abril 26 2024

Russia/Ukraine Sanctions Update - Month of April 2024

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

I. US SANCTIONS

US Department of the Treasury Sanctions Lukashenka Regime Based on a Determination of Sanctions Evasion: On April 15, the US Department of the Treasury designated 12 entities and 10 individuals based on a determination that the Belarusian Lukashenka regime continued to rely on revenue from state-owned enterprises to suppress its citizens, to circumvent US sanctions, and to support Russia’s war against Ukraine. Read more >>
US Announces Significant New Military Assistance for Ukraine: On April 24, following the passage of the national security supplemental, the US announced a new package of weapons and equipment for Ukraine, valued at up to $1 billion. The package includes air defense missiles, munitions for HIMARS, artillery rounds, armored vehicles, precision aerial munitions, anti-armor weapons, small arms, equipment, and spare parts. Read more >>
President Biden Holds Call with Ukrainian President Zelenskyy: On April 22, President Biden spoke with President Zelenskyy of Ukraine to underscore US support of Ukraine “as it defends its freedom from Russian aggression.” Read more >>
Secretary of the US Department of State Meets with Ukrainian Foreign Minister: On April 18, Secretary of the US Department of State, Antony J. Blinken, met with Ukrainian Foreign Minister, Dmytro Kuleba, to discuss the situation on the battlefield and Ukraine’s progress — in coordination with Allies and partners — as it pursues its goal of greater Euro-Atlantic integration. Read more >>
Secretary of the US Department of the Treasury Participates in 5^th Ukraine Ministerial Roundtable: On April 17, Secretary Janet L. Yellen of the US Department of the Treasury participated in the 5^th Ukraine Ministerial Roundtable, chaired by Ukraine’s Prime Minister, Denis Shmyhal, International Monetary Fund Managing Director, Kristalina Georgieva, and World Bank President, Ajay Banga. Secretary Yellen “commended the Government of Ukraine for prudently managing its economy, providing for its people, and continuing to fight corruption and strengthen governance, all while valiantly standing up to Russia’s brutal aggression.” Read more >>,Read more >> and Read more >>
Secretary of the US Department of Commerce Meets with Ukrainian Prime Minister: On April 17, Secretary of the US Department of Commerce, Gina Raimondo, met with Ukrainian Prime Minister, Denys Shmyhal, ahead of the second Ukraine Partnership Forum. During the meeting, Secretary Raimondo reiterated the Department of Commerce’s continued support for Ukraine as it defends itself against Russian aggression. Read more >>
US Deputy Secretary and US Under Secretary for International Affairs of the US Department of the Treasury Meet with Ukraine’s Minister of Finance: On April 15 and April 16, US Deputy Secretary, Wally Adeyemo, and Under Secretary for International Affairs, Jay Shambaugh, of the US Department of the Treasury met with Ukraine’s Minister of Finance, Sergii Marchenko, during the International Monetary Fund-World Bank Spring Meetings to emphasize “the United States’s commitment to support Ukraine in its fight to preserve its freedom, sovereignty, and territorial integrity.” Read more >> and Read more >>
United States and the United Kingdom Take Action to Reduce Russian Revenue from Metals: On April 12, the US Department of the Treasury, in coordination with the United Kingdom, issued two new prohibitions to disrupt the revenue that Russia earns from its export of aluminum, copper, and nickel. This new action prohibits the import of Russian-origin aluminum, copper, and nickel into the United States, and limits the use of Russian-origin aluminum, copper, and nickel on global metal exchanges, including the London Metal Exchange and Chicago Mercantile Exchange, and in over-the-counter derivatives trading. Read more >> and Read more >>
US Department of the Treasury Renews Memorandum of Understanding and Cooperation in Cybersecurity with Ukraine: On April 8, the US Department of the Treasury announced that it has signed a memorandum of understanding and cooperation in cybersecurity with the National Bank of Ukraine. The Memorandum renews the shared understanding on cybersecurity and operational resilience, which has been in place since 2020, and facilitates an ongoing exchange of information between the National Bank of Ukraine and the Treasury Department. Read more >>
US Department of the Treasury Assistant Secretary for Economic Policy Discusses Price Cap on Russian Oil: On April 4, the US Department of the Treasury’s Assistant Secretary for Economic Policy, Eric Van Nostrand, and Acting Assistant Secretary for Terrorist Financing, Anna Morris, discussed the price cap on Russian oil in India. Assistant Secretary Nostrand and Acting Assistant Secretary Morris highlighted that the Department of the Treasury continues to monitor the price cap and remains vigilant to ensure that the policy, its implementation, and enforcement are deployed to inflict financial burden on Russia and keep global energy markets stable. Read more >>

