On 8 April 2022, the EU adopted a fifth package of sanctions which introduced new sectoral measures targeting the Russian and Belarusian economies. As part of the package, the EU also imposed restrictive measures on four key Russian banks, prominent oligarchs, business people and high-ranking Kremlin officials, as well as family members of already sanctioned individuals.

The new Regulations and Council Decisions that introduce the new sanctions can be found here and here.     

We have outlined below the newly introduced sanctions in greater detail.

Targeted restrictive measures

The EU council added another 217 individuals and 18 entities to its designated persons list, introducing asset freezes and a prohibition on making funds or economic resources available to those persons.

Most notably, the list of newly sanctioned entities includes four major Russian banks (VTB Bank, Bank Otkritie, Sovcombank and Novikombank). Other newly sanctioned entities mainly operate within the transport and military-defence sectors.

The new designations also target individuals involved in key economic sectors such as energy, finance, media, defence and the arms industry.

Sectoral sanctions and export/import restrictions

Prohibition on the purchase, import or transfer of coal and other solid fossil fuels into the EU

The EU has now prohibited the purchase, import, or transfer, directly or indirectly, of coal and other solid fossil fuels, as listed in Annex XXII into the EU if they originate in Russia or are exported from Russia. Standard prohibitions on the provision of technical and financial assistance apply as well.

The new prohibition does not apply to the execution of contracts concluded before 9 April 2022, until 10 August, 2022.

New restrictions on import of goods and technology which generate significant revenues for Russia

In addition to the prohibitions on the import of coal and other solid fossil fuels into the EU, the new regulations also include a prohibition on the purchase, import, or transfer, directly or indirectly, of goods which generate significant revenues for Russia, as listed in Annex XXI, into the EU if they originate in Russia or are exported from Russia. Standard prohibitions on the provision of technical and financial assistance apply as well.

The new goods and technology listed in Annex XXI, include, inter alia, wood, cement, fertilizers, seafood and liquor products, listed by HS codes.

The regulation includes a wind-down provision, stating that the above-mentioned prohibitions do not apply to the execution of contracts concluded before 9 April, 2022, until 10 July 2022.

New export restrictions on goods which could contribute to the enhancement of Russian industrial capacities

The EU has also decided to prohibit the sale, supply, transfer or export, directly or indirectly, of goods which could contribute in particular to the enhancement of Russian industrial capacities as listed in Annex XXIII, to any natural or legal person, entity or body in Russia or for use in Russia. Standard prohibitions on the provision of technical or financial assistance apply as well.

Goods included in Annex XXIII, include, inter alia, chemicals such as hydrogen, nitrogen, oxygen, silicon, arsenic and many more chemicals, substances and products, listed by HS codes.

The prohibitions set out above does not apply to the execution of contracts concluded before 9 April 2022, until 10 July 2022. Goods which are necessary for the official purposes of diplomatic or consular missions of Member States or partner countries in Russia or of international organizations enjoying immunities in accordance with international law, or to the personal effects of their staff, are also exempted from these new prohibitions.

Moreover, the competent national authorities may grant licenses for the sale, supply, transfer or export of the goods and technology listed in Annex XXIII, if such transactions are necessary for humanitarian purposes.

Further export restrictions relating to the energy and aviation sectors

Before the introduction of the EU’s fifth sanctions package, the EU had introduced an export restriction on goods and technology suited for use in oil refining, as listed in Annex X. These export restrictions now also extend to goods and technology suited for use in the liquefaction of natural gas, as listed in Annex X.

Furthermore, the previously introduced export ban in relation to goods and technology suited for use in aviation or the space industry, as listed in Annex XI, now also includes an export ban on jet fuel and fuel additives as listed in Annex XX.

Additional restrictions on products that might contribute to Russia’s military and technological enhancement, or the development of the defence and security sector

As previously reported, the new sanctions imposed on Russia include a prohibition on the sale supply, transfer or export, directly or indirectly, goods and technology which might contribute to Russia’s military and technological enhancement, or the development of the defence and security sector, as listed in Annex VII, whether or not originating in the Union, to any natural or legal person, entity or body in Russia or for use in Russia.

The EU has now included a new category of goods in Annex VII, titled “miscellaneous”, thereby designating the products listed therein as products that might contribute to Russia’s military and technological enhancement.

