Sanctions Weekly Update – Ukraine/Russia Conflict – March 6, 2023

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

Week of March 6, 2023

I. US SANCTIONS

• REPO Task Force Issues Statement on Efforts Undertaken to Date, Issues Compliance Advisory: On March 9, the Deputies of the multilateral Russian Elites, Proxies, and Oligarchs (REPO) Task Force issued a statement on the Task Force’s efforts undertaken to date. Among other enforcement actions, the Task Force’s members have successfully blocked or frozen more than $58 billion worth of sanctioned Russians’ assets, tracked sanctioned Russian assets across the globe, and heavily restricted sanctioned Russians from the international financial system. The Task Force also issued a new Advisory on Russian Sanctions Evasion, which lists tactics that the Task Force has seen Russian sanctions targets use to obscure beneficial ownership, and suggests best practices for companies seeking to comply with sanctions laws. Read more>> and Read more>>
• US Seizes Airplane Owned by Russian Oil Company: On March 8, the US government obtained a warrant to seize a Boeing 737 aircraft owned by a Russian integrated energy company. According to the seizure warrant, the aircraft at issue, which was manufactured in the U.S., was flown in and out of Russia without a valid license, violating the Export Control Reform Act and the recent sanctions issued against Russia. Read more>>
• Treasury Department Conducting Outreach to Commodity Traders to Encourage Sales of Price Capped Russian Oil: On March 9, the Financial Times reported that officials from the Department of the Treasury have privately reached out to major commodity traders like Trafigura and Gunvor urging them to ship Russian oil at or below the G7’s Russian oil price cap. The move is intended to stabilize international oil markets and ensure Russian oil is being transported safely, since Russian sellers were turning to smaller trading houses with less well known safety records. However, trading houses reported issues in getting banks to accept payment for Russian oil. Read more>>
• White House Budget Requests $6 Billion for Ukraine: On March 9, the White House released its proposed fiscal year 2024 budget. The budget requests over $6 billion to support Ukraine, NATO, and European partner states. This includes a $753 million for Ukraine to continue to counter Rus(Read more>>) malign influence and to meet emerging needs related to security, energy, cybersecurity, disinformation, macroeconomic stabilization, and civil society resilience. 
• Treasury Sanctions Iranian UAV Procurement Network Supplying Russia: On March 9, the Treasury Department’s Office of Foreign Assets Control sanctioned a network of five companies and one individual, based out of China, for supporting Iran’s unmanned aerial vehicle procurement efforts. The network has helped the Iran Aircraft Manufacturing Industrial Company, itself sanctioned under EO 13382 in September 2008, export drones to Russia. Read more>>
• BIS Adds New Entities to Entity List: On March 2, the Department of Commerce’s Bureau of Industry and Security (BIS) issued a rule that, among other things, added 3 new entities located in Russia, Belarus, and Taiwan to the Entity List for significantly contributing to Russia’s military and/or defense industrial base. The entities also received a footnote 3 designation, indicating that they are Russian or Belarussian “military end users” and subjecting them to the Russia/Belarus-Military End User Foreign Direct Product (FDP) rule. Read more>> and Read more>>
• OFAC Sanctions Individuals Involved in Human Rights Abuse against Vladimir Kara-Murza: On March 3, pursuant to Executive Orders (E.O.) 13818 and 14024, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned 6 individuals who have been involved in the arbitrary detention and prosecution of Vladimir Kara-Murza, a Russian human rights defender who has been imprisoned in Moscow since April 2022 for speaking out against Russia’s war against Ukraine.Read more>> and Read more>>
• State Department, European Commission Conduct Outreach to Diamond Industry Regarding Russian Import Measures: On March 6, head of the State Department’s office of sanctions coordination Ambassador James O’Brien and European Commission Deputy Director General and Chief Trade Enforcement Officer Denis Redonnet met with EU and US representatives of the diamond industry. The meeting was intend to encourage the industry’s engagement with both governments on future Russia-related import measures. Read more>>
• Two US Citizens Arrested for Illegally Exporting Technology to Russia: On March 2, the Department of Justice announced that it had arrested two Kansas men on a years-long scheme to supply Western avionics equipment to Russian companies and provide repair services for equipment used in Russian-manufactured aircraft. The defendants obscured true end users, and transshipped items to obscure actual destination. Read more>>
• New Private Sector Partnerships to Help Ukraine’s Agricultural Sector: On March 2, the US Agency for International Development (USAID) announced new partnerships to help Ukraine overcome immediate and long-term export logistics challenges caused by Russia’s invasion. USAID, Grain Alliance, Kernel and Nibulon plan to make combined investments of more than $44 million to support storage and infrastructure expansion in Ukraine’s agriculture sector. The investments are projected to boost Ukraine’s shipping capacity of grain to the global market. Read more>>
• USAID Delivers Pop-Up Classroom to Ukrainian Students: On March 3, the US Agency for International Development (USAID) announced the delivery of a pop-up classroom donated by jp.ik to support education for internally displaced Ukrainians. The donation includes 1,210 laptops, backpacks and headsets, 857 tablet notebooks, and 6 charging trolleys that will help Ukrainian youth continue learning during wartime. Read more>>
• US Sends $400 Million in Defense Assistance to Ukraine: On March 3, the Biden administration announced its 33rd drawdown of US arms and equipment for Ukraine, valued at $400 million. This military assistance package includes more ammunition for U.S.-provided HIMARS and howitzers, as well as ammunition for Bradley Infantry Fighting Vehicles, Armored Vehicle Launched Bridges, demolitions munitions and equipment, and other maintenance, training, and support. Read more>> and Read more>>

