Sanctions Weekly Update – Ukraine/Russia Conflict – April 24, 2023

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

Week of April 24, 2023

I. US SANCTIONS

• US Announces on Sanctions on Russia’s Federal Security Service: On April 27, in conjunction with a statement by President Biden, the Department of State and the Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced that sanctions on Russia’s Federal Security Service for its involvement in the wrongful detention of US nationals abroad, adding that it has repeatedly been involved in the arrest, investigation, and detention of US nationals wrongfully detained in Russia. In addition, OFAC also issued Cyber-related General License (GL) 1C, “Authorizing Certain Transactions with the Federal Security Service,” and amended three cyber-related Frequently Announced Questions relating to the Federal Security Service. Read more>>, Read more>>, Read more>> and Read more>>
• Justice Department Targets Overseas Financial Advisers in Russian Sanctions Hunt: On April 21, Bloomberg reported that the Justice Department is looking for new ways to cut off Russia sanctions evasion by focusing on overseas investment advisers, hedge funds, law firms and private equity managers that have previously escaped scrutiny, according to an interview with the head of the department’s Task Force KleptoCapture. Investigators are also looking closely at how cryptocurrency may be used in less-regulated countries to camouflage transactions for restricted goods or funnel retail-level payments to sanctioned Russian individuals or entities. Read more>>
• New York Attorney Pleads Guilty to Participating in Money Laundering for Sanctioned Russian Oligarch: On April 25, the Department of Justice announced that a New York attorney pleaded guilty to participating in a scheme to make $3.8 million of payments to maintain six US properties owned by Viktor Vekselberg, a Russian oligarch sanctioned by the US in 2018. According to court records, the said attorney admitted to receiving wire payments from a shell company controlled by a Vekselberg associate, and used the funds to pay taxes, insurance premiums and other fees on the properties. The attorney agreed to forfeit more than $3.7 million and to be satisfied by a payment of $210,441.Read more>> and Read more>>
• Treasury under Secretary Nelson Travel to Europe, Continues Close Coordination on Countering Russian Sanctions Evasion: From April 16-22, 2023, Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson traveled to Switzerland, Italy, Austria, and Germany to continue close coordination with partners and allies on countering Russian sanctions evasion and limiting Russia’s ability to obtain materials for its war against Ukraine, including meetings with government officials, financial institutions, civil society, and business associations. Read more>> and Read more>>
• Senior Treasury and Commerce Department Officials Travel to Kazakhstan: From April 23-26, 2023, Treasury Assistant Secretary for Terrorist Financing and Financial Crimes Elizabeth Rosenberg and Assistant Secretary for Export Enforcement at the Commerce Assistant Secretary for Export Enforcement Matthew Axelrod, together with delegations from the EU and UK, visited Astana and Almaty, Kazakhstan to continue close partnership on countering the evasion of Russian sanctions and export controls. The delegations met with government officials and the private sector to share information, outline strategic priorities, and offer assistance to help facilitate sanctions compliance, highlighting that Russia had been seeking to circumvent sanctions through Central Asia by using cut-outs, facilitating opaque payments, and exploiting third countries that has high levels of integration with its own economy. Read more>> and Read more>>
• USAID to Contribute $25 Million to Strengthen Energy Security in Ukraine: On April 24, the U.S. Agency for International Development (USAID) announced it would contribute up to $25 million to the Energy Community’s Ukraine Energy Support Fund, which was established to pool donor resources for the purchase of energy sector equipment enabling Ukraine to prepare for the next winter season. This is the latest step taken under the USAID’s U.S.-Europe Energy Bridge, an initiative designed to strengthen the long-term energy security of Europe and Eurasia. USAID continues to intensify its commitment through the Energy Bridge in response to Russia’s invasion of Ukraine. Read more>> 
• USAID Deputy Administrator Meets with Chief Justice of Ukraine’s Supreme Court: On April 25, USAID Deputy Administrator Isobel Coleman met with Chief Justice of Ukraine’s Supreme Court Vsevolod Serhiiovych Kniaziev. The leaders discussed the progress the Ukraine government has made on judicial reforms and expanding access to justice in Ukraine, and also discussed USAID’s ongoing support for Ukraine’s efforts to document and adjudicate war crimes and crimes against humanity. Read more>> 

