Stock Company Alrosa until 7 May 2022.
- General License 25C authorises transactions related to telecommunications and certain Internet-based communications allowing (re)export, sale, or supply, directly or indirectly, from the United States to Russia of services, software, hardware, or technology incident to the exchange of communications over the internet.
On 2 May 2022 OFAC has reissued its Ukraine-Related Sanctions Regulations as the Ukraine-/Russia-Related Sanctions Regulations. The new regulations are a comprehensive update of those originally published in abbreviated form in May 2014 that includes additional interpretive and definitional guidance, general licenses, and other regulatory provisions that will provide further guidance to the public. See related Rule & updated FAQs.
On 8 May 2022, the US designated seven Russian shipping companies and 69 of their vessels. The shipping companies include: Russian Ministry of Defence's internal shipping company Oboronlogistika; SC South LLC, an Oboronlogistika shipping subsidiary; Northern Shipping Co, (27 vessels); Transmorflot (16 vessels); M Leasing LLC; Marine Trans Shipping LLC and Nord Project LLC Transport Co. In addition, offshore service company OOO Fertoing was designated.
OFAC has also issued following Russia-related General Licenses:
- General Licence 26A, authorising until 12 July 2022 all transactions ordinarily incident and necessary to the wind down of transactions involving Joint Stock Company SB Sberbank Kazakhstan, Sberbank Europe AG or Sberbank (Switzerland) AG.
- General Licence 32, authorising until 12 July 2022 all transactions ordinarily incident and necessary to the wind down of transactions involving Amsterdam Trade Bank NV.
On Tuesday 28 June 2022, the US Departments of Treasury and State imposed further Russia sanctions, for details please see State Department Press Release & Factsheet, Treasury Press Release & Notice, White House Factsheet.
Pursuant to E.O. 14024, OFAC has listed 70 entities, including State Corporation Rostec, the listed entities are said to be critical to Russia's defence industrial base and/or operating in the Russian aerospace, defence and related materiel sector, financial services or technology sectors.
OFAC has also issued a Determination pursuant to Section 1(a)(i) of E.O. 14068 which extends the import ban on Russian-origin products to gold. In coordination with the above, OFAC has issued Russia-related General Licences (GLs):
- 39, "Authorising the Wind Down of Transactions Involving State Corporation Rostec";
- 41, "Authorising Certain Transactions Related to Agricultural Equipment";
- 43, "Divestment or Transfer of Debt or Equity of, and Wind Down of Derivative Contracts Involving, Public Joint Stock Company Severstal or Nord Gold PLC".
Designated banks: IS Bank; Rossiya Bank; PJSC Promsvyazbank; JSC Genbank; Sberbank; and JSC Black Sea Bank Development and Reconstruction. On 4 March 2022 OFSI issued General Licence allowing until 3 April 2022 to provide financial services to Sberbank or a subsidiary for the purpose of winding down that activity; General Lisense authorising until 3 April 2022 the wind down of transactions involving Bank Otkritie, Promsvyazbank, Bank Rossiya, Sovcombank, Vnesheconombank (VEB), JSBC Novikombank and their subsidiaries.
UK Licencing section on the site provides a full list of GLs.
OFSI has also updated its Russia financial sanctions Guidance to reflect recent regulatory changes around transferable securities, money-market instruments and asset management.
Designated people: Gennadiy Timchenko; Boris Rotenberg; and Igor Rotenberg.
The 3 people, as well as the banks are also listed in the US.
On 24 February 2022 UK announced the second extensive package of sanctions against Russia.
On 25 February 2022 OFSI added Vladimir Putin and Sergey Lavrov to the list of persons subject to an asset freeze in the UK. Same day OFSI published a general licence permitting the wind-down of transactions involving VTB Bank, its UK subsidiary VTB Capital plc, and VTB Capital plc's UK subsidiaries until 27 March 2022, following designation of VTB Bank on 24 February. The licence permits any person (other than VTB) to wind down any transaction to which it is a party that involves VTB, including closing out any positions. The licence also permits UK financial institutions and VTB to carry out any activity reasonably necessary to effect such wind-down activities. However, the licence does not otherwise permit funds or economic resources to be provided to a restricted party in breach of the UK's sanctions against Russia.
Also OFSI issued Notice designating 5 additional persons and several legal entities including VTB Bank.
UK has also issued a General Licence: Russian Banks – UK subsidiaries – Basic needs, routine holding and maintenance and the payment of legal fees, authorising until 1 March 2023 VTB Capital and its UK subsidiaries to make payment for its basic needs, reasonable fees or service charges.
On 28 February 2022 OFSI added VEB, Bank Otrkritie adnd Sovocom Bank to its sanctions list.
On 1 March 2022 UK amended Russia Sanctions authorising:
- designation of vessels/ships for the purposes of the new shipping sanctions;
- deny access to UK ports by Russian ships, unless in case of emergency;
- detention of Russian ships or specified ships at UK ports or anchorages;
- control the movement of Russian ships, ships owned, controlled, chartered or operated by a designated person/entity or a person/entity "connected with Russia", and
- deny the registration of ships on the UK Ship Register where they are owned, controlled, chartered or operated by a designated person/entity or a person/entity "connected with Russia", or specified by the Secretary of State.
UK also prohibited providing financial services for the purpose of foreign exchange reserve and asset management to any of the following entities or any person owned/controlled directly/indirectly by the persons or acting on their behalf:
- the Central Bank of the Russian Federation
- the National Wealth Fund of the Russian Federation
- the Ministry of Finance of the Russian Federation
OFSI also updated Guidance on Russian sanctions to include the latest restrictions imposed by the UK.
On 8 March 2022, the UK government published the Russia (Sanctions) (EU Exit) (Amendment) (No. 6) Regulations 2022, introducing following measures with respect to aviation sector:
- the termination of existing registration, and refusal of application for registration, of aircraft owned by designated persons within the UK,
- banning Russian aircraft (owned, operated or chartered by a designated person or a person connected with Russia, as well as aircraft registered in Russia) from overflying or landing in the UK, and
- giving the Secretary of State power to direct an airport operator to detain Russian aircraft.
On 11 March 2022, the UK announced the designation of 386 members of the Russian State Duma, whom have been targeted for their support of the treaties that recognised the independence of the Luhansk and Donetsk regions.
Department of International Trade issued a General Trade Licence for Vessels in response to Russia sanctions clarifying certain permitted transactions and services (incl. insurance) in relation to vessels moving from a third country to Russia, to UK or from Russia to a third country or transiting Russia.
On 24 March 2022 OFSI sanctioned 33 persons and 26 Russian and Belorussian entities, including Alfabank, Gazprombank, SMP bank, Russian Agricultural bank and Ural Bank for Reconstruction and Development. OFSI has issued a General Licence INT/2022/1424276 to allow for the wind down of transactions, including the closing out of any positions, involving these banks or subsidiaries of these until 23 April 2022.
On 6 April 2022 The UK has added 2 banks to the Russia financial sanctions regime (Notice): Credit Bank of Moscow and Sberbank. A new General Licence was issued on the same day allowing until 6 May 2022 to wind down positions involving Credit Bank of Moscow. Sberbank General Licence has been amended, allowing Sberbank to be used in respect of energy related.
OFSI has also updated its general guidance to adding new para 4.14 on aggregation:
When making an assessment on ownership and control, OFSI would not simply aggregate different designated persons' holdings in a company, unless, for example, the shares or rights are subject to a joint arrangement between the designated parties or one party controls the rights of another. Consequently, if each of the designated person's holdings falls below the 50% threshold in respect of share ownership and there is no evidence of a joint arrangement or that the shares are held jointly, the company would not be directly or indirectly owned by a designated person.
It should be noted that ownership and control also relates to holding more than 50% of voting rights, the right to appoint or remove a majority of the board of directors and it being reasonable to expect that a designated person would be able in significant respects to ensure that the affairs of a company are conducted in accordance with their wishes. If any of these apply, the company could be controlled by a designated person.