II. EU SANCTIONS

European Commission Updated Its Russia Sanctions FAQs on Provision of Services: On April 2, 2024, the European Commission updated its FAQs regarding provision of services including the provision of services to Russian subsidiaries of EU companies, the provision of legal advisory services, the ability of national competent authorities to give bundled authorizations for multiple intra-group services and the provision of services and software to Russian entities by EU operators via third country subsidiaries. Read more >>
European Commission Added FAQ on Reporting on Outgoing Transfers to Its Russia Sanctions FAQs: On April 12, 2024, the European Commission issued a set of FAQs regarding reporting on outgoing transfers related to Article 5r under Council Regulation No 833/2014 as well as published a reporting template. Read more >>
European Commission Updated Its Russia Sanctions FAQs on Oblasts: On April 18, 2024, the European Commission updated its FAQs regarding Donetsk, Kherson, Luhansk and Zaporizhzhia oblasts of Ukraine. Read more >>
European Commission Updated Its Russia Sanctions FAQs on Imports, Purchase and Transfer of Listed Goods: On April 18, 2024, the European Commission updated its FAQs regarding status of partner countries for the importation of iron and steel. Read more >>
European Commission Clarified Impact of the Most Recent Russia Sanctions on Access to Essential Medicines: The European Commission clarified that there is an exemption for the provision of some services and software in cases of public health emergencies or the urgent prevention or mitigation of an event likely to have a serious and significant impact on human health and safety. National competent authorities may also authorize the provision of services and software for humanitarian purposes. Read more >> and Read more >>
EU's General Court Annulled the Sanctions Listing of Petr Aven and Mikhail Fridman Between February 2022 and March 2023: By its judgement of April 10, 2024, the General Court upheld the requests of Petr Aven and Mikhail Fridman, major shareholders of Alfa Group, and annulled both the initial acts and the acts maintaining the lists of sanctions for the period from 28 February 2022 to 15 March 2023. The General Court considered that none of the reasons set out in the initial acts is sufficiently substantiated and that the inclusion of Mr. Aven and Mr. Fridman on the lists at issue was therefore not justified. As regards the maintaining acts, the General Court held that the Council adduced no additional evidence compared to that on which it had relied in the initial acts. Read more >> and Read more >>
EU's Court of Justice Issued an Opinion on the Application to Notaries of the Ban on Legal Advisory Services to Russian Legal Persons: On April 11, 2024, Advocate General Medina issued her opinion in Jemerak case regarding the application to notaries of the ban on legal advisory services to Russian legal persons. According to the Advocate General, notaries authenticating a contract of sale of immovable property are not caught by the ban and thus that authentication should not be considered to be the provision of legal advisory services within the meaning of Article 5n(2) of Council Regulation No 833/2014. Read more >>
EU's General Court Dismissed a Challenge to EU Sanctions on the Import of Mica Products from Russia: By its judgment of April 17, 2024, the General Court dismissed action brought by Cogebi, a manufacturer in the EU of mica-based industrial products obtained from Russia-manufactured mica products, against the inclusion of mica in Annex XXI and in Article 3i of Council Regulation No 833/2014. The General Court found, amongst others, that the Council did not make a manifest error in concluding that mica products generate significant revenue for Russia, was not required to hear the applicants or to ensure their right of access to the file during the process of enacting this sanction provision, did not infringe the principle of proportionality and the freedom to conduct a business. The General Court also held that Cogebi was able to buy mica products similar to those which imported from Russia from other EU or third-country operators. Read more >>
EU Companies Grapple with Expiry of Russia Sanctions Carve-Out: European companies still operating in Russia are scrambling to comply with a new EU sanctions provision ending a carve-out that allowed them to provide their Russian subsidiaries with professional services like accounting, management consulting and legal advice. The new provision, which will enter into force in June, will give European regulators their most detailed overview of western businesses’ current dealings in Russia to date. Read more >>
EU to Look into Ways to Deal with Russia's Shadow Oil Fleet: The European Commission will investigate ways to deal with Russia's shadow oil fleet as part of the next package of sanctions. The EU considers that the shadow fleet, which consists of an estimated 1,400 ships with opaque ownership, aids Russia to circumvent the sanctions and is a clear environmental threat. Read more >>
Russian Investments in Austria Continue to Flow: The latest data from the Austrian Ministry of Economic Affairs' investment control report shows that Russian investments in Austria rose by 14% to EUR 25.5 billion in the first half of 2022. A more detailed look at Russian investments shows that large Russian companies such as Lukoil and the former Gazprom Austria are channeling significant sums through their Austrian subsidiaries. These cash flows, although officially registered as investments in Austria, could involve a significant amount of capital that is ultimately destined for operations outside Austria. Read more >>
EU Sees Signs China Supplying Dual-Use Components to Russia: The EU has concerns about China's actions regarding Ukraine, particularly recent indications that it was shipping components to Russia. US Secretary of State Antony Blinken is expected to raise similar concerns during his next visit to China end of April. Read more >>
Belgium, Czech Republic Seek Sanctions for Russian Interference in EU Elections: Belgium and the Czech Republic have called for new EU sanctions to counter Russian influence in the upcoming European elections after several countries discovered early interference. Instances of pro-Russian disinformation and interference had already been found in several member states. In particular, Belgian security services unearthed a network inside Belgium that involved cash transfers that took place in part in the Czech Republic and aiming to forge cooperation between pro-Russian politicians at the European Parliament. Read more >>
Belgian Federal Government and Diamond Sector Continue to Clash Over Russian Sanctions: CEO of the Antwerp World Diamond Centre (AWDC) announced its departure after 13 years. His resignation is the latest in a string of departures from the Antwerp diamond sector amid reported internal disagreements over AWDC's approach to Russian diamonds and the new diamond control system that is being rolled out to keep them out of Belgium. Antwerp plays a key role in the new diamond tracking and registration system which should prevent Russian diamonds from reaching the EU market via intermediate stops in processing countries such as India and the United Arab Emirates. Read more >>