II. EU SANCTIONS

• EU Updates Its Guidance on the Central Bank of Russia: On 26 April 2023, the EU updated its FAQs on Russian Sanctions relating to the Central Bank of Russia. Read more>>
• EU Updates Its Guidance on Asset Freezes: On 26 April 2023, the EU updated its FAQs on Asset Freeze measures by adding a section on the new reporting obligations introduced by the 10^th package. Read more>>
• EU Set to Propose Banning Many Goods from Transiting via Russia: The European Union is set to propose a ban on many goods transiting through Russia as the bloc attempts to tighten the screws on the enforcement of sanctions imposed over the past year. Read more>>
• EU Considers Sanctions on RT Serbian-Language Balkan Broadcasts: The European Union is considering placing sanctions on Russian state-controlled media Russia Today (RT) Balkans, which broadcasts programs in the Serbian language. Read more>>
• EU and Ukraine to Recognize, Enforce Each Other’s Court Decisions: The EU Council has agreed to establish treaty relations with Ukraine under the so-called Judgments Convention, which obliges contracting states to recognize and enforce judgments rendered in civil or commercial cases in other participating states. The Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters was concluded in 2019. Ukraine ratified it in 2022. Under the Convention, treaty relations between Ukraine and the European Union will be established from Sept. 1, 2023, if neither party objects to them. Read more>>
• Pernod Ricard Quietly Resumes Exports to Russia: Pernod Ricard has resumed exports of brands including Beefeater Gin and Jameson Irish Whiskey to Russia, a week after the French spirits giant was forced into U-turn on a decision to restart exports of Absolut Vodka following a backlash in Sweden. Read more>>
• Belgian Parliament Calls for Ban on Russian Diamonds Imports: Belgian MPs have passed a resolution advocating a ban on Russian diamond imports into the European Union, a text intended as a "strong signal" in response to a wish expressed in March 2022 by Ukrainian President Volodymyr Zelensky. Read more>>
• Russia Seizes Subsidiaries of Finland’s Fortum and Germany’s Uniper: The Kremlin has taken control of the Russian subsidiaries of Finland’s Fortum and Germany’s Uniper, these moves it said were a response to western confiscations of Russian assets. Read more>>
• Protesters in Paris Urged Brussels to Crack Down on the Wife of Russia's Deputy Defence Minister: The wife of Russia's deputy defence minister is reportedly enjoying a luxurious life in Europe, complete with holidays in southern France and Rolls-Royces. Protesters in Paris urged Brussels to crack down on the wife of Russia's deputy defence minister, accusing her of conspicuously dodging the bloc's sanctions over the Ukraine war. Read more>>
• Repsol CEO Asks EU to Stop Imports of Russian Diesel to Europe through Third Destinations: Josu Jon Imaz, the chief executive of Spanish oil company Repsol asked European Union authorities to put an end to imports of Russian diesel to the bloc through third destinations. Read more>>
• Commission Approves EUR 450 Million Spanish Scheme to Support Gas-Intensive Manufacturing Companies in the Context of Russia's War against Ukraine: The European Commission has approved a €450 million Spanish scheme to support gas-intensive manufacturing companies in the context of Russia's war against Ukraine. The scheme was approved under the State aid Temporary Crisis and Transition Framework. Read more>>
• EU Parliament to Approve Renewal of EU Import Duties on Ukrainian Exports: Members of the International Trade Committee approved a proposal to renew the suspension of import duties, anti-dumping duties and safeguards on Ukrainian exports to the European Union for another year, against the background of Russia’s war of aggression that is hampering Ukraine’s ability to trade with the rest of the world. The draft report is scheduled to be voted by all MEPs during the 8-11 May plenary session. Read more>>
• EU Set to Propose Banning Many Goods from Transiting via Russia: The European Union is set to propose a ban on many goods transiting through Russia as the bloc attempts to tighten the screws on the enforcement of sanctions imposed over the past year. The transit ban would extend to numerous technologies and other goods, including several types of vehicles, but not all items would be barred from traveling via Russia en route to third countries. Read more>>

