Russia’s invasion of Ukraine: sanctions and trade restrictions overview

Within the existing framework of sanctions against Russia, the EU has listed a number of high-profile individuals (including President Vladimir Putin, Minister of Foreign Affairs Sergey Lavrov, other prominent members of the Russian government and parliament (Duma), senior military officers and business persons/oligarchs supporting financially or materially the Russian military operations in Ukraine and certain state-affiliated entities (several banks and a company responsible for leading the disinformation war).

It should be noted that the current EU legal framework now allows the EU Commission to quickly update the list of sanctioned individuals and entities to target any person or entity that would support or benefit from the military intervention by Russia in Ukraine (i.e., Russian oligarchs).

Listed entities are subject to an asset freeze, a prohibition to make funds available and possibly a travel ban. Because the prohibition to make funds available includes the prohibition to make available, directly or indirectly, very broadly defined ‘economic resources’ for the benefit of a listed person or entity, any direct business dealings with such persons or entities are in fact prohibited. It should be noted that, in addition, any such dealings with non-listed entities that are directly or indirectly ‘owned’ or ‘controlled’ by a listed person or entity are equally prohibited.*

The criterion to be taken into account when assessing whether a legal person or entity is owned by a listed person or entity is the possession by the listed person or entity of more than 50% of the proprietary rights of an entity or having a majority interest in it.

*When assessing whether a non-listed subsidiary is controlled by a listed person or entity, alone or pursuant to an agreement with another shareholder or other third party, it is required to carry out a factual assessment of the organizational, structural and economic links between the listed person or entity and non-listed entities. The determining factor is whether the listed person or entity is able to and effectively asserts a decisive influence over the conduct of the non-listed subsidiary in question. Decisive influence can be for example (i) having the right or exercising the power to appoint or remove a majority of the members of the administrative, management or supervisory body of such legal person or entity, (ii) having the right to use all or part of the assets of a legal person or entity, or (iii) sharing jointly and severally the financial liabilities of a legal person or entity or guaranteeing them.

It is prohibited to sell, supply, transfer or export to Russia specific goods and technologies for use in oil refining as listed in Annex X to EU Regulation 833/2014 (mainly goods classified under Chapter 84 and 85 of the Combined Nomenclature). Providing technical assistance, brokering services, financing or financial assistance with respect to these goods or technologies is also prohibited.

The restriction is subject to two exemptions:

• Already existing contracts: the prohibition does not apply to the execution until 27 May 2022 of contracts concluded before 26 February 2022, or ancillary contracts necessary for the execution of such contracts.
• Preventing or mitigating events likely to have a serious impact on human health and safety or the environment: Member States may authorize the export of goods and/or the provision of related services as described above, if they determine that this is necessary for the urgent prevention or mitigation of an event likely to have a serious impact on human health and safety or the environment. In duly justified cases, the export may proceed without prior authorization, provided that the exporter notifies the competent authority within five working days and gives reasons for the export without prior authorization.

These measures add to or further restrict the already existing license requirements for oil exploration and requirements and a prohibition for the export of certain technologies for deep-water oil exploration and production, arctic oil exploration and production or shale oil projects in Russia.

An export ban applies to all goods and technology suited for use in aviation and the space industry as listed in Annex XI to Regulation 833/2014 (this includes all items listed under Chapter 88 of the Combined Nomenclature: Aircraft, spacecraft and parts thereof) The provision of insurance and reinsurance and maintenance services in relation to those goods and technology is also prohibited, together with the provision of technical assistance and other related services as well as financing and financial assistance in relation to these goods and technologies.

Please note that the aforementioned prohibitions shall not apply to the execution until 28 March 2022 of contracts concluded before 26 February 2022, or ancillary contracts necessary for the execution of such contracts.

In addition, the EU prohibits landing in, taking off from, or overflying, the territory of the Union for all Russian air carriers, Russian-registered aircraft and any non-Russian-registered aircraft which are owned or controlled by a Russian entity or individual.

