Russia/Ukraine Sanctions Update - Month of October

US Sanctions | EU Sanctions | UK Sanctions | Russia/Ukraine Sanctions | Other Notable Developments

I.  US SANCTIONS

• U.S. Department of the Treasury Targets Russian Military-Industrial Producers: On October 30, the U.S. Department of the Treasury announced new sanctions on 275 individuals and entities involved in supplying technology and equipment in support of Russia’s war effort. The U.S. Department of State is concurrently targeting third-country sanctions evaders and senior Russian Ministry of Defense officials and defense companies. Read more >>
  
• U.S. Department of Commerce Lists Entities for Their Support of Russian War Effort: On October 30, the Commerce Department’s Bureau of Industry and Security added 40 entities and 4 addresses to its Entity List for supporting the Russian war effort against Ukraine. The additions aim to limit the diversion of U.S.-origin or U.S.-branded products to Russia through third countries. Read more >>
  
• Department of Treasury Sanctions Two Swiss Lawyers for Sanctions Violations: On October 30, the U.S. Department of the Treasury’s Office of Foreign Assets Control sanctioned two Swiss lawyers for providing legal cover to Russian sanctions violators. Specifically, the lawyers served as handlers of Russian assets and facilitated cash illegal cash flows in Switzerland and Liechtenstein, in violation of U.S. sanctions law. Read more >>
• White House Announces Ukraine Loans Backed by Profits from Seized Russian Sovereign Assets: On October 23, President Biden announced $20 billion in loans to Ukraine, backed by profits of “immobilized Russian sovereign assets.” This action follows a previous commitment from G7 members to provide $50 billion in Extraordinary Revenue Acceleration loans to Ukraine. Read more >>
• U.S. Department of Commerce Lists Entity for Russia Sanctions Evasion: On October 21, the Commerce Department’s Bureau of Industry and Security added 26 entries to its Entity List. Four entries—Steel Design LLC (Egypt), Ahmed Abdellatif (UAE), Ayman Elgindy (UAE), and Steel Design FZE (UAS)—were listed for acquiring and attempting to acquire civil aircraft parts on behalf of a Russian buyers and attempting to avoid U.S. sanctions and export controls. Read more >>
• U.S. Department of the Treasury Targets Drone Producers: On October 17, the U.S. Department of the Treasury announced that its Office of Foreign Assets Control designated Russian and Chinese individuals and entities involved in the development and production of unmanned aerial vehicles for use against Ukraine. Read more >>
• Department of Justice Charges Two Russians for Export Control Violations: On October 9, the United States Attorney for the Southern District of New York announced charges against two Russian nationals and a dual Russian and German national for export control violations, smuggling, wire fraud, and money laundering. The trio are alleged to have acquired over $225,000 worth of controlled microelectronic devices and, through a series of shell companies, exported them to Electrocom in Russia. Read more >>
• U.S. Department of the Treasury and International Partners Sanctions Russia-Based Cybercriminal Group: On October 1, the U.S. Department of the Treasury’s Office of Foreign Assets Control, in a tri-lateral action with UK (Foreign, Commonwealth & Development Office) and Australian (Department of Foreign Affairs and Trade) partners, designated seven individuals and two entities associated with Evil Corp., a Russian-based cybercriminal group. Evil Corp is responsible for the deployment of Dridex malware, which resulted in more than $100 million in loss and damages starting in 2015. Read more >>