III. UK SANCTIONS

• UK Lists Five Linked to Mistreatment of Russian Opposition Leader Vladimir Kara-Murza: On April 21, 2023, the UK added three people to the Russian sanctions list after they were suspected in connection with the poisoning and arrest of Russian opposition politician and journalist, and British national, Vladimir Kara-Murza. On Monday April 17, 2023, Mr Kara-Murza was sentenced by a Russian court to 25 years in prison for charges including treason and spreading ‘knowingly false information’ about the Russian armed forces. The names added to the Russian sanction list included: i) Andrey Andreevich Zadachin, an investigator in the case against Mr Kara-Murza, and ii) Denis Vladmirovich Kolesnikov, Lieutenant General and Head of the Investigative Department at the Investigative Committee of Russia, who approved a decision to petition the arrest of Mr Kara-Murza. Two other people were also added to the UK’s human right’s sanction list: FSB agents Konstantin Borisovich Kudryavtsev and Alexander Samofal, who are alleged to have been part of the operational team that followed Mr Kara-Murza before he was poisoned both in 2015 and 2017. Read more>>, Read more>> and Read more>>
• UK Extends Russia Trade Sanctions: On April 20, 2023, the UK Russia (Sanctions) (EU Exit) (Amendment) Regulations 2023 were laid before Parliament, introducing further trade sanctions on Russia. These measures come into force on April 21, 2023, and include a ban on:
  • The export, supply and delivery, and making available to or for use in Russia, of a range of goods that Russia has been found using on the battlefield, as well as the provision of related ancillary services. These include aircraft and vehicle parts, radio equipment and other electronic equipment, biotechnology and 3D printing machinery;
  • The import and acquisition of additional goods originating or consigned from Russia which generate revenue for Russia, as well as the provision of related ancillary services;
  • The supply and delivery of certain revenue generating goods from Russia to third countries (see Schedule 3DA). Revenue generating goods that have an important humanitarian or civilian use, such as certain agricultural and energy-related goods are not covered by this new prohibition; and
  • The import, and provision of related ancillary services, of iron and steel goods that have been processed in a third country and incorporate one or more iron or steel products originating in Russia. This ban will enter into force on 30 September 2023. Read more>>, Read more>> and Read more>>
• UK Company Set up in Name of Top Putin Official in Ukraine Despite Sanctions: Volodymyr Saldo, a Kremlin puppet in the Russian-occupied territories, listed as firm’s owner, despite being subject to sanctions. In June 2022 the government imposed a freeze on any UK assets Saldo owns and banned him from entering the country. Companies House, the UK corporate registry, does not require proof of identity when people form companies, demonstrating a gap in the UK sanctions regime. More than a year after the invasion, proposals that would make it a crime for people under sanctions to set up UK companies have yet to become law. Read more>>