Department of International Trade issued a new General Trade Licence Russia Sanctions – Vessels allowing provision of financial services related to vessels moving to/from Russia or transiting in Russian territorial waters.
On 30 March 2022 UK issued The Russia (Sanctions) (EU Exit) (Amendment) (No. 7) Regulations 2022:
- introducing a power to collectively designate entities/persons under a special procedure;
- extending existing finance, shipping and trade sanctions relating to Crimea to the non-government controlled areas of the Donetsk and Luhansk oblasts of Ukraine. The Department for International Trade has issued Notice NTI 2953: Russia import sanctions regarding these changes;
- banning the provision of aviation and shipping technical assistance to, or for the benefit of, designated people/entities.
On 14 April 2022 the Parliament adopted a tranche of new trade sanctions on Russia Russia (Sanctions) (EU Exit) (Amendment) (No. 8) Regulations 2022.
The new measures include:
- prohibition to export, supply or transfer to Russia or for use in Russia of oil refining goods and technology, quantum computing and advanced materials goods and technology. Prohibition is extended to provision of related technical assistance, financial services and brokering services.
- prohibition to export, supply or transfer to or for use in Russia of certain luxury goods
- prohibition on the import, acquisition, supply and delivery of certain iron and steel products originating in or consigned from Russia.
UK has also updated the UK Sanctions List adding 206 individuals that are now subject to an asset freeze.
On 9 May 2022, the UK announced import tariffs and export bans as their third wave of trade sanctions. The new import tariffs would include platinum and palladium, while the planned export bans was targeting key materials such as chemicals, plastics, rubber, and machinery. The implementing legislation is in process and not yet published.
The UK Department of International Trade has published Guidance on the trade sanctions and restrictions that apply to UK companies trading with Russia. The Guidance covers: trade sanctions, export/import bans and licensing, tariffs on Russian and Belarusian goods, financial sanctions, 'getting paid' and transport sanctions.
On 15 July 2022 the UK has adopted the Russia (Sanctions) (EU Exit) (Amendment) (No. 11) Regulations 2022.
These amendment is relating to trade, both changing existing Schedules and inserting new ones.
New restrictions are imposed on trade of:
- maritime goods and maritime technology in certain circumstances;
- military goods and technology with non-government controlled Ukrainian territory;
- defence and security goods and technology
- interception and monitoring services;
- jet fuel and fuel additives; and
- goods which generate significant revenues for Russia in Schedule 3D (including financial services and insurance).
The amendment also:
- changes the definitions of “critical-industry goods”, “critical-industry technology”, “restricted goods” and “restricted technology”
- inserts additional prohibitions relating to trade in ancillary services relating to iron and steel goods;
adds further things to the list of oil and refining goods and technology in Schedule 2D and to the list of energy-related goods in Schedule 3 in respect of which trade is prohibited.
On 19 July 2022 UK introduced changes to the Russia (Sanctions) (EU Exit) (Amendment) (No. 12) Regulations 2022, imposing new investment restrictions prohibiting UK persons from certain investment activities:
- direct acquisition of any ownership interest in Russian land and entities connected with Russia.
- indirect acquisition of any ownership interest in Russian land and entities connected with Russia for the purpose of making funds or economic resources available (directly or indirectly) to, or for the benefit of, persons connected with Russia.
- direct or indirect acquisition of any ownership interest in entities with a place of business in Russia (which are not persons connected with Russia) for the purpose of making funds or economic resources available (directly or indirectly) to, or for the benefit of, persons connected with Russia.
- establishing joint ventures with a person connected with Russia.
- opening representative offices and establishing branches and subsidiaries in Russia.
OFSI have published General Licence INT/2022/2002560, which authorises until 26 July 2022 to undertake investment activities banned by the new Regulations.
On 21 July 2022 UK adopted further changes to Russia (Sanctions) (EU Exit) (Amendment) (No. 14) Regulations 2022. The new restrictions include a ban on the import of Russian oil and coal into the UK and the export of key industrial goods to Russia. It also expands existing restrictions in relation to the provision of energy-related goods and services to Russia. These new prohibitions (which are summarised below) extend to the provision of technical assistance, financial services (which includes insurance or reinsurance) or brokering services.
As a general reminder, UK sanctions apply to all persons within the UK and to all UK citizens and UK incorporated entities (including their branches) wherever they are in the world.
Oil and oil products
It is prohibited on or after the 31 December 2022 to:
- import oil and oil products (as defined in Schedule 3F of the Regulations by reference to their commodity codes) which are consigned from or originate in Russia;
- directly or indirectly acquire oil and oil products which originate in or are located in Russia with the intention of those goods entering the UK; or
- directly or indirectly supply or deliver oil and oil products from a place in Russia to the UK.
There is an exception to these prohibitions if the oil or oil products originate in a country other than Russia, are not owned by a person connected with Russia and are only being loaded in, departing from or transiting through Russia.
Coal and coal products
It is prohibited on or after 10 August 2022 to:
- import coal and coal products (as defined in Schedule 3H of the Regulations by reference to their commodity codes) that are consigned from, or originate in Russia;
- directly or indirectly acquire coal and coal products that originate in, or are located in Russia with the intention of those goods entering the UK; or
- directly or indirectly supply or deliver coal and coal products from a place in Russia to the UK.
The Regulations expand existing restrictions in relation to energy-related goods (which are defined in Part 2 of Schedule 3 of the Regulations). It is prohibited to:
- export energy-related goods to or for use in Russia;
- directly or indirectly supply or deliver energy-related goods from a third country (defined as a country that is not the UK, the Isle of Man or Russia) to a place in Russia; or
- directly or indirectly making energy-related goods available to a person connected with Russia.
There is an exception to the prohibition on providing financial services relating to energy-related goods i.e. it is not prohibited to provide insurance or reinsurance to a person not connected with Russia, with regard to that person's activities outside the energy sector in Russia.
The Regulations also broaden the prohibition on providing energy-related services ("specified services") which comprise drilling, well testing, logging and completion services or the supply of specialised floating vessels, which was previously limited to oil exploration or production projects in Russia which were in waters deeper than 150 metres, or in the offshore area north of the Arctic Circle or that had the potential to produce oil from shale formations by way of hydraulic fracturing. This prohibition has been extended so that it is prohibited to provide energy-related services to all oil and gas exploration and production projects in Russia.
G7 dependency and further goods list
It is prohibited to export, supply or deliver to Russia or make available to a person connected with Russia or for use in Russia, a new category of restricted goods known as "G7 dependency and further goods list" (which are listed in Schedule 3E of the Regulations). It includes a broad range of chemicals, machinery and electrical appliances used in the commercial and industrial sectors.
It is prohibited to import gold (as defined in Schedule 3G of the Regulations) from Russia or acquire, supply or deliver gold which has originated in Russia with the intention of it entering the UK.
As referred to above, these restrictions include prohibitions against the provision of insurance and reinsurance in relation to the listed goods and services. Members should be aware that even if they are not directly impacted by these Regulations, the club may not be able to provide cover in respect of these trades or activities Members are therefore strongly advised to contact the club if they have any queries regarding these Regulations.
- Council Decision (CFSP) 2022/265 & Council Implementing Regulation (EU) 2022/260, which designate 22 people, including members of government, senior military personnel, people working for “pro-Russian” media and businesspeople, and Bank Rossiya, PROMSVYAZBANK, VEB.RF.
- Council Regulation (EU) 2022/259, which implements a derogation mechanism where making available funds is necessary for the termination of contracts/operations by 24 August 2022.
- Council Decision (CFSP) 2022/267 & Council Implementing Regulation (EU) 2022/261, which designate 336 members of the Russian State Duma.
- Council Decision (CFSP) 2022/264 & Council Regulation (EU) 2022/262, which imposes a sectoral prohibition on financing Russia and its government, the Central Bank of Russia, or any entity acting on behalf of or at the direction of the Central Bank of Russia, subject to certain conditions.