II. EU SANCTIONS

• EU Sanctions Nine Individuals and Three Entities under Its Global Human Rights Sanctions Regime: On 9 March, Council decided to impose restrictive measures on nine individuals and three entities in view of their role in committing serious human rights violations and abuses, particularly sexual and gender-based violence. The new listings include officers of the Moscow Police Station and high-ranking members of the Russian armed forces. Read more>>)
• Russian Ex-Haas Driver Mazepin Cleared to Race In Europe: Russian ex-Formula 1 driver Nikita Mazepin was cleared to return to motor racing in Europe, a year after his career was brought to a halt by Moscow's invasion of Ukraine. Read more>>
• Putin’s Blood Diamonds: EU Countries Push for Sanctions by May: Western countries are working on plans to hit Russia's diamond exports with sanctions and are hoping to seal a deal as soon as May, according to officials from European states involved in the talks. Read more>>
• EU General Court Annuls the Restrictive Measures Applied to Ms. Violetta Prigozhina, Mother of Mr. Yevgeniy Prigozhin: Even if the latter is responsible for actions undermining the territorial integrity, sovereignty and independence of Ukraine, the link between Ms. Prigozhina and her son established at the time of the adoption of the contested acts is based solely on their family relationship and is therefore not sufficient to justify her inclusion on the contested lists, the Court ruled. Read more>>
• EU Commission Updates Its FAQ on Aviation: On 3 March, the EU Commission updated its FAQ on aviation with a new question on the sale to Russian entities of leased aircraft lost in Russia. Read more>>
• EU Extends Sanctions in View of the Situation in Ukraine: On 2 March 2023, the Council extended restrictive measures directed against certain persons, entities and bodies in view of the situation in Ukraine until 6 March 2024.Read more>>
• Commission Approves Amendment to Italian Guarantee Scheme, Including Up to EUR 3 Billion Budget Increase, in Context of Russia's War against Ukraine: The European Commission has approved, under EU State aid rules, an amendment to an existing Italian guarantee scheme, including an up to EUR 3 billion budget increase, for the reinsurance of natural gas and electricity trade credit risk in the context of Russia's war against Ukraine. Read more>>
• Commission Approves EUR 18 Million Irish Scheme to Support Road Haulage Operators in Context of Russia's War against Ukraine: The European Commission has approved a EUR 18 million Irish scheme to support road haulage operators in context of Russia's war against Ukraine. The scheme was approved under the State Aid Temporary Crisis Framework. 
• European Parliament Chief Wants Ukraine EU Membership Talks to Start This Year: European Parliament President Roberta Metsola made an unannounced trip to Lviv and discussed Ukraine’s bid to join the EU with Ukrainian President Volodymyr Zelenskyy. “I am hopeful that accession negotiations can begin already this year”, Metsola said in Lviv on Saturday through a spokesperson who was traveling with her. Read more>>