Under the updated sanctions regime, the EU has now imposed a strict prohibition on exports of dual-use goods and technology listed in Annex I to EU Dual-use Regulation 2021/821 and on the provision of related services to any natural or legal person, entity or body in Russia or for use in Russia. Related services include a prohibition to provide financing, technical and financial assistance, brokering services and other services related to dual use items.

As Annex I of the Dual-use Regulation includes a wide range of goods and technologies this measure is considered as a very far-reaching prohibition with only limited exceptions:

1. The prohibition shall not apply to the sale, supply, transfer or export of dual-use goods and technology or to the related provision of technical and financial assistance, for non-military use and for a non-military end-user, intended for: 
   

   (a) humanitarian purposes, health emergencies, the urgent prevention or mitigation of an event likely to have a serious and significant impact on human health and safety or the environment or as a response to natural disasters;

   (b) medical or pharmaceutical purposes;

   (c) temporary export of items for use by news media;

   (d) software updates; (e) use as consumer communication devices;

   (f) ensuring cyber-security and information security for natural and legal persons, entities and bodies in Russia except for its government and undertakings directly or indirectly controlled by that government; or

   (g) personal use of natural persons travelling to Russia or members of their immediate families travelling with them, and limited to personal effects, household effects, vehicles or tools of trade owned by those individuals and not intended for sale.

   The exporter shall declare in the customs declaration that the items are being exported under the relevant exception set out above and shall notify the competent authority of the Member State where the exporter is resident or established of the first use of the relevant exception within 30 days from the date when the first export took place.
   
   

2. By way of derogation and without prejudice to the authorization requirements pursuant to Regulation 2021/821, the competent authorities may authorize transactions of items, for non-military use and for a non-military end-user, after having determined that such goods or technology or the related technical or financial assistance are:
   

   (a) intended for cooperation between the Union, the governments of Member States and the government of Russia in purely civilian matters;

   (b) intended for intergovernmental cooperation in space programmes;

   (c) intended for the operation, maintenance, fuel retreatment and safety of civil nuclear capabilities, as well as civil nuclear cooperation, in particular in the field of research and development;

   (d) intended for maritime safety;

   (e) intended for civilian telecommunications networks, including the provision of internet services;

   (f) intended for the exclusive use of entities owned, or solely or jointly controlled by a legal person, entity or body which is incorporated or constituted under the law of a Member State or of a partner country;

   (g) intended for the diplomatic representations of the Union, Member States and partner countries, including delegations, embassies and missions.
   
   

3. By way of derogation, and without prejudice to the authorization requirements pursuant to Regulation (EU) 2021/821, the competent authorities may authorize, transactions of items for non-military use and for a non-military end-user, after having determined that such goods or technology or the related technical or financial assistance are due under contracts concluded before 26 February 2022, or ancillary contracts necessary for the execution of such a contract, provided that the authorization is requested before 1 May 2022.

When deciding on requests for authorizations, the competent authorities shall not grant an authorization if they have reasonable grounds to believe that:

• the end-user might be a military end-user, a natural or legal person, entity or body in Annex IV or that the goods might have a military end-use; or
• the sale, supply, transfer or export of goods and technology is intended for aviation or the space industry.

For completeness’ sake it should be noted that since 2014, it was already prohibited to export arms and related material to Russia, or to provide related technical or financial assistance and services. Conversely, it is prohibited to import, purchase or transport arms and related material from Russia. These restrictions remain unchanged.

Several Member States (including the export control agencies in Belgium and Luxembourg) have meanwhile informed operators of the new restrictions while stating that all existing licenses for the export of dual use items have been suspended. Operators are requested to contact their competent agency to determine whether one of the aforementioned exceptions could apply for their exports.    

At the same time operators are also reminded to consider the catch-all provision of article 4 of the Dual-use Regulation 2021/821 which targets dual-use items not listed in Annex I if destined for certain end-use(r)s. See for example Sancties Rusland - Departement Buitenlandse Zaken (fdfa.be)

Please note, that the Belgian customs authorities have also provided notice that all export declarations whereby goods are destined for Russia, Ukraine or Belarus will be checked. A physical inspection of the goods will be carried out if deemed necessary.