- an import ban on goods from DNR and LNR, as well as a ban on associated financing and financial assistance;
- restrictions on investment in the regions, including the purchase of land, the purchase of shares and securities of entities in the regions, entering into financing and joint venture agreements with entities in the regions, and the provision of investment services related to these activities;
- a prohibition on the supply of tourism services;
- an export ban for a wide array of goods and technologies (aimed at the transport, telecommunications, energy, and oil, gas and minerals sectors, but covering a wide range of goods that may impact many other sectors). The ban also prohibits the provision of technical services, financing and financial assistance related to these items for use in the regions; and
- a ban on providing technical assistance, brokering, construction or engineering services directly relating to infrastructure in the non-government controlled areas within the transport, telecommunications, energy, and oil, gas and minerals sectors.
On 25 February 2022, the EU decided to freeze the assets of Russia's President Vladimir Putin and Minister of Foreign Affairs Sergey Lavrov. In addition, the EU imposed restrictive measures on the members of the National Security Council of the Russian Federation and on the remaining members of the Russian State Duma who supported Russia's recognition of the self-proclaimed Donetsk and Luhansk "republics".
The Council also agreed on a further package of individual and economic restrictive measures to respond to the military aggression against Ukraine. These sanctions cover the following sectors:
- visa, travel bank and asset freeze to certain persons
EU has introduced further wide-reaching sanctions against Russia including:
Dual-use items and technology
Imposing a blanket ban on the supply of dual-use items to any Russian person or for use in Russia. The sanctions also include standard prohibitions on providing technical assistance, brokering and other services related to dual-use items, and on providing related financing or financial assistance.The new measures also prohibit the export of a wide variety of items beyond the Dual-Use List. A new Annex VII to Regulation 833/2014 has been added, restricting wide variety of electronics, computers, telecoms, information security, sensors and lasers, navigation and avionics, marine, and aerospace items. This list also includes so-called mass market encryption items that are otherwise decontrolled under standard EU dual-use export controls. These items (and associated services) are prohibited for supply to Russian persons or for use in Russia. There are exceptions to the list in certain cases, including for exports for personal use.
Prohibiting supplies of additional items "suited for use in oil refining" listed in Annex X to Regulation 833/2014. There are also restrictions on associated services, financing and financial assistance. There is a wind down provision for contracts concluded before 26 February 2022 which expires on 27 May 2022.
Restricting dealings involving "transferable securities and money-market instruments" of Alfa Bank, Bank Otkritie, Bank Rossiya and Promsvyazbank and to 8 Russian state-owned companies (Almaz-Antey, Kamaz, Novorossiysk Commercial Sea Port, Rostec, Russian Railways, JSC PO Sevmash, Sovcomflot, and United Shipbuilding Corporation). These restrictions will take effect after 12 April 2022. Further there are restrictions on providing "new loans or credit" to these same entities applied to loans and credit granted after 26 February 2022.
In addition, from 12 April 2022, EU trading venues registered or recognised in the EU will be prohibited from listing or providing services for the transferable securities of any Russian entity with over 50% public ownership.
The provision of public financing and financial assistance for trade with, and investment in, Russia has been prohibited. Exemptions are available for binding commitments established prior to 26 February 2022, financing for EU-established SMEs of up to EUR 10 mn per project, and financing for trade in food or for agricultural, medical and humanitarian purposes.
Prohibiting the export of all items listed in Annex XI to Russian persons or for use in Russia. It is now prohibited to export aircraft, spare parts and equipment to Russian airlines and to the Russian space sector and provide any insurance or reinsurance for such export. EU is also shutting its airspace for Russian-owned, Russian registered or Russian-controlled aircraft (incl private jets) that no longer are permitted to land in, take off or overfly the territory of the EU.
- as of 12 March 2022, the provision of SWIFT services to: Bank Otkritie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank, VNESHECONOMBANK (VEB) and VTB BANK; or to any entity established in Russia and owned (directly or indirectly) by more than 50% by one of the above entities.
- Sale, supply, transfer or export of euro banknotes to Russia or to any person/entity in Russia (including the Russian government), or for use in Russia.
- 146 members of the Russian Federation Council who ratified the Treaties of Friendship, Cooperation and Mutual Assistance between the Russian Federation and the Donetsk People's Republic and the Luhansk People's Republic; and
- 14 people, said to be "oligarchs and prominent business people" and their family members: Alexander Dmitrievich Pumpyansky; Alexander Semenovich Vinokurov; Andrey Igorevich Melnichenko; Dmitry Alexandrovich Pumpyansky; Dmitry Arkadievich Mazepin; Galina Evgenyevna Pumpyanskaya; Mikhail Eduardovich Oseevsky; Mikhail Igorevich Poluboyarinov; Sergey Alexandrovich Kulikov; Vadim Nikolaevich Moshkovich; Vladimir Sergeevich Kiriyenko; Andrey Andreevich Guryev; Dmitry Vladimirovich Konov; and Nikita Mazepin.
On 15 March 2022 the EU adopted a fourth package of sanctions in response to Russia's military aggression against Ukraine.
The EU has designated 15 individuals including Russian oligarchs and 9 entities operating in the Russian aviation, military, shipbuilding and machine building sectors, to the EU sanctions list (Council Implementing Regulation (EU) 2022/427). The designated entities include: Rosneft Aero; JSC Rosoboronexport; JSC NPO High Precision Systems; JSC Kurganmashzavod; JSC Russian Helicopters; PJSC United Aircraft Corporation; JSC United Shipbuilding Corporation; JSC Research and Production Corporation Uralvagonzavod, and JSC Zelenodolsk Shipyard (A. M. Gorky Zelenodolsk Plant).
Members should be aware that where an individual is listed, an ownership and control analysis should be undertaken to establish any impact on a linked company with which they are transacting. The Commission Opinion of 8 June 2021 is helpful in identifying the factors to take into account and the approach to be taken.
The other measures (Council Regulation (EU) 2022/428 amending EU Regulation no. 833/2014) include:
- Prohibition on the sale, supply, transfer or export of equipment or technology (whether or not originating in the EU) which is listed in Annex II to a person or entity in Russia or for use in Russia. Annex II includes certain goods and technology suited to certain categories of exploration and production projects.
It is also prohibited to provide technical assistance or financial assistance (which is defined to include insurance or reinsurance) in respect of these activities. However, this ban does not apply to the transport of fossil fuels, in particular coal, oil and natural gas from or through Russia into the EU. There is an exemption until 17 September 2022 for the performance of contracts concluded before 16 March 2022 provided that the competent authority of the EU member state has been given five working days prior notice.
- Ban on new investments in the Russian energy sector, which includes creating any new joint venture with an entity incorporated or constituted under Russian law or any other third country.
- Ban on the import of iron and steel products listed in Annex XVII into the EU and transport of such products to the EU or any other country if they originate in Russia or have been exported from Russia. This includes a ban on providing insurance or reinsurance. However, there is an exemption until 17 June 2022 for the performance of contracts concluded before 16 March 2022.
- Prohibition on transactions with certain state-owned Russian companies listed in Annex XIX. There is an exemption until 15 May 2022 for performance of contracts concluded before 16 March 2022. This ban does not apply to:
- transactions which are strictly necessary for the purchase, import or transport of fossil fuels, in particular, coal, oil and natural gas, as well as titanium, aluminium, copper, nickel, palladium and iron ore from or through Russia into the EU; or to
- transactions related to energy projects outside Russia in which the companies listed in Annex XIX is a minority shareholder.
- Prohibition from 15 April 2022 on the provision of credit rating services or providing access to any subscription services in relation to credit rating activities to Russian clients.
- Prohibition on the sale, supply, transfer or export directly or indirectly of luxury goods as listed in Annex XVIII from the EU to Russia.