The newly included products include, equipment for oil production and oil exploration, equipment, “electronic assemblies” and components, specially designed for quantum computers, and conjugated polymers (conductive, semiconductive, electroluminescent) for printed or organic electronics, etc.

Prohibition on providing access to EU ports to vessels registered under the flag of Russia

After 16 April 2022, it will be prohibited to provide access to ports within the territory of the EU to any vessel registered under the Russian flag. This prohibition also applies to any vessel that has changed its Russian flag or its registration to the flag or register of any other state after 24 February 2022.

An exception to this prohibition is provided for in the event of a vessel in need of assistance seeking a place of refuge, of an emergency port call for reasons of maritime safety, or for saving life at sea.

Furthermore, notwithstanding this new prohibitions, the competent national authorities may authorize a vessel to access a port if it is deemed necessary for:

  1. the purchase, import or transport into the Union of natural gas and oil, including refined petroleum products, titanium, aluminum, copper, nickel, palladium and iron ore, as well as certain chemical and iron products as listed in Annex XXIV;
  2. the purchase, import or transport of pharmaceutical, medical, agricultural and food products, including wheat and fertilizers whose import, purchase and transport is allowed under this Regulation;
  3. humanitarian purposes;
  4. transport of nuclear fuel and other goods strictly necessary for the functioning of civil nuclear capabilities; or
  5. the purchase, import or transport into the Union of coal and other solid fossil fuels, as listed in Annex XXII until 10 August 2022.

A ban on any Russian and Belarusian road transport companies to transport goods by road within the EU, including transit

As part of the new sanctions package, it will be prohibited for any road transport undertaking established in Russia or Belarus to transport goods by road within the territory of the Union, including in transit.

For purposes of the regulation, “road transport undertaking” means any natural or legal person, entity or body engaged with a commercial purpose in the transport of freight by means of motor vehicles or combinations of vehicles.

The prohibition set out above does not apply to road transport undertakings transporting:

  1. mail as a universal service (applies to both Russia and Belarus);
  2. goods in transit through the EU between the Kaliningrad Oblast and Russia, provided that the transport of such goods is not otherwise prohibited under this Regulation (this exception applies only to Russia, not Belarus).

The new prohibition includes a wind-down provision, meaning that it does not apply until 16 April 2022 to the transport of goods that started before 9 April 2022, provided that the vehicle of the road transport undertaking:

  1. was already in the territory of the EU on 9 April 2022, or
  2. needs to transit through the EU in order to return to Russia.

Additionally, the competent national authorities may grant licenses for the transport of goods by a road transport undertaking established in Russia or Belarus, provided that such transport is deemed necessary for:

  1. the purchase, import or transport into the EU of natural gas and oil, including refined petroleum products, as well as titanium, aluminum, copper, nickel, palladium and iron ore;
  2. the purchase, import or transport of pharmaceutical, medical, agricultural and food products, including wheat and fertilizers whose import, purchase and transport is allowed under this Regulation;
  3. humanitarian purposes;
  4. the functioning of diplomatic and consular representations of the Union and of the Member States in Russia, including delegations, embassies and missions, or international organizations in Russia enjoying immunities in accordance with international law; or
  5. the transfer or export to Russia of cultural goods which are on loan in the context of formal cultural cooperation with Russia (licensing ground only applies to Russia, not Belarus).

Prohibition on awarding or continuing the execution of certain public or concession contracts

The new sanctions prohibits the award or continuation of execution of any public or concession contract falling within the scope of the public procurement Directives, as well as Article 10, paragraphs 1, 3, 6(a) to 6(e), 8, 9 and 10, Articles 11, 12, 13 and 14 of Directive 2014/23/EU, Article 7 and 8, Article 10 (b) to (f) and (h) to (j) of Directive 2014/24/EU, Article 18, Article 21 (b) to (e) and (g) to (i), Articles 29 and 30 of Directive 2014/25/EU and Article 13 (a) to (d), (f) to (h) and (j) of Directive 2009/81/EC, to or with:

  1. A Russian national, or a natural or legal person, entity or body established in Russia;
  2. a legal person, entity or body whose proprietary rights are directly or indirectly owned for more than 50 % by an entity referred to in point (a) of this paragraph; or
  3. a natural or legal person, entity or body acting on behalf or at the direction of an entity referred to in point (a) or (b) of this paragraph,

including, where they account for more than 10 % of the contract value, subcontractors, suppliers or entities whose capacities are being relied on within the meaning of the public procurement Directives.

