On 14 March 2022, the Monetary Authority of Singapore (“MAS”) issued the following 2 notices that are legally binding on all financial institutions regulated by the MAS (including banks, finance companies, insurers, capital markets intermediaries, securities exchanges, payment service providers and digital payment token service providers):
- Notice SNR-N01 Financial Measures in Relation to Russia
- Notice SNR-N02 Financial Measures in Relation to Russia – Non-prohibited Payments and Transactions
Notice SNR-N02 sets out the general sanctions measures against Russia, while the exceptions to the prohibition against dealing with and freezing of assets of designated banks and entities set out in Notice SNR-N01 are set out in Notice SNR-N02.
A high level summary of each of these notices are set out below.
Further to our blog post on 6 March 2022, financial institutions:
- must not, directly or indirectly, establish business relations with or undertake any financial transaction for; enter into any financial transaction with; provide, or facilitate or procure the provision of, any financial assistance or service (including but not limited to the granting of export credits, guarantees, insurance or re-insurance) to; or transfer any financial assets or resources, or other assets or resources, to, any Sanctioned Bank or Sanctioned Entity (see below definitions). The designated banks and entities that are subject to the sanctions measures refer to:
- the following entities, as well as all entities owned or controlled by, directly or indirectly, or acting on behalf of or under the direction of, these entities (“Sanctioned Banks“): VTB Bank Public Joint Stock Company; the Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank; Promsvyazbank Public Joint Stock Company and Bank Rossiya
- entities (which will be designated in an Annex to Notice SNR-N01 in the near future) that supplies to Russia specific export controlled items prescribed under the Strategic Goods (Control) Order 2021 (“Sanctioned Entities“) which include items falling within the categories of electronics, computers, telecommunications and military goods;
- are required to immediately freeze all funds, financial assets or economic resources that are owned or controlled, directly or indirectly, by a Sanctioned Bank or Sanctioned Entity, and ensure that such funds, financial assets or economic resources are not made available for the benefit of any Sanctioned Bank or Sanctioned Entity;
- are prohibited from entering into financial transactions or providing financial assistance or services to any person insofar as it relates to the supply of certain export controlled items (including items falling within the categories of electronics, computers, telecommunications and military goods) from Singapore or any other jurisdiction to Russia;
- are, with respect to the Russian government, the Central Bank of the Russian Federation or any legal persons owned or controlled by the Russian government or the Central Bank of the Russian Federation, prohibited from purchasing, selling or providing financial services for or assist in the issuance of securities or certificates of deposit issued to such persons; or make new loans or credit to such persons from 14 March 2022 onwards;
- are, with respect to transport, telecommunications, energy, oil, gas and mineral resources, prohibited from entering into financial transactions or providing financial assistance or services relating to the sale, transfer or export of such goods or technology relating to specific sector in Donetsk or Luhansk;
- prohibited from facilitating any digital payment token transaction where the proceeds or benefits from such transaction may be used to facilitate any of the transactions or activities as set out above; and
- are obliged to provide information to the MAS immediately should it have any information or fact on any of the transactions or activities as described above.
As mentioned above,exceptions to the prohibition against dealing with and freezing of assets of Sanctioned Banks and Sanctioned Entities set out in Notice SNR-N01 are set out in Notice SNR-N02:
Financial institutions are permitted to process or facilitate any payment or transfer of funds, financial assets or economic resources where such payment or transfer is:
- necessary for the payment of basic expenses of Sanctioned Banks and Sanctioned Entities. Such basic expenses include insurance premiums, remuneration and allowances for employees, rent or storage services, mortgage payments, fees for providing property management services or technology-related services, utility or telecommunication charges; or expenses that are necessary to comply with regulatory requirements; or
- exclusively for the payment of fees or service charges imposed for the routine holding or maintenance of frozen funds, financial assets or economic resources; or reasonable fees and expenses for the provision of audit, tax, legal or payroll services.
Further, financial institutions are permitted to process the following types of transactions between one or more Sanctioned Banks: any transaction to facilitate a person’s withdrawal of funds, financial assets or economic resources pursuant to the termination of existing business relations between the person (not a Sanctioned Bank) and the Sanctioned Bank, for the benefit of the person; and any transaction in relation to any funds, financial assets or economic resources which are necessary for the performance of the functions of the Embassy of the Russian Federation in Singapore.
Complete, accurate and readable records must be kept if the financial institutions intend to apply the above exceptions.