The EU has also published updated Guidance (FAQs) on its Russia sanctions regime, covering a.o. aggregation: if the aggregated ownership of a company by listed persons meets the 50% threshold, the company should be considered jointly owned and controlled by listed persons. This applies, for example, if one listed person owns 30% of the company and another listed person owns 25% of the company. Dealings with the company could be considered as making funds indirectly available to those listed persons.
Members should note that some of the above provisions include prohibitions against the provision of insurance and reinsurance for the listed activities. As a consequence, even if a Member is not directly impacted by the Regulation (because, for example, they are domiciled outside the EU), the Club may not be able to provide cover for engaging in these activities. Members are strongly encouraged to contact the Club accordingly before engaging in any of these trades.
Members are also reminded that EU sanctions apply in the following circumstances: within the territory of the Union, including its airspace; on board any aircraft or any vessel under the jurisdiction of a Member State; to any person inside or outside the territory of the Union who is a national of a Member State; to any legal person, entity or body, inside or outside the territory of the Union, which is incorporated or constituted under the law of a Member State; to any legal person, entity or body in respect of any business done in whole or in part within the Union.
On 8 April 2022 the EU adopted a fifth package of sanctions on Russia, comprising of several Regulations and Decisions:
- prohibits to purchase, import or transfer coal and other solid fossil fuels into the EU if they originate in Russia or are exported from Russia, including in transit. Exception is available until 10 August 2022 (for contracts concluded before 9 April 2022).
Further, derogations may be granted for transports that are deemed necessary for certain purposes (such as the purchase, import or transport of certain goods into the EU). It also introduces further export restrictions to Russia, in particular on jet fuel and other goods.
- prohibits providing access after 16 April 2022 to ports in the EU to vessels registered under the flag of Russia (and to vessels that have changed their Russian flag or registration to the flag or register of other states after 24 February 2022). There are certain exceptions , e.g. humanitarian purposes. Derogations may be granted for port access that is deemed necessary for specified purposes (such as the purchase, import or transport of certain goods into the EU).
- prohibits sale, supply, transfer or export as well as related technical and financial assistance to any person in Russia or for the use in Russia of jet fuel and certain fuel additives (as listed in Annex XX); and goods and technology which could contribute in particular to the enhancement of Russian industrial capacities (as listed in Annex XXIII).
- prohibits purchase, import, or transfer into the EU, as well as financial assistance, if originating in Russia or exported from Russia, of goods which generate significant revenues for Russia, including (among other things) wood, cement, fertilisers and seafood (as listed in Annex XXI).
- prohibits the award and continued execution of public contracts and concessions with Russian nationals and entities or bodies established in Russia.
- prohibits being a beneficiary, acting as a trustee or in similar capacities for Russian persons and entities, as well as a prohibition on providing certain services to trusts.
- extends the prohibitions on the export of euro-denominated banknotes and on the sale of euro-denominated transferrable securities to all official currencies of the Member States.
- extends the exemption from the prohibition to engage in transactions with certain State-owned entities as regards transactions for the purchase, import or transport of fossil fuels and certain minerals into Switzerland, the European Economic Area and the Western Balkans.
- extends the exemptions from the prohibition on transaction with certain Russian State-owned enterprises and their subsidiaries to countries in the European Economic Area and Switzerland as well as to the Western Balkans.
Council Regulation (EU) 2022/581 and Council Decision (CFSP) 2022/582, listed an additional 216 individuals and 18 entities, including Bank Otkritie FC Bank; Novikombank; Sovcombank; VTB Bank and JSC GTLK State Transport Leasing Company.
On 3 June 2022 the EU adopted its 6th package of Russia sanctions: Council Decision (CFSP) 2022/884 and Council Regulation (EU) 2022/879. The European Commission has also published a consolidated version of its Russia sanctions FAQs. International Group has issued a circular summarising effect of this package on insurance and transportation.
On 21 July 2022 the EU adopted the 7th package of sanctions against Russia: Council Decision (CFSP) 2022/1271 & Council Regulation (EU) 2022/1269; Council Decision (CFSP) 2022/1272, Council Regulation (EU) 2022/1273 & Council Implementing Regulation (EU) 2022/1270.
The new regulations:
- Prohibit the purchase, import or transfer (directly or indirectly) of Russia-origin gold (including jewellery) if it has been exported from Russia into the EU or to any third country.
- Extend the list of controlled items which might contribute to Russia’s military and technological enhancement or the development of its defence and security sector.
- Extend the existing port access ban to locks;
- Allow the sharing of technical assistance with Russia for aviation goods and technology insofar as it is needed to safeguard the technical industrial standard setting work of the International Civil Aviation Organisation.
- Provide for an exemption from the ban on entering into any transactions with Russian public entities necessary to ensure access to judicial, administrative or arbitral proceedings
Extend the exemption from the prohibition to engage in transactions with certain state-owned entities as regards transactions for agricultural products and the supply of oil / petroleum products to third countries.
On 26 July, the EU published FAQs on the reporting obligations under the oil import restrictions in relation to Article 3m (oil transport ban into EU) of Regulation 833/2014.
EU has adopted an eighth package of sanctions on 6 October 2022 in response to Russia's continued military aggression against Ukraine. A number of Regulations and Decisions were published (full details of which can be found here) but of particular significance for Clubs and their Members is Council Regulation (EU) 2022/1904 ("the Regulation") which further amends Council Regulation 2014/833. For further details please see Skuld's article.
Germany has also confirmed that it will stop the certification process of the Nord Stream 2 pipeline.
The Government has implemented extensive sanctions against Russia mainly corresponding to measures adopted by the EU up to and including 9 March 2022. The Government has also issued FAQs related to the new sanctions (in Norwegian only). Norway has implemented sanctions (in Norwegian only) previously adopted by the EU on 15 March (and described in EU section above), including prohibition on engaging in transactions with 12 state-owned Russian companies (with wind down period until 24 May 2022), restrictions related to import of iron and steel products (with wind-down period until 26 June 2022), prohibition to import a number of luxury products, investment into the Russian energy sector and supply of equipment and technology to the sector.
On 8 May 2022, Norway implemented the prohibition for Russian flagged vessels to enter Norwegian ports. Vessels re-flagged after 24 February are included by the prohibition. There is an exemption for fishing vessels.
On 17 June 2022 Norway has implemented amendment to the Norwegian sanctions regulation relating to Ukraine largely equivalent to the EU's sixth sanctions package. Norwegian authorities have also issued a press release (in Norwegian only).
- Restrictions on members of the Russian State Duma who voted for the decision to recognise the independence of the DNR and LNR;
- a “dealings ban” on the areas;
- new prohibitions on direct and indirect dealings in Russian sovereign debt; and
- sanctions on 2 significant Russian financial institutions.
Canada has announced a second package of sanctions that includes the designation of 31 people who are "key members of President Putin's inner circle, close contacts and family members of some individuals already sanctioned by Canada, and 27 financial institutions (List), including Sberbank, VTB, Alfa-Bank, Eximbank of Russia. Bank Otkritie, Transkapitalbank, Cetelem Bank, Ural Bank for Reconstruction and Development, Genbank, Black Sea Bank for Development and Reconstruction, Sovcombank, Sovcomflot, Gazprombank, Russian Agricultural Bank, Gazprom, Gazpromneft, Transneft, Central Bank of the Russian Federation, VEB and Promsvyazbank.
As a consequence persons in Canada and Canadians outside Canada are prohibited from dealing in any property, wherever situated, held by or on behalf of a designated person and entering into or facilitating, directly or indirectly, any transaction involving a designated person, including e.g. providing goods and services to vessels calling Canadian ports if they belong to the sanctioned entities.
Further new sanctions include the restriction of exports to Russia by halting new export permit applications and cancelling valid export permits, with a limited number of exceptions for critical medical supply chains.
Pursuant to the Special Economic Measures (Russia) Regulations, Canada has listed further 45 persons, including members of Government, Rosneft and Gazprom executives and 32 entities operating in Russia's defence sector.