IV. RUSSIA/UKRAINE SANCTIONS

• Ukraine Adds to Sanctions Lists: On 22 April 2023 Ukraine added 40 individuals and 382 legal entities to the sanctions list. The amendments were implemented by two Orders of the President of Ukraine, which entered into force on 25 April.Read more>> and Read more>>
• Zelensky Holds Phone Call with Xi Jinping: President Volodymyr Zelensky talked to Chinese President Xi Jinping on April 26 for the first time since Russia's full-scale invasion of Ukraine began. Zelensky tweeted that he hopes the "long and meaningful phone call" and the appointment of Ukraine's ambassador to China will "give a powerful impetus" to the development of the countries' relations. Read more>>
• Ukraine's Grain Overload Sours Country's Relationship with Key Allies: Negotiations over a European import ban on Ukrainian grain between the European Commission and its eastern flank members were stalled as of April 23. Poland, Slovakia, Hungary, Romania, and Bulgaria asked to extend protection measures after the EU's one-year decision to abolish customs duties, while they claim Ukrainian grain glut threatens their domestic market. Hungary, Slovakia, and Bulgaria also restricted imports while authorizing grain transit until June 30. Read more>>
• Ukraine Adopts a Law Banning Place Names Associated with Russian Aggression: Ukraine adopts a law that prohibits naming geographic sites in Ukraine after Russian figures or historical events associated with Russian aggression. The move is part of larger “de-Russification” efforts in Ukraine amid Russia’s full-scale invasion. The law prohibits naming geographical sites with titles that glorify Russia or its prominent historical and cultural places, cities, dates, events, and figures. It also bans geographic markers associated with state totalitarian policies. Read more>>
• Putin Allows Seizure of ‘Unfriendly’ Foreign Assets: Russian President Vladimir Putin signed a decree Tuesday authorizing temporary control over foreign companies’ Russia-based assets. Putin’s decree lists the Russian divisions of the German energy giant Uniper and Finland’s Fortum whose shares had already been taken over by Moscow. Temporary administration of the seized assets will be handled by Russia’s Federal Agency for State Property Management, Rosimushchestvo. Read more>>
• Russian Federal Property Management Agency Suggested that the List of Companies with External Management Will Be Extended: Russia’s Federal Agency for State Property Management announced that the list of foreign companies under external management may be expanded. “The introduction of external management contributes to maintaining the investment climate in Russia and reducing the outflow of capital from the country,” the department noted. The Federal Property Management Agency added that the external management of foreign companies "is temporary and means that the original owner no longer has the right to make management decisions." Read more>>
• Russian Ministry of Finance Proposed to Create a Secret Register of Russian Property Abroad: The Russian Ministry of Finance proposed the creation of a special register of foreign property of Russia, which will represent a state secret. In case of classifying information about federal property recorded in the register, all information about it and documents confirming this information are subject to exclusion from the register. Read more>>
• Speaker of the Upper Chamber of the Russian Parliament Urged to Use Inventions without the Consent of Copyright Holders: Chairman of the Federation Council Valentina Matvienko proposed to allow the use of inventions without the consent of foreign copyright holders, "if the issue concerns the security of our state or the health of the population." She urged "to prevent cases of unreasonable prosecution of Russian companies using the results of intellectual property of foreign copyright holders." Read more>>
• Russian Decree Permits Government to Take Temporary Control of Property Linked to “Unfriendly” States: On April 25, 2023, President Putin signed Decree No. 302 to allow the Russian government to place property belonging to people or entities from “unfriendly” countries into the interim administration of the Federal Agency for State Property Management. Russia used the decree to seize control of utilities owned by Finland’s Fortum Oyj and Germany’s Uniper SE and said that the government may assume control of:
  • movable goods and properties located in Russia and belonging to foreign parties with ties to unfriendly countries (including if these foreign parties are citizens or residents of these countries or if they have their registered addresses in these countries, or principal place of business or if they derive most of their profits from operating in these countries), and also those belonging to the parties controlled by the said foreign parties;
  • foreign-held securities, shares in authorised joint capital of Russian legal entities held by parties from unfriendly foreign countries; and
  • property rights held by parties from unfriendly foreign countries. Read more>>
• Pro-Ukraine Scholars Call for Much Tougher Sanctions on Russia: On April 25, 2023, a group of pro-Ukrainian scholars has called for much tougher Western sanctions on Russia, including halving an oil price cap to $30 a barrel, imposing a full embargo on Russian steel, iron and diamonds and making it easier to confiscate Russian assets. The International Working Group on Russian Sanctions, which includes around 40 scholars including Stanford University's Michael McFaul, a former US ambassador to Russia, said tighter sanctions would reduce Russia's ability to fight in Ukraine. The group says it coordinates and consults with the Ukrainian government but does not take direction from Kyiv, which has long called for tougher sanctions on Moscow. In the report, entitled "Action Plan 2.0 - Strengthening Sanctions against the Russian Federation", the scholars said Russia's energy sector should be the main target. Read more>>
• Zelenskyy Announces New Sanctions against Russian Military: On April 21, 2023, Ukraine announced new sanctions against individuals or legal entities who support or invest in “Russian aggression.” Ukrainian President Volodymyr Zelenskyy said that Kyiv has sanctioned 322 companies that manufacture weapons and military components for Russia’s military against Ukraine. Additional sanctions have been imposed against “individuals and legal entities that help circumvent sanctions against Russia,” he said. “The task is to remove any opportunity for Russia to circumvent sanctions,” he added, “the tougher the sanctions against the Russian war economy, the faster the end of the aggression will be.” Read more>>
• Russia’s Fuel Shipments Show Little Sign of Sanctions Strain: On April 26, 2023, Russia’s exports of fuels such as diesel and gasoline are on course to remain well above seasonal norms this month despite European Union sanctions that recently came into force. Shipments of clean petroleum products — of which more than half are diesel-type fuel — stood at 1.9 million barrels a day during the first three weeks of April. If that rate continues for the rest of the month, exports will be their highest for the time of year since at least 2016. Exports of diesel-type fuel in March hit the highest level on record in data going back to the start of 2016. The nation’s crude oil shipments to the international market have also shown little sign of dropping, even as the government says output has been cut. Much of Russia’s diesel-type fuel has been heading to Turkey, with barrels also going to north African countries including Morocco, Tunisia and Libya. Shipments to Brazil have also surged since EU sanctions came into force. Read more>>
• Western Price Caps Cut into Russian Oil Revenue: On April 26, Financial Times reported that Russia’s revenue from oil exports fell by nearly a third in the first quarter of 2023, showcasing the effect of western price caps on damaging the lucrative oil trade for Moscow, according to oil sales records compiled by the Kyiv School of Economics. The researchers attributed about 75% of the fall to lower sales volume and larger price discounts for Russian crude – both factors relating directly to western restrictions. The findings prove that sanctions targeting Russia’s energy sales are effective, to a certain extent, in limiting Moscow’s ability to fund its war against Ukraine, while also maintaining the non-disruption of oil flow in global markets. Read more>>