In the Netherlands, no official notice of the Central Service for Import and Export, the competent authorities for export controls, has been forthcoming to date. The Service has indicated, however, that dual-use shipments destined for Russia will be stopped by Dutch customs and that guidance with respect to inter alia the status of existing export licences for dual-use items will be issued.

Apart from military and dual use items, the updated sanctions also prohibit the exports of certain items (goods and technology – see Annex VII) which might contribute to Russia’s technological and military enhancement or the development of its defense and security sector. It covers a wide range of equipment and technologies including semiconductors and cutting-edge technologies listed across various categories (electronics, computers, telecommunications, information security, sensors & lasers, navigation & avionics, marine and aerospace and propulsion).

This prohibition extents to financing, technical and financial assistance, brokering and other services related to these items and is subject to the same exceptions as described above in point 1.4. for dual-use items.

On 9 March an export ban entered into force which prohibits to sell, supply, transfer or export, directly or indirectly, maritime navigation goods and technology, as listed in Annex XVI, whether or not originating in the Union, to any natural or legal person, entity or body in Russia, for use in Russia, or for the placing on board of a Russian-flagged vessel.

The ban includes a prohibition to:  

1. provide technical assistance, brokering services or other services related to the goods and technology and to the provision, manufacture, maintenance and use of those goods and technology, directly or indirectly to any natural or legal person, entity or body in Russia or for use in Russia;
2. provide financing or financial assistance related to the goods and technology for any sale, supply, transfer or export of those goods and technology, or for the provision of related technical assistance, brokering services or other services, directly or indirectly to any natural or legal person, entity or body in Russia or for use in Russia.

The prohibitions shall not apply to the sale, supply, transfer or export of the goods and technology or to the related provision of technical and financial assistance, for non-military use and for a non-military end-user, intended for humanitarian purposes, health emergencies, the urgent prevention or mitigation of an event likely to have a serious and significant impact on human health and safety or the environment, or as a response to natural disasters.

By way of derogation the competent authorities may authorize the sale, supply, transfer or export of the goods and technology or the provision of related technical or financial assistance, for non-military use and for a non-military end-user, after having determined that such goods or technology or the related technical or financial assistance are intended for maritime safety.

The EU has imposed restrictions on dealing with Donetsk and Luhansk. The restrictions resemble the restrictions the EU has already imposed on Crimea and Sevastopol and include:

• a general import ban on any goods originating in Donetsk and Luhansk.
• financing or financial support, insurance or reinsurance relating to the import of such goods is equally prohibited.
• an export ban of certain listed goods from the sectors transport, telecommunications, energy or the prospecting, exploration and production of oil, gas and mineral resources to the regions of Donetsk and Luhansk.
• technical assistance, brokering or financing or financial assistance regarding these goods are equally prohibited.
• investment restrictions including the acquisition of real estate, (shares of) companies or regarding the creation of joint ventures, providing financial and investment services and tourism services in the regions of Donetsk and Luhansk.

In addition to the already existing restrictions under Regulation 833/2014 the following additional measures will amongst others be imposed:

1. Prohibition on dealing with any transferable security and money market instrument issued after 12 April 2022 for entities that were already listed under Annex III (certain credit institutions), Annex V(defense companies), Annex VI (state owned oil companies), Annex XII (newly listed credit institutions) and Annex XIII (newly listed state owned entities);
   
   
2. Prohibition to directly or indirectly make or be part of any new arrangement to make any new loans or credit to any party listed in Annex III, V, VI, XII & XIII;
   

   The prohibition relating to loans and credit will not apply for:

   • loans or credit that have a specific and documented objective to provide financing for non-prohibited imports or exports of goods and non-financial services between the Union and any third State, including the expenditure for goods and services from another third State that is necessary for executing the export or import contracts;
   • loans that have a specific and documented objective to provide emergency funding to meet solvency and liquidity criteria for legal persons established in the Union, whose proprietary rights are owned for more than 50 % by any entity referred to in Annex III;
   • drawdown or disbursements made under a contract concluded before 26 February 2022 provided that certain conditions are met.

   The prohibitions mentioned under 1) and 2) also apply to non-EU subsidiaries of the entities listed in Annex III, V, VI, XII & XIII to the extent that these are owned for 50% or more or are under the control of the latter (see also Section  1.1 above). 