Canada also imposed a full ban and asset freeze on the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation and the Ministry of Finance of the Russian Federation. Trade restrictions.
Canada has further prohibited any person/entity in Canada, or any Canadian outside of Canada, from importing, purchasing or acquiring petroleum oils and oils, as well as petroleum gases and other gaseous hydrocarbons, wherever situated, from Russia or from any person/entity in Russia.
Canada has banned Russian-owned, chartered or operated aircraft from its airspace and all Russian-owned or registered ships and fishing vessels from Canadian ports and internal waters.
Canada has introduced a prohibition to dock or pass through Canada any ship registered, used, leased, chartered (in whole or in part) in Russia, by a person in Russia or for the benefit of Russian persons.
On 14 July 2022, Canada further amended the Special Economic Measures (Russia) Regulations to:
prohibit the provision of services to the Russian oil, gas, chemical and manufacturing industries:
- Services incidental to manufacturing, except to the manufacture of metal products, machinery and equipment
- Services incidental to the manufacture of metal products, machinery and equipment
And adding new industries to Schedule 8, which prohibits any Canadian person to provide any services to any of the below-mentioned industries:
- Manufacture of basic metals
- Manufacture of fabricated metal products
- Manufacture of computer, electronic and optical products
- Manufacture of electrical equipment
- Manufacture of machinery and equipment not elsewhere classified
- Manufacture of motor vehicles, trailers and semi-trailers
- Manufacture of other transport equipment
- Land transport and transport via pipelines
Japan announced a 3-part package of measures which includes:
- Travel bans and asset freezes on DNR and LNR officials;
- an import/export ban of goods from the areas; and
- a ban on the issuance and trading of new Russian sovereign bonds in Japan.
Japanese Prime Minister Fumio Kishida has announced the second round of Russia sanctions which includes:
- Additional sanctions (travel bans and assets freezes) on people and entities (Sanctions List);
- an asset freeze on Russian financial institutions VEB, Promsvyazbank and Bank Rossiya (Report), VTB; Sovcombank, Novikombank and Otrkitie; and
- export controls in respect to Russian military organisations and on goods such as semiconductors.
The Japanese government will freeze the assets of the designated individuals/entities and it will require a license for any payments to the designated persons/ entities and capital transactions with the designated persons/entities. The sanctions against the four designated banks (VTB Bank, Sovcombank, Novikombank and Otkritie) will come into effect on 2 April 2022.
On 12 April 2022 the Japanese government introduced further sanctions against Russia, designating an additional 398 individuals and 28 entities related to the Russian Federation and subjected them to the following sanctions:
- Restrictions on payments
- Restrictions on capital transactions, including deposits, trusts, and loan contracts, etc.
- Asset freezes against the two newly designated Russian banks (Sberbank and Alfa-bank) will go into effect on 12 May 2022.
The list of newly designated persons/ entities is available here.
Japan announced a ban from 17 June 2022 on the export to Russia of certain goods that support industrial infrastructure, including wood and wood products, machinery and electrical equipment components, trains, bulldozers and trucks. Please see text of the Amendment, Notice, News Release & FAQs. Japan has also imposed asset freezes on Credit Bank of Moscow, Russian Agricultural Bank and Belinvestbank (Belarusian Bank for Development and Reconstruction). Notice & Notice.
Australia announced the “first phase” of Russia sanctions, which will include:
- the imposition of travel bans and targeted financial sanctions on 8 members of Russia’s Security Council;
- restrictions on transactions with Rossiya Bank, Promsvyazbank, IS Bank, Genbank and the Black Sea Bank for Development and Reconstruction;
- restrictions on investment in the Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB); and
- the extension of existing sanctions on Crimea and Sevastopol under the Autonomous Sanctions Regulations 2011 to Donetsk and Luhansk, thereby prohibiting trade in the transport, energy, telecommunications and oil, gas and minerals sectors.
Australia has also said that it will broaden the criteria for including people and entities on its sanctions list to include those of “strategic and economic significance to Russia.
Australia has adopted further the Autonomous Sanctions Amendment (Russia) Regulations 2022 which amends the criteria for adding a person/entity to its Russia sanctions list to include a person/entity determined to:
- Be engaging, or have engaged, in activity or performing a function that is of economic or strategic significance to Russia;
- a current or former Minister or senior official of the Russian Government; or
- an immediate family member of a person who fits the above criteria.
- Adopted the Autonomous Sanctions Amendment (Ukraine Regions) Regulations 2022, which extends Crimea and Sevastopol sanctions to the Donetsk and Luhansk regions of Ukraine, including export and import controls and restriction on commercial activity (Notice).
- Added over 380 people and entities to its sanctions list, including over 330 members of the Russian State Duma who voted to authorise the use of Russian troop in Ukraine and "oligarchs whose economic weight is of strategic significance to Moscow"
- Announced that it intends to specify Cetelem Bank, Russian Agency for Export Credit and Investment (EXIAR), Otkritie Bank and the Russian Direct Investment Fund (RDIF), which will introduce investment restrictions on these entities (Notice).
On 10 March 2022 Australia introduced a ban on import of a.o. Russian coal, petroleum products. The ban enters into force 45 days after the date the regulation was published.
On 20 March 2022 the Government introduced an immediate ban on Australian exports of alumina and aluminium ores (including bauxite) to Russia.
On 13 April 2022, Australia adopted Autonomous Sanctions (Designated Persons and Entities and Declared Persons - Russia and Ukraine) Amendment (No. 12) Instrument 2022 adding 14 major Russian companies to its Russia sanctions list. The sanctioned companies include Novorossiysk Commercial Sea Port, United Shipbuilding Corporation, Sovcomflot, Russian Railways, Gazprom, Gazprom Neft, Transneft, Insurance Company SOGAZ.
On 18 March 2022 the Government released first tranche of measures against Russia sanctioning a large number of political and military individuals and entities, which are now subject to asset freezes and prohibitions for their vessels and aircrafts to enter the country.
Swiss Federal Council has implemented a complete revision of the Ordinance on Measures connected with the Situation in Ukraine, adopting further packages of European Union sanctions against Russia prohibiting:
- export of dual-use goods to any Russian person or for use in Russia, regardless of the end-user and the intended end-use; incl. provision of financial services;
- export to Russia or Ukraine specific military goods that could contribute to the military and technological strengthening of Russia or to the development of the defense and security sector
- supplies of items "suited for use in oil refining", including associated services, financing and financial assistance
- provision of drilling, well testing, logging and completion, supplying floating units in Russia, including in its exclusive economic zone and on its continental shelf, in connection with oil exploration and extraction in waters deeper than 150 m, in the area north of the Arctic Circle, or in connection with projects related to the production of oil from resources located in shale formations by hydraulic fracturing
- export aircraft, spare parts and equipment to Russian airlines and to the Russian space sector
- provide SWIFT services to Promsvyazbank, Sovcombank, VTB Bank, Vnesheconombank, Bank Otkritie, Bank Rossiya, Novikombank
- assisting in the issuance, trading, or provision of investment services of securities and money market instruments issued after 12 April 2022 by Alfa Bank, Bank Otkritie, Bank Rossiya, Almaz-Antey, Kamaz, Novorossiysk Commercial Sea Port, Rostec, Russian Railways, JSC PO Sevmash, Sovcomflot, and United Shipbuilding Corporation
- Banks from accepting deposits from Russian nationals or natural persons residing in Russia, or from banks, companies or entities established in Russia if the total value exceeds CHF 100,000. Banks must provide SECO by June 3, 2022, with a list of deposits exceeding CHF 100,000 held by these persons and companies
- transactions with the Russian Central Bank on selling or exporting banknotes denominated in Swiss Francs or Euros to or within the Russian Federation or to any person or entity in Russia including the Government and the Central Bank of the Russian Federation
- freeze the assets of Igor Sechin (CEO of Rosneft), Nikolay Tokarev (CEO of Transneft), Gennady Timchenko (founder of Volga Group), Alisher Usmanov, Mikhail Fridman and Petr Aven, Vitaly Savelyev.
