Sanctions Update: Further measures taken by UK, EU and US in response to Russia's invasion of Ukraine

Given how rapidly announcements are being made in this area we have not sought to outline all new restrictions that have been announced. The following is a short summary of some of the key announcements that have been made in recent days:

UK

• On 25 February, the UK announced that Russian President, Vladimir Putin, and Foreign Minister, Sergey Lavrov, would be targeted by an asset freeze as part of the UK’s sanctions regime. This approach was also taken by the EU and US.
  
  
• The UK has added a number of entities and individuals formally to the UK Sanctions List.
  
  
  • The UK has stated that this includes more than "100 companies and oligarchs at the heart of Putin’s regime" although the full list has not yet been published. It was suggested before Parliament on 2 March 2022 by the UK's Prime Minister, Boris Johnson, that a full list would be published in due course.
  • In addition, asset freezes have been imposed on a number of entities including VTB, Rostec, VEB, Bank Otkritie and Sovcombank and it is anticipated that sanctions will also be imposed on 571 members of the Russian Duma and Federation council, as a result of their involvement in the decision to invade Ukraine.
  • The UK has also announced a small number of new sanctions in respect of Belarus for its role in the Russian invasion of Ukraine.
  • The UK has banned Aeroflot and all other Russian commercial and private jets from UK airspace.
  • On 28 February, the UK's Export Control Joint Unit ("ECJU") issued a notice that extant and new dual-use licences to Russia had been suspended. Nine open general export control licences have also been updated to remove Russia as a permitted destination.
  • A number of legislative amendments have been made to Russia (Sanctions) (EU Exit) Regulations 2019, which expand the scope of the UK's sanctions regime. Please see below for further details.

EU

• The EU's consolidated list of financial sanctions is available on this page for download.
  
  
• On 26 February, it was announced in a joint statement by the European Commission, US, Italy, France, Germany, UK and Canada that certain Russian banks will be excluded from the SWIFT messaging systems, although the identities of all these banks have not yet been confirmed.
  
  • The Council of the EU's most recent press release is available here. Seven banks are included; Bank Otkritie, Novikombank, Promsvyazbank, Rossiya Bank, Sovcombank, VNESHECONOMBANK (VEB), and VTB BANK. The restriction will enter into force on the tenth day after the publication of the list in the Official Journal of the EU (12 March 2022).
    
    
• On 28 February, the EU Council approved:
  • a ban on transactions with the Russian Central Bank;
  • € 500 million support package to finance equipment and supplies to the Ukrainian armed forces;
  • a ban on the overflight of EU airspace and on access to EU airports by Russian carriers of all kinds; and
  • new sanctions on persons and entities.
    
    
• On 2 March, the EU approved new sanctions against Belarus for its role in supporting Russia's invasion of Ukraine, effectively banning around 70% of all imports from Belarus, targeting in particular the wood, steel and potash sectors.

US

• The US has added a number of entities and individuals to its sanctions lists. These lists can be searched using the following search tool available on the Office of Foreign Assets Control's website.
  
  
• The US has introduced a number of export restrictions focusing on Russia's aviation industry, including a new license requirement for essential parts and components used in Russian civilian aircraft, which may limit Russia's ability to service aircraft.
  
  
• On 2 March the US president, Joe Biden, stated that "nothing is off the table" in response to a question on cutting off Russian oil from being sold in the US, which may have a further impact on the Russian economy. Although the US is not a major importer of Russian oil, this may signal that the US will try to encourage European allies to cut ties to the Russian oil and gas sector, which would have a much more significant impact on Russia's exports.
  
  
• In addition to targeting Russia’s financial institutions, the US (and UK and EU) have restricted, and are seeking to restrict further, certain companies from raising money through their markets.

The Russia (Sanctions) (EU Exit) Regulations 2019 came fully into force on 31 December 2020 (the "Regulations"). Details of the UK's Russian sanctions regime are available here and guidance is available here. A number of amending regulations have been published in connection with the Regulations, laid before Parliament on 28 February 2022 and 1 March 2022.

Although we have not sought to summarise all of the relevant amendments made to the Regulations as a result of these new pieces of legislation, some key points include:

• Extending the existing prohibition on dealing with transferable securities and money market instruments if it has a maturity exceeding 30 days and was issued on or after 1 March 2022 by:
  • an entity incorporated or constituted under the law of the UK and owned by one or more of the entities listed in Schedule 2 of the Regulations (Sberbank, VTB Bank, Gazprombank, Vnesheconombank (VEB), Rosselkhozbank, OPK Oboronprom, United Aircraft Corporation, Uralvagonzavod, Rosneft, Transneft, Gazprom Neft ("Schedule 2") – all of which were already subject to sectoral sanctions);
  • an entity acting on behalf or at the direction of the above;
  • a person connected with Russia (which is widely defined);
  • an entity owned by such persons or an entity acting on behalf or at the direction of any of the above; or
  • the Government of Russia.
    
    
• Extending the existing prohibition on directly or indirectly granting or entering into any arrangement to grant a new loan or credit, with a maturity exceeding 30 days to:
  • the entities listed in Schedule 2;
  • an entity which is incorporated or constituted under the law of a non-UK country and owned by one or more of the entities listed in Schedule 2, or an entity acting on behalf or at the direction of either that entity or an entity listed in Schedule 2;
  • an entity which is incorporated or constituted under the law of the UK and owned by an entity listed in Schedule 2, on or after 1 March 2022;
  • a person connected with Russia; or
  • the Government of Russia.
    
    
• Prohibition on a UK credit or financial institution from establishing or continuing a correspondent banking relationship with a designated person if the UK credit or financial institution knows, or has reasonable cause to suspect, that the correspondent banking relationship is with a designated person.
  
  
• Prohibition on a UK credit or financial institution from processing a sterling payment to, from or via, a designated person, or a credit or financial institution (domiciled anywhere including the UK) owned or controlled by the designated person, if the UK credit or financial institution has reasonable cause to suspect that the sterling payment is to, from or via a designated person.
  
  
• A new tranche of trade sanctions on Russia were also introduced. The new measures include a list of critical-industry goods and critical-industry technology which are now prohibited for export, supply or transfer to, or for use in, Russia, along with the provision of related technical assistance, financial services and brokering services. Although there are some exceptions, which are set out in detail in the legislation, the ECJU has stated that licenses can only be granted in a few limited circumstances.

No immediate end to the conflict appears likely. Alarmingly, news reports suggest that Russia has intensified its attacks on key Ukrainian cities and the international criminal court confirmed it is opening an investigation into possible war crimes in Ukraine.

It is anticipated that the UK, EU and US will announce further individuals and entities who will become subject to sanctions and additional trade controls as the conflict continues. In addition to government led restrictions, increasingly a number of major international companies have stated that they have, or that they intend to, cease trading in Russia in response to the conflict.