II.  EU Sanctions

• New Sanctions Framework in Response to Russia’s Destabilizing Actions Abroad: The new framework will allow the EU to target individuals and entities engaged in actions and policies by the government of the Russian Federation, which undermine the fundamental values of the EU and its member states, their security, independence, and integrity, as well as those of international organizations and third countries. Under this newly established framework, those designated will be subject to an asset freeze and travel ban. Read more >> and Read more >>
• EU Targets 14 Iranian Individuals and Entities for Providing Missiles to Russia: The EU designated seven individuals and seven entities as subject to an asset freeze and travel ban following Iran’s missile and drone transfers to Russia. The listings include three Iranian airlines, Saha Airlines, Mahan Air, and Iran Air, and two procurement firms. These are respectively responsible for the transfer and supply, through transnational procurement networks, of Iran-made UAVs and related components and technologies to Russia, to be used in its war of aggression against Ukraine. Two companies involved in the production of propellant used to launch rockets and missiles were also listed. Read more >> and Read more >>
• EU Commission Launches Survey on "No Russia" Contractual Clauses Requirements: The European Commission is seeking feedback on Article 12g of Council Regulation No 833/2014 in the context of the EU’s efforts to deter circumvention. In addition to assessing the feedback received, the Commission will look into trade data, export statistics and other information concerning circumvention patterns regarding the goods referred to in Article 12g, including the role that EU operators' subsidiaries in non EU countries may play in such patterns. On that basis, the Commission will assess whether the ‘no re export to Russia’ clause is appropriate for its purpose and consider any other necessary actions to curb Russia’s access to sensitive goods that enable it to pursue the war in Ukraine, including the possibility of requiring EU operators to ensure that their subsidiaries in non EU countries also use the ‘no re export to Russia’ clause. Read more >>
• Ukraine Loan Cooperation Mechanism Designated as the Union Spending Instrument: A newly established Ukraine Loan Cooperation Mechanism will make future revenues from the frozen Russian Central Bank assets located in the EU available to Ukraine. The objectives of the Ukraine Loan Cooperation Mechanism and the exceptional macro-financial assistance loan to Ukraine to be provided by the Union are to provide additional funding to Ukraine to be repaid by future flows of extraordinary revenues accruing to central securities depositories as a result of the implementation of restrictive measures. Read more >> and Read more >>
• EU Corrects the 14^th Package of Sanctions against Russia: The EU deleted CN code 8609 and the corresponding Description ‘Containers, (including containers for the transport of fluids), specially designed and equipped for carriage by one or more modes of transport’ from the EU sanctions framework again Russia. This code was made subject to EU sanctions under the 14th package of sanctions against Russia. Read more >>
• Updated Price Cap Coalition Advisory for the Maritime Oil Industry and Related Sectors: The Price Cap Coalition issued an updated advisory to provide recommendations concerning specific best practices for private sector actors involved in the maritime trade of crude oil and refined petroleum products, as well as government stakeholders. This updated advisory reflects our ongoing efforts to promote responsible practices in the industry to prevent and disrupt sanctions evasion. It also reflects efforts to further enhance compliance with the price caps on crude oil and petroleum products of Russian Federation origin. Read more >>
• General Court Confirms Validity of Legal Services Ban on Russian Entities: On October 2, 2024, the General Court of the EU ruled on challenges brought by several bar associations against the legal services ban under the EU sanctions against Russia. The Court confirmed the legality of the ban and clarified that the general prohibition on providing legal advisory services to the Russian Government or to legal persons, entities or bodies established in Russia does not concern legal advisory services provided in connection with judicial, administrative, or arbitral proceedings. The prohibition thus applies only to legal advice that has no link with judicial proceedings. Read More >>, Read More>>, and Read More >>
• OLAF Supports Spanish Operation Enforcing EU Sanctions against Russia: The European Anti-Fraud Office (OLAF) assisted the Spanish authorities with the enforcement of EU sanctions against Russia during Operation “Probirka" (Russian for “Test Tube"). The operation led to the arrest of four individuals involved in the illegal export of chemicals to Russia and the seizure of 13 tons of chemical substances. As part of the Joint Sanctions Enforcement Operation that OLAF has been running since July 2023, OLAF was called upon by the Spanish authorities to assist with investigations into the export of chemical substances from Spain. It is suspected that certain companies were bypassing EU sanctions by rerouting goods through intermediaries in Kyrgyzstan, with the final destination being Russia. Read More >>
• Czech Industry Profiting from Russian Oil Sanctions Loophole: A report found that the Czech Republic has spent over €7 billion on Russian oil and gas. The situation is possible because the European Union granted the Czech Republic an exemption to its Russian oil ban after Moscow invaded Ukraine. The carve-out was intended to give landlocked countries in Central Europe like Hungary, Slovakia, and the Czech Republic extra time to find new fuel routes. One company in particular, Polish firm Orlen Unipetrol, has benefited from the arrangement. Read More >>