On 25 March, Switzerland implemented a revision of the sanctions against Russia, further aligning Swiss sanctions with those imposed by the EU. The newly adopted measures include:
- export restrictions on goods for the energy sector;
- trade restrictions concerning iron and steel;
- export restrictions on luxury goods;
- export restrictions on maritime goods and technologies;
- restrictions on transactions with certain state-owned enterprises as listed in a new Annex 15 of the Ordinance;
- new investment restrictions in the Russian energy sector.
On 13 April 2022 the Swiss Federal Council decided to fully adopt the new sanctions introduced by the EU in its fifth sanctions package against Russia on 8 April (see information about the 5th package in EU section above).
On 10 June 2022, the Swiss Federal Council decided to also adopt the new sanctions introduced by the EU in its sixth sanctions package against Russia on 3 June 2022. The Ordinance on Measures connected with the Situation in Ukraine will be updated accordingly.
On 3 August 2022, the Swiss Federal Council agreed on the partial implementation of the EU's seventh sanctions package.
These latest amendments include:
- A new prohibition to purchase as well as to import, transfer or transport, directly or indirectly, into Switzerland gold and gold products, if they originate in Russia and have been exported from Russia after 4 August 2022. Prohibited are also services of any kind, including financial services, brokering and technical assistance in connection with the purchase, and the import, transit and transport to and through Switzerland, as well as with the provision, manufacture, repair or use of such gold or gold products.
- Carve-outs for agricultural and food products and oil supplies:
(i) exemptions from the asset freeze / ban on making available assets or economic resources to designated persons, where necessary for:
- the sale or transfer of ownership rights in companies domiciled in Switzerland or an EEA member state;
- the purchase, import or transport of agricultural and food products, including wheat and fertilizers (with regards to certain designated persons); and
- the orderly wind-down of operations, including corresponding banking relations, and the sale or transfer of ownership rights in companies domiciled in Switzerland or an EEA member state with regards to Sberbank.
(ii) exceptions from the ban on dealing with state-owned enterprises, for transactions which are necessary for:
- the direct or indirect purchase, import or transport of oil, including refined oil products, from or through the Russian Federation,
- the purchase, import or transport of pharmaceutical and medicinal products, agricultural and food products, including wheat and fertilizers, to the extent not prohibited by the Ordinance.
On 28 February 2022, the Singapore Foreign Minister announced that Singapore intends to impose export controls on items that can be used directly as weapons in Ukraine to inflict harm, and it will also block certain Russian banks and financial transactions connected to Russia.
On 5 March 2022, the Singapore formally released Singapore's sanctions. A ban will be implemented on the export, transit and transhipment of all items under the Strategic Goods (Control) Order 2021 which (i) are listed as 'Military Goods', and (ii) fall under the 'Electronics', 'Computers', and 'Telecoms and Information Security' categories of the List of Dual-Use Goods, which may have both military and commercial uses.
Financial institutions in Singapore will be prohibited from:
a) Entering into transactions or establishing business relationships with VTB Bank Public Joint Stock Company, Vnesheconombank, Promsvyazbank, and Bank Rossiya. For existing relationships with these banks, all financial institutions must freeze any assets and funds.
b) Providing financing or financial services in relation to the export of goods subject to Singapore's export controls, from Singapore or any other jurisdiction.
c) Providing financial services to designated Russian non-bank entities involved in the export of controlled goods. For existing relationships with these entities, all financial institutions must freeze any assets and funds.
d) Facilitating fundraising activities by the Russian government and central bank, or any entity owned or controlled by them or acting or their behalf.
e) Entering into transactions or providing financial services in the (i) transport, (ii) telecommunications, (iii) energy and (iv) prospecting, exploration and production of oil, gas and mineral resources sectors in Donetsk and Luhansk.
f) Entering into or facilitating any transactions involving cryptocurrencies which circumvent the above prohibitions.
Russia has announced and implemented several countermeasures against a list of "unfriendly states", i.e. states that recently have imposed sanctions against Russia in response to Russia's military aggression against Ukraine. The list includes a.o. EU member states, Great Britain, Candada, Norway, Republic of Korea, Singapore, Ukraine, Switzerland and USA.
On 28 February 2022, President Putin issued Decree No. 79 which imposes an obligation on Russian residents:
- to sell 80% of foreign currency export proceeds which were credited after 1 January 2022 to their Russian bank accounts under foreign trade contracts – not later than 3 business days following 28 February 2022 (i.e., not later than 3 March 2022);
- to sell 80% of foreign currency export proceeds which are/will be credited on 28 February 2022 and onwards to their Russian bank accounts under foreign trade contracts – not later than 3 business days following receipt of such foreign currency.
Second, it establishes a prohibition for Russian residents:
- to provide foreign currency loans to non-residents – starting from 1 March 2022;
- to transfer foreign currency to their foreign accounts with foreign banks and other foreign financial institutions and to their foreign ewallets – starting from 1 March 2022.
On 1 March 2022, President Putin issued Decree No. 81, which, inter alia, provides that, effective from 2 March 2022, certain transactions (e.g. transfer of title to real estate or securities) involving Russian residents and legal entities which are either established in "unfriendly states", doing significant business there or deriving significant profit therefrom, only may be performed if approved by a special Government Commission.
On 5 March 2022, President Putin issued Decree No. 95, which establishes a temporary procedure for payments by Russian debtors towards foreign creditors. Effective from 5 March 2022, Russian debtors may fulfil their payment obligations for credits, loans and financial instruments towards foreign creditors related to "unfriendly states" by paying the amount due to a special deposit account opened in the name of a foreign creditor or a foreign nominee holder of securities, in roubles.
Rules and Cover
Members must do their own due diligence and the position remains that while Skuld can give guidance ultimate responsibility for compliance rests with members.
Our Rules contain exclusion of liability for liabilities, costs or expenses where payment by the Association or the provision of cover in respect thereof may expose the Association to the risk of being subject to a sanction, prohibition or any adverse action (Rule 30.4.6).
We also continue to exclude the liability of the Association towards the member when there is a shortfall due to an inability to recover reinsurance or pool contributions from other insurers or P&I Clubs which are themselves unable to pay due to sanctions legislation (Rule 32.6). In addition we have a provision giving the Association the right to terminate cover where, in the opinion of the Association, the member has exposed or may expose the Association to the risk of being or becoming subject to a sanction, prohibition, restriction or other adverse action by a state or international organisation or competent authority (Rule 3.3.2a). The same provisions are also included in the Terms & Conditions governing Skuld's fixed premium covers.
Sanctions can cause possible shortfall due to irrecoverable reinsurance contributions from reinsurers. If there is no liability under an LOU or blue card, as per Rule 32.6 and equivalent in fixed T&Cs, the member will be unable to recover from the Association and the member bears the shortfall.
Other sanctions against Russia
Starting from 1 January 2021 the US implemented the Protecting Europe's Energy Security Clarification Act of 2020 (the PEESA Clarification Act) which expands the potential scope of PEESA sanctions. Among other things, the PEESA Clarification Act now authorizes sanctions against vessels that engage in pipe-laying or "pipe-laying activities" for the construction of Nordstream 2 or Turkstream 2 gas pipeline projects. Pipe-laying activities are defined broader as "activities that facilitate pipe-laying, including site preparation, trenching, surveying, placing rocks, backfilling, stringing, bending, welding, coating, and lowering of pipe."
Under the PEESA Clarification Act, sanctions may be imposed on the persons (incl. foreign persons) engaged in the following activities:
- Pipe-laying and related activities, including site preparation, trenching, surveying, placing rocks, backfilling, stringing, bending, welding, coating, or lowering of pipe for either project
- Selling, leasing, or otherwise "providing" pipe-laying vessels, including through deceptive or structured transactions for either project
- Selling, leasing, or otherwise "providing" goods, services, information, technology, or support for either project
- Underwriting, insuring, or reinsuring either project
- Testing, inspection, and certification for the Nord Stream 2 pipeline
The Act also contains several exceptions with respect to provisions intended for the safety of the crew, vessel or the environment; activities necessary or related to the repair or maintenance of or environmental remediation with respect to a pipeline project as described in the Act.
