In light of the further escalation of the Russia-Ukraine conflict, the EU agreed on Friday, 25 February, on a second wave of sanctions targeting broad areas of the Russian economy and other high profile political and military leaders in Russia and Belarus.

In brief, the new restrictions include:

  • designations of Russian and Belarusian individuals;
  • wide-ranging restrictions on trade in goods and associated services, including dual-use and various other items, and goods for the oil refining, aviation and space sectors; and
  • a substantial expansion of financial and capital markets restrictions to target additional Russian banks and other entities, as well as deposits and investment by Russian nationals, residents and entities.

A third sanctions package is expected in the coming days.  This is in addition to the joint international announcement on 26 February that certain Russian banks will be disconnected from the SWIFT financial messaging system, and of additional measures against the Russian Central Bank.  We will blog further on this shortly.

A summary of the latest EU sanctions package is outlined below and supplements the existing suite of sanctions.

Additional designations

The EU designated an additional 99 individuals, including the Russian President and the Foreign Minister, as well as members of the National Security Council and additional members of the Russian State Duma who supported Russia’s recognition of the Donetsk and Luhansk People’s Republics as independent entities. In addition, the new sanctions designate a number of Belarusian individuals (mostly military officers) identified as having participated in Russia’s military activities.

The EU significantly expanded the scope of the legal grounds for designating individuals and entities under its Russian sanctions regime to include persons supporting materially or financially, or benefiting from, Russian decision-makers responsible for the destabilization of Ukraine, as well as leading businesspersons and entities involved in economic sectors providing a substantial source of revenue to the Russian government.  This paves the way for further designations of individuals and entities in key sectors of the Russian economy, and follows a similar expansion in the UK’s designation criteria on 10 February (see our previous post here).  More designations may be imposed shortly following this expansion.

In total, 654 individuals and 52 entities are now designated under EU’s Russian sanctions regime, entailing an asset freeze and a prohibition on making funds or economic resources available to, or for the benefit of, the listed persons. Entities that are owned or controlled by an individual or entity subject to restrictive measures are generally regarded as being subject to the same restrictions.

Restrictions on goods and associated services

Dual-use items and technology

The EU has further restricted the export of controlled dual-use items to Russia, as well as exports of other items. Under the previous measures, it was prohibited to supply dual-use items to Russia if those items were or may have been intended for military use or for a military end-user.  This applied in addition to the standard EU export control regime, under which a licence is required for exports of all dual-use items.

The updated sanctions regime removes the “military use or end-user” qualifier, and instead imposes 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, which contains items that the EU considers “might contribute to Russia’s military and technological enhancement, or the development of the defence and security sector.”  The list of restricted items is extensive, and restricts a wide variety of electronics, computers, telecoms, information security, sensors and lasers, navigation and avionics, marine, and aerospace items not already controlled under the Dual-Use List.  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.

The Regulation provides for a number of exceptions, including in particular for supplies for the following purpose (provided, in all cases, that there is no supply for military use or a military end-user):

  • humanitarian purposes;
  • medical or pharmaceutical purposes;
  • temporary export of items for use by news media;
  • software updates;
  • use as consumer communication devices;
  • non-government cyber-security and information security; and
  • personal use of individuals and their immediate families travelling to Russia (generally covering personal effects and tools of trade not intended for sale).

While no licence is required to use these exemptions, in most cases the exporter must include a reference to the exemption in the customs declaration. Exporters must also notify the competent authority of their EU Member State within 30 days of the first use of the relevant exemption.

The sanctions also include licensing grounds where the items are intended for the following (and will not be supplied for military use or a military end-user):

  • civilian co-operation between the EU, Member State governments and the Russian Government;
  • intergovernmental space co-operations;
  • civil nuclear use (including R&D);
  • maritime safety;
  • civilian telecommunications networks, including the provision of Internet services;
  • the exclusive use by entities owned or controlled by an EU entity, or an entity from a “partner country”;
  • the diplomatic representations of the EU, EU Member States, and “partner countries”; and
  • contracts concluded before 26 February 2022, provided that the licence application is submitted before 1 May 2022.

The list of “partner countries” is intended to contain countries applying a set of export control measures substantially equivalent to the measures set out in the EU sanctions.  At present, the list contains only the United States.  However, this may change as other jurisdictions introduce similar measures.  For example, the UK Government has indicated that it intends to enact similar restrictions on dual-use items and other technologies.

Licences will not generally be available where:

  1. the end-user might be a military end-user, an entity listed in Annex IV to Regulation 833/2014 (which has been substantially expanded to contain a variety of aerospace, defence, technology and Russian Government-affiliated entities) or that the goods might have a military end-use; or
  2. the supply is intended for aviation or the space industry.