III.  UK Sanctions

• UK Government adds six new entries to the UK sanctions list under the Russia regime: On October 28, 2024, the UK Government added Ilya Andreevich Gambashidze, Andrey Naumovich Perla, Nikolai Aleksandrovich Tupikin, Ano Dialog, Social Design Agency, and Structura National Technologies to the UK Sanctions List under the Russia Regime. Read more >>
• OFSI legal services general licence to expire; new general licence to come into effect: On October 25, 2024, OFSI published new General Licence INT/2024/5334756, which comes into effect on 29 October 2024.  This general licence authorises certain activities relating to the provision of legal services to designated persons under the Russia and Belarus sanctions regimes and will replace General Licence INT/2024/4671884, which expires on October 29, 2024.  Under the new General Licence, OFSI has (i) increased the fee and expenses caps; (ii) introduced a restricted permission to pay into non-UK bank accounts; and (iii) clarified the position relating to caps applicable and in-house lawyers and directly instructed Counsel. Read more >> and Read more >>
• OFSI moves NSD General Licence to expired licences page: On October 23, 2024, the Office of Financial Sanctions Implementation (OFSI) moved the General Licence INT/2024/4919848, which expired on October 12, 2024, to the expired licences page.  This General Licence authorised until October 12, 2024, certain activities relating to the sale, divestment and transfer of financial instruments held by the Russian National Settlement Depository (NSD) and payment of safe keeping fees to the NSD. Read more >>
• Updated Price Cap Coalition Advisory for the Maritime Oil Industry and Related Sectors Issued: On October 22, 2024, the Price Cap Coalition, which includes the G7, the EU, Australia, and New Zealand, updated its Price Cap Coalition Advisory for the Maritime Oil Industry and Related Sectors.  The Advisory, initially published in October 2023, has been updated to provide stakeholders with new recommendations on meeting international obligations, enhancing due diligence around tanker sales, avoiding interactions with sanctioned counterparties, and raising internal awareness. Read more >>
• UK Government delists Russian individual under the Russia regime: On October 17, 2024, the UK Government delisted Semyon Mkrtychovich Simonyan under the Russia sanctions regime. Simonyan is no longer subject to an asset freeze. Read more >>
• G7 issues Joint Guidance on preventing Russian export control and sanctions evasion: On October 17, 2024, the G7 issued joint guidance on preventing Russian export control and sanctions evasion.  Among other things, the joint guidance contains: (i) a list of items which pose a heightened risk of being diverted to Russia; (ii) updated red flag indicators of potential export control and sanctions evasion; (iii) best practices for industry to address these red flags; and (iv) screening tools and resources to assist with due diligence. Read more >>
• UK Government adds new entry to the UK sanctions list under the Russia regime: On October 17, 2024, the UK Government added Rusgazdobycha JSC, a Russian gas company, to the UK Sanctions List under the Russia Regime.  Rusgazdobycha JSC is subject to an asset freeze and trust services sanctions.  The UK Government corrected its initial Notice shortly following its publication. Read more >>
• UK Government proscribes 22 ships under the Russia regime: On October 17, 2024, the UK Government proscribed 18 oil tankers and four LNG tankers under the Russia regime.  According to a UK Government announcement, this is the largest package to date against Putin’s shadow fleet of oil tankers and bring the number of oil tankers sanctioned by the UK to 43. Read more >> and Read more >>
• UK amends two entries on the UK sanctions list under the Russia regime: On October 11, 2024, the UK Government amended the entries of Andrey Igorevich Melnichenko, founder of Eurochem, one of world's largest coal and fertiliser companies, and Grigory Vikotorovitsj Berezkin, the owner and chairman of ESN Group, on the UK sanctions list.  These individuals remain subject to an asset freeze and trust services sanctions. Read more >>
• OFSI updates General Licence for payments to water companies: On October 1, 2024, the Office of Financial Sanctions Implementation (OFSI) updated General Licence INT/2023/3179120, which inter alia authorises payments by UK designated persons and persons acting for or on their behalf to certain water companies.  The updated general licence amends the definitions of “UK designated person” and “return payments” under the licence.  The General Licence is now also of indefinite duration. Read more >>
• OFSI publishes new FAQs and relating to trust services and licensing: On October 1, 2024, OFSI added two new FAQs.  FAQ 121 states that internal settlements of Russian securities between two counterparties with sub-accounts held within the same non-designated bank do not engage UK sanctions, subject to certain conditions.  FAQ 122 seeks to clarify the definition of “located” and “ordinarily resident” in Russia for the purposes of the UK trust services sanctions targeting Russia. Read more >>
• UK to remove licensing consideration relation to provision of intra-corporate services by UK companies to their Russian subsidiaries: On September 30, 2024, the UK issued Notice to Exporters 2024/26 to provide an update on Russian sanctions licensing for intra-corporate services.  In particular, the Notice states that, from October 31, 2024, the provision of intra-corporate services “will no longer be listed in the Statutory Guidance as a licensing consideration that is likely to be consistent with the aims of the sanctions regime”. Read more >>
• Office of Financial Sanctions Implementation (OFSI) issues monetary penalty for breaches of Russia sanctions: On September 27, 2024, OFSI published details of a £15,000 monetary penalty imposed against Integral Concierge Services Limited ("ICSL") for breaches of the Russia (Sanctions) (EU Exit) Regulations 2019.  The penalty related to 26 payments made or received by ICSL in 2022 and 2023 in connection with property management services it provided to a UK assets freeze target.  ICSL also breached the reporting requirements under certain general licences issues by OFSI. Read more >>