On 21 May 2021 OFAC has sanctioned 3 entities and 13 vessels, including the Federal State Budgetary Institution Marine Rescue Service (MRS).
The designations follow the US State Department's recent report identifying the vessels and entities as involved in the construction of Nord Stream 2.
OFAC has also published PEESA General Licence (GL) 1 and related FAQ 894, authorising US persons to engage in transactions and activities involving the MRS that are unrelated to the Nord Stream 2 or TurkStream pipeline projects.
On 20 December 2019 President Trump signed new legislation – the Protecting Europe's Energy Security Act of 2019 ("PEESA") – that contains legal basis for imposing targeted secondary sanctions on vessels, entities and individuals determined to have
- sold, leased or otherwise provided vessels engaged in pipe-laying at depths of 100 feet or more below sea level for the construction of the Nord Stream 2 pipeline project, the TurkStream pipeline project; or
- facilitated deceptive or structured transactions to provide such vessels for the construction of these projects.
Such determinations shall be made in a report to Congress by 18 February 2020, and every 90 days thereafter. OFAC has also issued a new FAQ 815 to clarify application of the 30 day quasi-wind-down period.
On 18 December 2019 OFAC removed sanctions imposed on the Ventspils Freeport Authority, designated on 9 December 2019 for being owned/controlled by Aivars Lembergs. The Latvian government now passed on legislation ending Lembergs' control of the port. See official press release here.
On 27 August 2018, the Department of State published a Notice bringing mandatory sanctions under the Chemical and Biological Weapons Control and Warfare Act into force. They will remain in place for at least one year. Sanctions are imposed on:
- Arms Sales and Financing of Such Sales: termination of sales to Russia of any defence articles, services, design and construction services, licenses for the export to Russia of any item on the US Munitions List, and all foreign military financing for Russia. This sanction has been waived in relation to the issuance of licenses in support of government space cooperation and commercial space launches (such licenses to be issued on a case-by-case basis).
- Denial of US Government Credit or Other Financial Assistance: denial to Russia of any credit, credit guarantees, or other financial assistance by the US Government.
- Exports of National Security-Sensitive Goods and Technology: prohibition on the export to Russia of any goods or technology on that part of the control list. There are a number of waivers, including the flight safety (civil fixed-wing passenger aviation), space flight, and commercial end-users (civil end-uses in Russia).
- The fifth mandatory sanction: termination of foreign assistance to Russia has been waived in its entirety.
On 16 August 2018 the U.S. Department of State made a determination that will trigger sanctions under "Chemical and Biological Weapons Control and Warfare Elimination Act". The first round of sanctions took effect on 27 August 2018 and introduced a ban on exports to Russia of security-sensitive products and technology (exemption permitted for existing contracts) and termination of related export licenses.
The second round of sanctions will take effect in three months unless US government determines otherwise and will include three or more sanctions, including possible prohibition of all exports of US goods or technology to Russia (exemptions for food and agricultural products and existing contracts) and restrictions on import to the US of any articles produced or grown in Russia.
US government has the authority to waive any of these sanctions and it is currently not clear which of the second-round sanctions will be imposed. Companies trading with Russia shall in any case review sanction provisions in their contracts.
On 2 August 2017 President Trump signed into law the "Countering America's Adversaries Through Sanctions Act" (CAATSA).
The Act expands and codifies sanctions against Russia:
- Opens up for designations for entities and persons operating in (or providing support to) certain sectors of Russian economy: railway, financial services, mining, energy, metals, defence and related material;
- Reduces tenors for transactions listed under Directive 1 E.O. 13622 (equity and debt financing of certain Russian financial institutions) from 30 to 14 days and under Directive 2 (debt financing of certain Russian oil and gas companies) from 90 to 60 days respectively;
- Projects named in Directive 4 (under E.O. 13622), namely supply of goods and services (except for financial) in support of exploration or production of deepwater, Arctic offshore or shale projects that have potential to produce oil are now prohibited also for "persons within the US" and not only on the territory of Russian Federation but worldwide. Furthermore, restrictions apply not only to persons designated under this Directive but also where such persons have interest of at least 33 percent;
- Opens up for sanctions against persons who have made an investment in Russia's energy export pipelines (of USD1 million or aggregate value of USD5 million during a 12 month period);
- Authorises further sanctions related to cybersecurity, investments in crude oil projects, human rights abuses, defence/intelligence sectors and privatisation of Russian state-owned assets;
- Instructs the President to impose sanctions on persons that provided Syria with weapons.
On 27 October 2017 the Department of State issued public guidance on the implementation of Section 231 of CAATSA accompanied by list of entities considered to be operating in Russia's defence or intelligence sectors. President may impose sanctions against individuals that engage in "significant" transactions with entities on this list. Additionally, OFAC published new FAQs related to CAATSA sections 223(a), 226, 228, and 233.
CAATSA also imposes substantial restriction on the President's ability to provide sanctions relief to Russia.
Specially Designated Nationals - SDN List
On 27 January 2019 OFAC lifted sanctions imposed on Rusal, EN+ Group and JSC EuroSibEnergo. Please see OFAC Notice.
On 6 April 2018 OFAC designated 7 of Russia's oligarchs, 12 companies they own and 17 senior Russian government officials. The full list can be found here. OFAC has also four general licences authorising certain transactions with the designated entities. OFAC also published a notice (OFAC Notice) about these general licenses.
On 6 March 2014 the President signed Executive Order 13660 allowing to sanction any individual or entity responsible for or complicit in actions that undermine the democratic process or threaten the peace, security and stability of Ukraine. The full text of EO can be found here. This was expanded on 17 March 2014 and 20 March 2014 by Executive Orders 13661 & 13662 enabling the targeting of Russian entities and individuals, including both Russian and Crimean officials, individual businessmen, banks and commercial companies. These three EOs were subsequently implemented by Regulation (31 CFR part 589). In July 2015, OFAC designated five Crimean port operators and one sea ferry operator pursuant to Executive Order 13685. The seaports affected are at Kerch, Sevastopol, Feodosia, Evpatoria and Yalta. The US has extended its targeted sanctions against senior Russian officials, businessmen and state-owned companies until 6 March 2017. The White House's notice on the extension is here. The list of Specially Designated Nationals (SDN List) has steadily grown and the latest list can be found on US treasury website. More information on the designations can be found here and a link to the OFAC search facility is provided here.
The US authorities adopt the approach that designations extend to any entity owned or controlled by designated persons. An entity which is not itself listed but is owned directly or indirectly by a blocked person with a 50% or more interest is considered as a blocked person. Caution is required when dealing with a non-blocked entity in which one or more blocked persons has a significant interest. For more information see US OFAC Guidance published on 13 August 2014.
Sectoral Sanctions - SSI List
In July 2014 limited "sectoral sanctions" were introduced against several banks (Gazprombank, Vneshtorgbank, Russian Agricultural Bank and Vnesheconomobank) and two energy companies (Rosneft and Novatek). Since then the list has continued to expand. These companies are not subject to an asset freeze but US persons are unable to enter into certain transactions with them. These companies appear on a new Sectoral Sanctions Identification List (SSI List) and are not in the SDN list. Russia's largest company - the United Shipbuilding Corporation has been added to the SDN list. US Treasury has issued FAQs on sectoral sanctions which can be found here.