The Russian economy is heavily dependent on income from its export of oil and natural gas, and the EU has since 2014 imposed licensing requirements on supplies of certain items for use in upstream oil and gas projects. These restrictions are unchanged by the new package.

However, the EU has introduced new prohibitions on supplies of additional items “suited for use in oil refining“.  There are also restrictions on associated services, financing and financial assistance. The list of restricted items is contained in a new Annex X to Regulation 833/2014, which restricts the items based on their customs tariff code.  All of the restricted items are contained within Chapters 84 and 85 of the customs tariff.

There is a temporary exemption to the prohibition for supplies under contracts concluded before 26 February 2022, expiring on 27 May 2022. Licences are available for the urgent prevention or mitigation of events likely to have a serious and significant impact on human health and safety or the environment.

Aviation and space sector

The EU has also prohibited the export of all items listed in Chapter 88 of the customs tariff to Russian persons or for use in Russia (listed in a new Annex XI).  This includes aircraft, spacecraft, and parts thereof.  Consequently, it is now prohibited to export aircraft, spare parts and equipment to Russian airlines and to the Russian space sector.

Standard prohibitions on associated services also apply.  In addition, the following activities are also prohibited in relation to the items listed in Annex XI: overhaul, repair, inspection, replacement, modification or defect rectification of an aircraft or component, with the exception of pre-flight inspection.

There is a temporary exemption to the prohibition for supplies under contracts concluded before 26 February 2022, expiring on 28 March 2022.

Financial sector restrictions

Capital markets and loans

Friday’s package further increases the restrictions in place on financial transactions between the EU and Russia in an effort to impede the Russian Government’s ability to borrow money and finance its military operations.  These build upon existing loans and capital markets restrictions that have been in place since 2014, and also involve various new restrictions.

Under the new measures, the existing restrictions on dealings involving “transferable securities and money-market instruments” are being extended to four additional Russian banks (Alfa Bank, Bank Otkritie, Bank Rossiya and Promsvyazbank – the latter two having been also fully designated earlier in the week), and to another eight Russian state-owned companies (Almaz-Antey, Kamaz, Novorossiysk Commercial Sea Port, Rostec, Russian Railways, JSC PO Sevmash, Sovcomflot, and United Shipbuilding Corporation).  In addition, the measures have been tightened such that there will be no minimum maturity limit for the relevant securities (whereas under the previous measures, securities with a maturity of less than 30 days were exempt). These restrictions will take effect after 12 April 2022. 

Similarly, the restrictions on providing “new loans or credit” have been extended to these same entities, and there is now no minimum maturity period below which loans and credit are unrestricted.  The existing exemptions, including for trade finance and pre-existing loans, remain in place.  These changes take effect for 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.

Public financing

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.

Deposit restrictions

The EU has imposed a limit on deposits by Russian nationals, Russian residents and Russian entities, with financial institutions in the EU.  Financial institutions may not accept deposits of over EUR 100,000 from these persons. 

Nationals and residents of EU Member States are exempt from these measures, as are deposits necessary for lawful trade in goods and services between the EU and Russia.  Standard licensing conditions are also available, including for deposits for individuals’ basic needs, humanitarian purposes, civil society activities, reasonable professional fees and expenses for legal services, and extraordinary expenses.

EU financial institutions must report any deposits in excess of these limits no later than 27 May 2022, and will be required to provide an update every 12 months.  In addition, financial institutions must provide details of deposits exceeding the limits held by Russian nationals or residents who have acquired EU Member State citizenship or EU residence rights through an investor citizenship or residence scheme.

Investment restrictions

The EU has imposed a number of new investment restrictions, prohibiting:

  • the provision of various services by EU central securities depositories to Russian nationals, residents and entities, in relation to transferable securities issued after 12 April 2022, and
  • the sale of EUR-denominated securities issued after 12 April 2022, and units in collective investment undertakings providing exposure to such securities, to Russian nationals, residents and entities.

Nationals and residents of EU Member States are exempt from these new restrictions.



Ben Smith is a Partner in Baker McKenzie’s London office and a member of the firm’s Compliance & Investigations and International Trade practice groups. Both these practices are ranked Tier 1 by Legal 500 UK. Ben joined the London office of Baker & McKenzie in September 2007. He has also worked in Baker McKenzie's San Francisco and Brussels offices, as well as on secondment to the legal and compliance teams at three FTSE 100 UK plcs. The Legal 500 UK ranked Ben as a “Rising Star”, noting “Ben Smith is a pleasure to work with. Professional, knowledgeable and always ready to assist with practical solutions.”