3. Prohibition to accept deposits: it is prohibited to accept deposits exceeding EUR 100.000 from Russian nationals or residents or legal persons established in Russia;

4. Prohibition to hold accounts of Russian clients with the EU Central Securities Depositories for Russian clients, as well as to sell euro-denominated securities to Russian clients;

5. Prohibition to provide public financing or financial assistance for trade with, or investment in, Russia.

This has a rather broad application and is only restricted by the fact that it should concern public financing or financial assistance.

The prohibition will, however, not apply for:  

• binding financing or financial assistance commitments established prior to 26 February 2022;
• the provision of public financing or financial assistance up to the total value of 10 000 000 EUR per project to small and medium-sized enterprises established in the Union; or
• the provision of public financing or financial assistance for trade in food, and for agricultural, medical or humanitarian purposes.

On 9 March 2022 the Council clarified the notion of “transferable securities” clearly includes crypto-assets.

The EU Council decided on 2 March 2022 to take the following additional measures:

• SWIFT: a prohibition to provide specialised financial messaging services, which are used to exchange financial data (SWIFT), to a selection of 7 Russian banks (e.g. Bank Otkritie, Novikombank, Promsvyazbank, Rossiya Bank, Sovcombank, VNESHECONOMBANK (VEB), and VTB BANK’). This prohibition will enter into force on the tenth day after the publication in the Official Journal of the EU, and will also apply to any legal person, entity or body established in Russia whose proprietary rights are directly or indirectly owned for more than 50% by the above-mentioned banks;
  
  
• The Russian Direct Investment Fund: a prohibition to invest, participate or otherwise contribute to future projects co-financed by the Russian Direct Investment Fund. A derogation is possible in case such an investment participation or contribution is due under contracts concluded before 2 March 2022 or ancillary contracts necessary for the execution of such contracts;
  
  
• EURO denominated banknotes:  a prohibition to sell, supply, transfer or export euro denominated banknotes to Russia or to any natural or legal person, entity or body in Russia, including the government and the Central Bank of Russia, or for use in Russia.

This prohibition shall not apply to the sale, supply, transfer or export of euro denominated banknotes provided that such sale, supply, transfer or export is necessary for:

• the personal use of natural persons travelling to Russia or members of their immediate families travelling with them; or
• the official purposes of diplomatic missions, consular posts or international organisations in Russia enjoying immunities in accordance with international law.

Also on 2 March 2022 the EU council decided to ban certain Russian media outlets Russia Today and Sputnik for disinformation:

Under this sanction measure it shall be prohibited for operators to broadcast or to enable, facilitate or otherwise contribute to broadcast, any content by the legal persons, entities or bodies listed in Annex XV, including through transmission or distribution by any means such as cable, satellite, IP-TV, internet service providers, internet video-sharing platforms or applications, whether new or pre-installed. Furthermore, any broadcasting licence or authorisation, transmission and distribution arrangement with the legal persons, entities or bodies listed in Annex XV shall be suspended.

In an earlier statement on 27 February 2022, the EU High Representative Josep Borrell also announced that the EU is advancing work on sanction regimes targeting corruption specifically as well as foreign information manipulation and interference.

On top of the already existing extensive sanctions against Belarus (see sanctionsmap.eu) the EU has added new individuals who are considered to have facilitated the Russian invasion of Ukraine from Belarus including the listing of 22 high ranked members of Belarusian military personnel on 2 March 2022.

Furthermore the EU Council introduced further restrictions in the trade of goods including: 

1. A ban on the export of all dual items:

The conditions and derogations are similar to those implemented for Russia (see section 1.4.)

2. A ban on the export of semiconductors, cutting edge technologies and other goods for the defense sector:

Also here the ban is subject to similar conditions and derogations as those imposed for Russia (see section 1.5.). The full list of goods and technologies is included in Annex Va. 