The category of prohibited transactions varies and it is necessary to check the SSI Listing to find out details by cross referencing to the applicable Directive under EO 13662. Certain types of financial services are commonly restricted. However some operators in the energy sector may be affected by Directive 4 (updated 31 October 2017) which contains restrictions on the provision by a US person or within the US of "goods, services (except for financial services), or technology in support of exploration or production for deepwater, Arctic offshore, or shale projects that have the potential to produce oil in the Russian Federation, or in maritime area claimed by the Russian Federation and extending from its territory, and that involve any person determined to be subject to this Directive, its property, or its interests in property". OFAC has also published new and updated FAQs relating to this Directive.
Restrictions on US corporations
In addition to prohibitions on transactions with named entities and individuals, there are general restrictions on US corporations and individuals conducting business with Crimea (see for example Executive Order dated 19 December 2014).
Cyber based sanctions
On 29 December 2016, President Obama imposed sanctions by Executive Order on Russian intelligence agencies, three companies and several individuals for alleged involvement in cyber activity affecting the US. These sanctions are unlikely to have an effect on international trade.
Restrictions on trading with or investment in Crimea or Sevastopol
On 23 June 2014 the European Union passed Council Decision 2014/386/CFSP and Council Regulation 692/2014 introducing new set of sanctions relating to Ukraine. Import of goods originating in Crimea or Sevastopol into the EU is prohibited, as well as financing, financial assistance or (re)insurance in relation to such imports.
On July 30 2014 an amendment to the 692/2014 regulation was passed in a new Council Regulation No. 825/2014 imposing ban on new investments related to infrastructure in the sectors of transport, telecommunications and energy and the exploitation of natural resources in Crimea and Sevastopol as well as export ban on key equipment and technology related to these sectors. These restrictions were extended on 19 December 2014 by Regulation 1351/2014 which also included a ban on cruise vessels calling at ports in the Crimean Peninsula.
For further information see International Group circular published on 17 July 2014 and the supplementary circular dated 12 August 2014.
The EU has extended its sectoral sanctions against Russia until 31July 2017. In its statement the Council sums up the scope of sanctions imposed by Council Regulation 692/2014 and Council Decision 2014/386/CFSP.
On 1 August 2014, EU Regulation 833/2014 introduced a requirement for prior authorization was required for exporting dual use technology to the Russian oil sector, including floating or submersible drilling or production platforms, sea-going light vessels, fire-floats, floating cranes and other vessels, etc. (listed in Annex II of the Regulation). Prior authorisation was also required for any sale, supply, transfer or export of certain technologies which are "suited for the oil industry" and it is clear that licensing would not be given for technology to be used in "projects pertaining to deep water oil exploration and production, Arctic oil exploration and production, or shale oil projects in Russia". Activities under contracts made before 1 August 2014 were able to go ahead.
EU Regulation 960/2014 of 8 September 2014 amended Regulation 833/2014 and extended the restrictions for certain services associated with deep water oil exploration and production, arctic oil exploration and production, or shale oil projects. These Regulations were further amended, largely to provide clarification, on 4 December 2014 by Regulation 1290/2014.The prohibited services are (i) drilling, (ii) well testing, (iii) logging and completion services and (iv) the supply of specialised floating vessels. There is no provision for authorities to grant an export authorisation, although the measures do not apply to contracts concluded before 12 September 2014. The restrictions do not apply to services necessary for the urgent prevention or mitigation of an event likely to have a serious impact on human health and safety or the environment.
EU Commission published Guidance on the application of certain provisions in Regulation 833/2014 on 16 December 2014.
Similar restrictions apply to other sectors including dual-use technology, arms and military equipment and access to the capital market for financial institutions
Designated individuals and entities
The EU first introduced measures freezing the funds and economic resources of designated persons in March 2014. Since then Council Regulation 269/2014 adopted on 17 March has been amended by a series of Council Regulations adding further individuals and entities to the list. Restrictions are in place against a large number of individuals and entities (including Crimea based companies involved in the gas and oil industries, Kerch and Sevastopol Commercial Sea Ports and several Russian largest banks). The EU extended sanctions until 15 September 2016 by Implementing Regulation 2016/353 amending Regulation 269/2014 and Decision 2016/359 amending Decision 2014/145/CFSP. See Links with information about where to find official lists provided by US, EU and UK.
On 14 September 2017 the EU issued Council Regulation 2017/1547 which allows to authorise payments to Crimean Sea Ports for certain services.
Although EU Regulations do not have direct effect in Norway, the Norwegian government has in general aligned itself with the EU.
On 15 August 2014 the Ministry of Foreign Affairs issued a Press Release announcing the introduction of restrictive measures against Russia in line with those already implemented by the EU, including Regulation 833/2014. The Regulation can be found here (FOR-2014-08-15-1076 Norwegian language only).
On April 17 2015, the Norwegian Foreign Ministry adopted changes to its Regulation on restrictive measures against Russia extending its scope and providing some clarifications in line with EU regulations.
On 16 December 2019, the Russian Government signed Resolution No. 1685, which expanded an import ban with respect to Ukrainian goods. The list of banned goods now includes cornstarch, glucose and fructose, a number of medical goods (such as medical stoppers, hot-water bags, ball syringes), radiators, central-heating boilers and waste paper. These goods are prohibited from entering Russia if they
(i) originate from Ukraine,
(ii) are supplied from Ukraine, or
(iii) have been in transit through the territory of Ukraine.
The same day the Russian Government signed Resolution No. 1692, which amended the list of Ukrainian citizens subject to sanctions: nine more individuals, including state officials and deputies of the city council of Odessa region of Ukraine, were sanctioned; two individuals were de-listed. The total number of the Ukrainian individuals sanctioned by Russia now amounts to 574.
Both Resolutions entered into force on 17 December 2019.
In accordance with Presidential Executive Order issued on October 22, 2018, Russian government added 322 individuals and 68 entities to its Ukraine sanctions list (asset freezes) in order to "counter Ukraine's unfriendly actions towards Russian citizens and legal entities, to ensure that the restrictions imposed by Ukraine on Russian citizens and legal entities are lifted and to encourage the normalisation of bilateral relations".
According to the Russian press release, the list includes the Judges of the Constitutional Court of Ukraine, deputies of the 8th Verkhovna Rada of Ukraine, major businesspeople, officials from the Executive Office of the President of Ukraine, heads of executive authorities of Ukraine and large Ukrainian companies, as well as legal entities controlled by major Ukrainian businesspeople.
On 4 June 2018 President Putin signed law on new counter-measures including restrictions on the import into Russia of products and/or raw materials originating from the USA and other foreign states, and on the export from Russia of products to foreign citizens. The legislation gives President Putin the power to choose the sectors and products that will be affected, and to "ban or suspend co-operation with a hostile state". The Russian Government will define the list of products and raw materials which may be banned from being imported/exported, as well as other types of work/services the procurement of which may be banned or restricted.
On 30 July 2017 in response to CAATSA the President of Russia confirmed that staff at US diplomatic missions in Russia would have to be cut by 755 people and that Russia would seize two US diplomatic properties.
On 7 August 2014 Russia implemented an import ban on beef, pork, poultry, fruit, vegetables, fish, cheese, milk and dairy products. The ban applies to imports from the EU, US, Norway, Australia and Canada.
On May 29 2015 Russia issued a list of 89 European politicians and officials who are banned from entering the country. The list includes past and present European parliamentarians and ministers. The list was sent to all EU member states.
On 11 May 2022, the Russian Government adopted Decree No. 851 adding 31 energy companies incorporated in the EU, the US, the UK, Singapore and Switzerland to the designated persons list. Notably, most of the designated persons are members of Gazprom Germania group of companies.
The Decree further supplemented the list of transactions with designated persons that are prohibited for persons under Russian jurisdiction:
(i) transactions with (including discharging of obligations, including deals already in progress) in favour of designated persons;
(ii) the export of raw materials/commodities/other products originating from Russia in favour of sanctioned persons or via sanctioned persons to third parties;
(iii) transactions involving entry of vessels owned or chartered by the designated persons into Russian seaports; and
(iv) transactions involving payments and securities transactions with or for the benefit of the designated persons.