IV.  Russia/Ukraine Sanctions

• Russia Bans 131 Australians in Retaliation for Australia’s “Anti-Russian Agenda”: On October 29, Moscow announced that 131 Australians are banned from entering Russia. The action targets senior diplomats, journalists, military officials, and business leaders. The Russian Foreign Ministry indicated that the ban is in response to Canberra’s sanctions on Russia and “anti-Russian course.” Read more >>
• Russia Imposes New Sanctions on Military Officials in New Zealand: On October 30, 2024, Russia's Foreign Ministry sanctioned nine leading individuals from New Zealand's Ministry of Defence and armed forces.  The designations came as Russia accused them of "shaping an anti-Russian agenda" and consist of New Zealand's Secretary of Defence and Chief Executive of the Ministry of Defence, four deputy ministers and representatives from the country's air force and navy commands. Read more >>

V.  Other Notable Developments

• Switzerland Defends Limits on Russian Sanctions: On October 18, Switzerland stated that it is “unequivocally committed” to Russian sanctions following international pressure in response to its decision to not adopt fully the European Union’s 14th sanctions package. U.S. officials criticized the decision and stated a desire for Switzerland to “close the loophole” opened by not adopting the sanctions package. Read more >>
• Canada Quietly Lifts Sanctions on Russian Banker: On October 28, Canada’s Foreign Affairs Minister announced that sanctions on Russian banker Denis Kamyshev would be lifted. Kamyshev is employed by Gazprombank and was sanctioned in 2022. The Canadian Government did not explain the decision. Read more >>
• Launch of the Office of Trade Sanctions Implementation in the UK:  On October 10, 2024, the Office of Trade Sanctions Implementation (OTSI) within the Department for Business and Trade became operational within the UK.   Complementing HMRC’s trade sanctions enforcement role at the UK border, OTSI has new civil enforcement powers in relation to services as well as movement of goods across third country borders, where there is a UK nexus. Financial services firms, money services businesses and legal service providers are now required to report suspected breaches of relevant trade sanctions to OTSI. Read more >> and Read more >> 
  
• BRICS Conference takes place in Kazan, Russia: Between October 22 and October 24, 2024, Russia hosted the annual BRICS summit in which the BRICS members (namely Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates) discussed the economic and political effect of the West's sanctions regimes.   Following the summit, the BRICS nations released a statement which accused the West's sanctions regime of "discriminatory politically motivated practices…that are incompatible with the principles of the UN Charter" which primarily are "aimed at limiting development" in the sanctioned nations. Read more >> and Read more >>