Existing trading restrictions under previous sanctions packages where in addition extended and expanded: 

3. A ban to export goods used for the production or manufacturing of tobacco products (e.g. filters, papers, machinery and cutting blades)

It shall be prohibited to sell, supply, transfer, or export the goods listed in Annex VI, whether such goods originate or not in the Union, to any natural or legal person, entity or body in Belarus or for use in Belarus.
It is also added that it shall be prohibited to provide, directly or indirectly, technical assistance, brokering services, financing or financial assistance, including financial derivatives, as well as insurance and re-insurance.

4. A ban to import mineral products

(e.g. products listed under headings 2707-2715 of the Combined Nomenclature with certain exceptions)

It shall be prohibited:

1.  to import petroleum products as listed in Annex VII into the Union if they:(i) originate in Belarus; or (ii) have been exported from Belarus;
2. to purchase petroleum products which are located in or which originated in Belarus;
3. to transport petroleum products if they originate in Belarus, or are being exported from Belarus to any other country;
4. to provide, directly or indirectly, technical assistance, brokering services, financing or financial assistance, including financial derivatives, as well as insurance and re-insurance, related to the prohibitions set out in points (1), (2) and (3).

The prohibitions shall not apply to purchases in Belarus of petroleum products which are required in order to meet the essential needs of the purchaser in Belarus or of humanitarian projects in Belarus.

5. A ban to import potash products

(e.g. products listed in headings 3104-3105 with certain exceptions)

It shall be prohibited to import, purchase or transfer, directly or indirectly, potassium chloride ("potash") products as listed in Annex VIII from Belarus, whether or not originating in Belarus.

It is also added that It shall be prohibited to provide, directly or indirectly, technical assistance, brokering services, financing or financial assistance, including financial derivatives, as well as insurance and re-insurance, related to the prohibitions.

The export ban under 1) -5) entered into effect as from 3 March 2022.

6. A ban to export machinery

(e.g. goods listed under headings 8401-8548 of the Combined Nomenclature with few exceptions)

It shall be prohibited:

1. to sell, supply, transfer or export, directly or indirectly, machinery as listed in Annex XIV, whether or not originating in the Union, to any person, entity or body in Belarus or for use in Belarus;
2. to provide, directly or indirectly, technical assistance, brokering services, financing or financial assistance, including financial derivatives, as well as insurance and re-insurance, related to the prohibitions in point (1)

The prohibition shall not apply if the items are for non-military use and for a non-military end-user and intended for:

1. humanitarian purposes, health emergencies, the urgent prevention or mitigation of an event likely to have a serious and significant impact on human health and safety or on the environment, or as a response to natural disasters;
2. medical or pharmaceutical purposes;
3. temporary use by news media;
4. software updates;
5. use as consumer communication devices;
6. ensuring cyber-security and information security for natural or legal persons, entities or bodies in Belarus except for its government and undertakings directly or indirectly controlled by that government; or
7. personal use of natural persons travelling to Belarus, and limited to personal effects, household effects, vehicles or tools of trade owned by those individuals and not intended for sale.

With the exception of points (6) and (7), the exporter shall declare in its customs declaration that the items are being exported under the relevant exception set out in this paragraph and shall notify the competent authority of the Member State where the exporter is resident or established of the first use of the relevant exception within 30 days from that first export.

7. A ban to import wood products

(e.g. all products listed under chapter 44 of the Combined Nomenclature)

It shall be prohibited:

1. to import, directly or indirectly, wood products as listed in Annex X :  into the Union if they (i) originate in Belarus; or (ii) have been exported from Belarus;
2. to purchase, directly or indirectly, wood products as listed in Annex X which are located in or which originated in Belarus;
3. to transport wood products as listed in Annex X if they originated in Belarus or are being exported from Belarus to any other country;
4. to provide, directly or indirectly, technical assistance, brokering services, financing or financial assistance, including financial derivatives, as well as insurance and re-insurance, related to the prohibitions in points (1), (2) and (3)

8. A ban to import cement

(e.g. all products listed under heading 2523 and 6810 of the Combined Nomenclature)

It shall be prohibited:

1. to import, directly or indirectly, cement products as listed in Annex XI (into the Union if they: (i) originate in Belarus; or (ii) have been exported from Belarus;
2. to purchase, directly or indirectly, cement products as listed in Annex XI which are located in or which originated in Belarus;
3. to transport cement products as listed in Annex XI if they originated in Belarus or are being exported from Belarus to any other country;
4. to provide, directly or indirectly, technical assistance, brokering services, financing or financial assistance, including financial derivatives, as well as insurance and re-insurance, related to the prohibitions in points (1), (2) and (3).