III. UK SANCTIONS

• Russia Sanctions Regime at Risk of ‘Falling to Pieces’: On March 9, 2023, the London newspaper The Times reported that senior UK politicians are demanding action to stiffen the rules after an investigation by The Times and Transparency International revealed details of property owned by families of sanctioned oligarchs. The government’s sanctions regime must be strengthened to include relatives, according to campaigners, as it emerged the eight-year-old daughter of one of Vladimir Putin’s former regional governors owns a £2.3 million flat in Kensington. Additionally, analysis by The Times has revealed that property worth hundreds of millions of pounds is held by the family members of individuals with links to the Kremlin who have been sanctioned either by London or Kyiv. Read more>>
• OFSI Updates Guidance on Maritime Services Ban and Price Cap: On March 8, 2023, OFSI updated its guidance on the UK maritime services prohibition and price cap. The guidance outlines the obligations under the UK maritime services prohibition and oil price cap exception, as well as OFSI’s approach to implementation and enforcement. Specifically, the guidance has been updated to: (i) reflect the price cap on refined Russian oil products and the wind-down period for oil products loaded on ships before 5 February 2023; (ii) set out an amended ‘origin of goods’ section; (iii) use the term ‘provider(s)’ rather than ‘persons’ or ‘entity’ when describing attestation tiers, and; (iv) set out an updated example scenario involving the transport of co-mingled refined oil products. Read more>> and Read more>>
• OFSI Financial Sanctions Targets: On March 8, 2023, OFSI published a ‘Who is subject to financial sanctions in the UK?’ guide along with an updated consolidated list of asset freeze targets and a list of persons named in relation to restrictions under the Russia regulations. The links used to search the list of persons named in relation to financial and investment restrictions under the Russia regulations and associated guidance can be found here: Read more>>
• Expiry of OFSI General Licence INT/2020/059: On March 8, 2023, OFSI general licence INT/2020/059 expired. This licence related to payment(s) out of non-frozen funds to certain Crimean Sea Ports. A link to the expired general licence can be found here: Read more>> A description and full terms and conditions of the expired licence can be found here: Read more>> 

IV. RUSSIA/UKRAINE SANCTIONS

• Sberbank Reports Nearly 80% Drop in Year Over Year Profit, but Expects Rebound: On March 9, Russia’s dominant lender Sberbank reported a 78.3% drop in year over year net profit between 2021 and 2022. The bank’s CEO attributed the drop to Western sanctions, saying it had been “the most difficult year.” However, CEO German Gref said this year’s profits should be close to the record 1.25 trillion rubles ($16.5 billion) earned in the “pre-crisis year,” and added that the company is considering issuing dividend payments on its 2022 results. Read more>>
• Russia Sanctions 144 EU Individuals: On March 9, the Russian Foreign Ministry announced new sanctions on 144 individuals from Estonia, Latvia, and Lithuania. The Ministry said that the sanctions were imposed in response to the countries’ “lobbying for sanctions and other measures against Russia, interference in our internal affairs, and inciting Russophobic moods." Read more>>
• Address by Ukrainian President - ‘We are Doing Everything to Ensure that Our Tactical Steps Contribute to the Strategic Goal’: On March 8, 2023, President Volodymyr Zelenskyy addressed the Ukrainian people via videoconference. In his address, the President said he is “preparing new and quite just steps by our state against those in Ukraine who are still trying to weaken the state and undermine the strength of our society. A new meeting of the National Security and Defense Council will soon take place, and we have relevant draft sanctions decisions.” Read more>>
• Five Greek Shipping Firms Placed on Ukraine Sanctions List: On March 8, 2023, Ukraine placed five Greek shipping firms on a list compiled by the National Committee for War and Sanctions for allegedly continuing to cooperate with Russia despite the ongoing war in Ukraine and the levying of Western sanctions. The five companies named on the sanctions list were: TMS Tankers, Minerva Marine, Dynacom Tankers Management, Thenamaris, and Delta Tankers. The shipping firms have were included in Ukraine’s War and Sanctions list as “sponsors of war.” Read more>>
• Falling Oil Revenues, Soaring War Costs Squeeze Russia’s Finances: On March 6, 2023, it was reported that the Russian government’s budget plunged into a deeper deficit in February, heaping pressure on the Kremlin to square the ballooning costs of its war in Ukraine with falling oil revenues caused by a raft of Western sanctions. The soaring budget gap comes after both the Russian economy and the state have weathered Western sanctions better than expected during the first year of the war. However, some economists have warned the pain would rise as time went by, with new sanctions targeting Russia’s ability to turn its extensive natural resources into cash—historically its main source of revenue. Read more>>
• Western Sanctions are Raising Putin’s War Costs: On March 3, 2023, it was reported that a year after Russian President Vladimir Putin ordered the invasion of neighbouring Ukraine, the cost of his decision is clear in the impact on Russia’s faltering economy. But world leaders should not confuse the political effectiveness of the Allies’ response with the effects of the economic sanctions. The article quotes Bloomberg News stating that since the invasion, Russia’s top 23 oligarchs — each ranked among the world’s 500 richest people — had lost $67 billion since the start of the war, about 20% of their combined wealth. Additionally, the Russian economy has contracted by 5.6%, Russia’s trade flows have declined, inflation has risen sharply and Russian companies face steep challenges to raise capital. Read more>>
• Ukraine and U.N. Call for Extension of Black Sea Grain Export Deal: On March 8, Reuters reported that Ukraine’s president and United Nations (U.N.) Secretary-General called for the extension of a deal with Moscow that has allowed Ukraine to export grain via Black Sea ports during Russia’s invasion. The Black Sea Grain Initiative brokered by the U.N. and Turkey was extended once in November last year and will expire on March 18 unless an extension is agreed. Read more>> and Read more>>