V. OTHER NOTABLE DEVELOPMENTS

• EU and Japan Resist US Proposal to Ban All G7 Exports to Russia: On April 24, Financial Times reported that the EU and Japan have pushed back against a proposal by the US for G7 countries to ban all exports to Russia, as part of negotiations ahead of the G7 summit in May. The proposal calls for a pledge to replace the current sector-by-sector sanctions regime against Russia with a complete export ban with a few exemptions on agricultural, medical and other products, but according to officials who spoke anonymously on the matter, the move was “simply not do-able,” showing the lack of additional options available to G7 leaders as they seek to increase the economic punishment for Russia. Read more>>
• China Says It Respects Sovereignty of Ex-Soviet States after Controversial Comment from Its Ambassador to France: Chinese Foreign Ministry's spokesperson Mao Ning said on April 24, as cited by Bloomberg, that Beijing "respects the status of the former Soviet republics as sovereign countries after the Soviet Union's dissolution," adding that the country's position remains "unchanged." Mao's remarks, which she claims to represent China's official government stance, come days after the Chinese ambassador to France Lu Shaye's scandalous statement questioning the independence of post-Soviet countries. Earlier on April 21, in an interview with the French television channel LCI, Shaye said that former Soviet countries "have no effective status in international law" as "there is no international agreement to materialize their status of a sovereign country." Read more>>
• Russia Arms Sales to India Stall Due to Fears over US Sanctions: On April 21, Bloomberg reported that Russian deliveries of military supplies to India have ground to a halt as countries struggle to find a payment mechanism that does not violate US sanctions. According to Indian officials with knowledge of the matter, India was unable to settle the outstanding payments for weapons in US dollars due to concerns about secondary sanctions, nor does it want to pay in Russian rubles due to concerns about being able to purchase enough on the open market at a fair rate. Read more>>
• Russian Race-Car Driver Challenges Canadian Sanctions in Court: On April 22, The Canadian Press reported that former Russian Formula One driver, Nikita Mazepin, is taking Canada to court, saying that the sanctions imposed on him following Russia’s invasion of Ukraine are unfairly hurting his career. According to filed court documents, Mazepin claimed that he was “in no way involved in the aggression suffered by Ukraine,” nor engaged in any economic sectors providing substantial revenue to Russia. Apart from asking to be removed from the Canadian sanctions list, he also asks the court to order interim relief that would allow him to take part in racing activities in Canada. Read more>>
• Russian Gold Enters Switzerland Despite Sanctions: On April 27, swissinfo.ch reported that Switzerland imported unprecedented amounts of gold from Russia in February this year despite sanctions, according to a Swiss NGO. The NGO said that the Russian gold could be “linked to human rights violations in Sudan as well as co-financing the war of aggression against Ukraine, which is against international law.” It is also concerned that the gold imported could include those acquired by Yevgency Prigozhin, the head of Russia’s notorious Wagner Group. Read more>>
• Hong Kong Bank Refuses to Serve Russian IT Company Sanctioned by Ukraine: On April 24, reports emerge that Hong Kong’s HSBC Bank has refused to allow a Russian IT company on Ukraine’s sanctions list to make a payment under a contract with a foreign partner. The bank explained its decision by the position of Ukraine’s National Security and Defense Council, which was published in the Dow Jones compliance database. Read more>>
• Czech Government Designates Russian Patriarch Kirill on Sanctions List over Ukraine: On April 26, 2023, the Czech government made the head of the Russian Orthodox Church, Patriarch Kirill, the first person on its national sanctions list due to his support for Russia's invasion of Ukraine. Kirill, 76, was listed by his civil name of Vladimir Mikhailovich Gundyayev on the sanctions roster, which is posted on the Foreign Ministry's website. His inclusion means he is barred from entry to the Czech Republic, a European Union and NATO member country, and banned from any financial transactions with Czechs. Patriarch Kirill is a close ally of President Vladimir Putin and has strongly backed the war in Ukraine, in which tens of thousands of people have been killed and millions driven from their homes. Russia denies accusations of war crimes in Ukraine. The 27-nation EU as a whole tried to put Kirill on its sanctions list last year but member states failed to find unanimity on the issue as Hungary opposed his inclusion. On Tuesday April 25, 2023, Kirill branded Russians who fail to serve their country as "internal enemies" and described patriotism as the "greatest virtue", the RIA state news agency reported. Read more>>
• Analysts Warned about Violation of G7 Sanctions in the Supply of Russian Oil: A study by the Kyiv School of Economics showed that when oil was transported from Asian ports in Russia, it was sold above the limit price set by the G7 and using the services of Western companies. Analysts noted that almost all oil coming from the port of Kozmino (Primorsky Krai, near Nakhodka) was sold at a price exceeding the established limit of $60 per barrel. In more than half of the cases, the services of companies from the G7 countries were used during transportation, although they were forbidden to do so. to do if oil is sold at a price above the cap. Read more>>