The regulation provides for the following licensing grounds:

  1. the operation, maintenance, decommissioning and radioactive waste management, fuel supply and retreatment and safety of civil nuclear capabilities, and the continuation of design, construction and commissioning required for the completion of civil nuclear facilities, as well as the supply of precursor material for the production of medical radioisotopes and similar medical applications, critical technology for environmental radiation monitoring, as well as civil nuclear cooperation, in particular in the field of research and development;
  2. intergovernmental cooperation in space programmes;
  3. the provision of strictly necessary goods or services which can only be provided, or which can only be provided in sufficient quantities, by the persons referenced above;
  4. the functioning of diplomatic and consular representations of the Union and of the Member States in Russia, including delegations, embassies and missions, or international organizations in Russia enjoying immunities in accordance with international law;
  5. the purchase, import or transport of natural gas and oil, including refined petroleum products, as well as titanium, aluminum, copper, nickel, palladium and iron ore from or through Russia into the Union; or
  6. the purchase, import or transport into the Union of coal and other solid fossil fuels, as listed in Annex XXII until 10 August 2022.

Lastly, the prohibitions set out above will not apply to the execution of contracts concluded before 9 April 2022, until 10 October 2022.

Prohibition on providing certain services to Russian trusts, or similar legal arrangements

As part of the EU’s efforts to prevent circumvention of the new measures targeting Russia, it will now be prohibited to register, provide a registered office, business or administrative address as well as management services to, a trust or any similar legal arrangement having as a trustor or a beneficiary:

  1. Russian nationals or natural persons residing in Russia;
  2. legal persons, entities or bodies established in Russia;
  3. legal persons, entities or bodies whose proprietary rights are directly or indirectly owned for more than 50 % by a natural or legal person, entity or body referred to in points (a) or (b);
  4. legal persons, entities or bodies controlled by a natural or legal person, entity or body referred to in points (a), (b) or (c);
  5. a natural or legal person, entity or body acting on behalf or at the direction of a natural or legal person, entity or body referred to in points (a), (b), (c) or (d).

Furthermore, as of 10 May 2022, it will be prohibited to act as, or arrange for another person to act as, a trustee, nominee shareholder, director, secretary or a similar position, for a trust or similar legal arrangement as referred to above.

Operations that are strictly necessary for the termination by 10 May 2022 of contracts which are not compliant with the prohibitions set out above concluded before 9 April 2022 or ancillary contracts necessary for the execution of such contracts are exempted from the prohibitions referenced above.

Lastly, the competent national authorities may authorize the services referred to above, under such conditions as they deem appropriate, after having determined that this is necessary for:

  1. humanitarian purposes, such as delivering or facilitating the delivery of assistance, including medical supplies, food, or the transfer of humanitarian workers and related assistance or for evacuations; or
  2. civil society activities that directly promote democracy, human rights or the rule of law in Russia.

Various new financial restrictions

The new regulations also include the following new financial and business restrictions:

  1. A prohibition on the provision of crypto-asset wallet, account or custody services to Russian nationals or natural persons residing in Russia, or legal persons, entities or bodies established in Russia, if the total value of crypto-assets of the natural or legal person, entity or body per wallet, account or custody provider exceeds EUR 10 000. This prohibition is subject to certain exceptions and licensing grounds.
  2. The previously implemented prohibition in Article 5i on the sale, supply, transfer or export of 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, now extends to any official currency of a Member State. The same exceptions as before apply. Likewise, the same prohibition is extended to Belarus.
  3. Similar to point b) above, the previous prohibition on the sale of euro denominated transferable securities issued after 12 April 2022 or units in collective investment undertakings providing exposure to such securities, to any Russian national or natural person residing in Russia or any legal person, entity or body established in Russia, now extends to transferable securities denominated in any official currency of a Member State issued after 12 April 2022.
  4. A prohibition to provide direct or indirect support, including financing and financial assistance or any other benefit under a Union, Euratom or Member State national programme and contracts within the meaning of Regulation (EU, Euratom) 2018/1046, to any legal person, entity or body established in Russia with over 50 % public ownership or public control. This prohibition is subject to certain exceptions.
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