V. OTHER NOTABLE DEVELOPMENTS

• Australia Vocalizes Desire for China to Not Send Weapons to Russia: On March 2, Reuters reported that the Australian Foreign Minister Penny Wong met with her Chinese counterpart on the sidelines of the G20 summit in New Delhi. She stated that she told Foreign Minister Qin Gang that all countries want to see China “do the right thing” and not supply weapons to Russia. Read more>> 
• China’s Imports of Russian Oil Set to Hit Record: On March 2, Reuters reported that China’s imports of Russian oil are expected to hit a record in March after refiners took advantage of cheap prices, providing Russia the much-needed revenue after the Group of Seven imposed a price cap on Russian oil last December. Read more>> 
• UAE Increasing Its Purchases of Russian Oil: On March 6, Reuters reported that the UAE has received 1.5 million barrels of Russian oil since November 2022, an increase over its previous imports from the country. The UAE’s imports of Russian oil have spiked beginning in April 2022, though the November totals are an increase over those, according to industry reports. Read more>> 
• South Korea Confirms Approval to Poland’s Export of South Korean Weapons Components to Ukraine: On March 8, Reuters and Wall Street Journal reported that the South Korean government approved export licenses for Poland last year to provide Krab howitzers, built with South Korean components, to Ukraine. This marks the first confirmation that the country has officially acquiesced to at least indirectly providing weapons components to Ukraine for its war against Russia. Read more>> and Read more>>
• India’s Oil Deals with Russia Dents Dollar’s Dominance: On March 8, Reuters reported that international sanctions on Russia led by the U.S. has caused the gradual erosion of the dollar’s decades-old dominance of international oil trade. This is because most deals with India, who is Russia’s top outlet for seaborne crude oil, have been settled in other currencies. Read more>>
• Swiss Sanctions Stance on Russia Deters Chinese Investment: On March 9, the Financial Times reported that executives at major Swiss banks have seen a dip in business from Chinese investors, attributing the drop to Switzerland’s decision “abandon its neutral status” and sanction Russia. Since Russia’s invasion of Ukraine, Switzerland has followed the EU’s lead in imposing sanctions on Russia. Read more>>
• Canadian Athletes Pressure Olympic Committee to Withdraw Support of Neutral Russian Athletes: On March 9, over 40 Canadian athletes sent a letter to the Canadian Olympic Committee, demanding it withdraw its support for Russian athletes competing under a neutral flag at the 2024 Paris Olympics. The International Olympic Committee took the position allowing Russian participation in the 2024 games under a neutral flag in January 2023, and the Canadian committee soon followed. Read more>>
• China Says Ukraine Crisis Driven by 'Invisible Hand', ‘Sanctions Will Not Solve the Problem’: On March 7, 2023, it was reported that China’s foreign minister Qin Gang said that the Ukraine crisis seems to be driven by an invisible hand that is pushing for the protraction and escalation of the conflict. The “invisible hand” is using the Ukraine crisis to serve certain geopolitical agendas." Qin went further to state that "conflict, sanctions, and pressure will not solve the problem...the process of peace talks should begin as soon as possible, and the legitimate security concerns of all parties should be respected." Qin’s comments come amid growing tensions between Beijing and the European Union, which has questioned China's sincerity as a mediator when it has refused to name Russia as the aggressor in the conflict. Read more>>