9. A ban to import iron & steel products

(e.g. all products listed under chapters 72 and 73 of the Combined Nomenclature)

1. to import, directly or indirectly, iron and steel products as listed in Annex XII (into the Union if they: (i) originate in Belarus; or (ii) have been exported from Belarus;
2. to purchase, directly or indirectly, iron and steel products as listed in Annex XII which are located in or which originated in Belarus;
3. to transport iron and steel products as listed in Annex XII if they originated in Belarus or are being exported from Belarus to any other country;
4. to provide, directly or indirectly, technical assistance, brokering services, financing or financial assistance, including financial derivatives, as well as insurance and re-insurance, related to the prohibitions in points (1), (2) and (3).

10. A ban to import rubber

(e.g. all products under heading 4011 of the Combined Nomenclature)

It shall be prohibited:

1. to import, directly or indirectly, rubber products as listed in Annex XIII into the Union if they: (i) originate in Belarus; or (ii) have been exported from Belarus;
2. to purchase, directly or indirectly, rubber products as listed in Annex XIII which are located in or which originated in Belarus;
3. to transport rubber products as listed in Annex XIII if they originated in Belarus or are being exported from Belarus to any other country;
4. to provide, directly or indirectly, technical assistance, brokering services, financing or financial assistance, including financial derivatives, as well as insurance and re-insurance, related to the prohibitions in points (1), (2) and (3).

Wind down period:  The newly included prohibitions 6) until 10) shall be without prejudice to the execution until 4 June 2022 of contracts concluded before 2 March 2022, or ancillary contracts necessary for the execution of such contracts.

11. Disconnection from SWIFT

It shall be prohibited as of 20 March 2022 to provide specialised financial messaging services to the banks listed in Annex XV or to any legal person, entity or body established in Belarus whose proprietary rights are directly or indirectly owned for more than 50 % by an entity listed in Annex XV. This concerns  Belagroprombank, Bank Dabrabyt and the Development Bank of the Republic of Belarus.

12. Additional financial restrictions

1. Transactions related to the management of reserves as well as of assets of the Central Bank of Belarus, including transactions with any legal person, entity or body acting on behalf of, or at the direction of, the Central Bank of Belarus, will be prohibited (exceptions may apply if the financial stability of the Union as a whole or of the Member State concerned needs to be ensured)
2. It shall be prohibited to list and provide services as of 12 April 2022 on trading venues registered or recognised in the Union for the transferable securities of any legal person, entity or body established in Belarus and with over 50 % public  ownership.
3. It shall be prohibited to provide public financing or financial assistance for trade with, or investment in, Belarus (similar exceptions apply as for Russia)
4. It shall be prohibited to accept any deposits from Belarusian nationals or natural persons residing in Belarus, or legal persons, entities or bodies established in Belarus, if the total value of deposits of the natural or legal person, entity or body per credit institution exceeds EUR 100 000 (exceptions apply – see also Publications Office (europa.eu))
5. It shall be prohibited for Union central securities depositories to provide any services as defined in the Annex to Regulation (EU) No 909/2014 for transferable securities issued after 12 April 2022 to any Belarusian national or natural person residing in Belarus or any legal person, entity or body established in Belarus (exceptions apply).
6. It shall be prohibited to sell euro denominated transferable securities issued after 12 April 2022 or units in collective investment undertakings providing exposure to such securities, to any Belarusian national or natural person residing in Belarus or any legal person, entity or body established in Belarus (exceptions apply).
7. It shall be prohibited to sell, supply, transfer or export euro denominated banknotes to Belarus or to any natural or legal person, entity or body in Belarus, including the Government and the Central Bank of Belarus, or for use in Belarus (exceptions apply).

The Council clarified also for the Belarus financial sanctions that the notion of “transferable securities” includes crypto-assets.