III. UK SANCTIONS

UK HM Revenue and Customs (HMRC) Issues Compound Settlement Offers to Six UK Exporters: On April 25, 2024, the ECJU issued a notice to exporters reporting that, between January and March 2024, HMRC issued settlement offers to six UK companies. These settlements were in relation to a breach of licence conditions in relation to the export of military goods; the unlicensed exports of military goods controlled by The Export Control Order 2008; and the unlicenced exports of dual use goods controlled by Retained Regulation 428/2009. HMRC has seen an increase over the last 12 months in the number of voluntary disclosures relating to: unlicenced exports; incorrect licence usage; and breach of licence conditions. Read more >>
UK HMRC Issues a Compound Settlement of over £1 million Relating to Export of Goods in Breach of Russia Sanctions: On April 25, 2024, the ECJU published Notice to Exporters 2024/07 announcing a compound settlement issued in March 2024 worth £1,058,781.79 in relation to the export of goods in breach of The Russia (Sanctions) (EU Exit) Regulations 2019. Over £20 billion of UK-Russia bilateral trade (2021 figures) is now under full or partial sanction. There has been a 94% fall in Russian imports into the UK and a 74% fall in UK exports to Russia. Read more >>
UK Supreme Court Upholds UK Court of Appeal Decision to Grant an Anti-suit Injunction against Russian Company’s Proceedings against UniCredit: On April 23, 2024, in UniCredit Bank GmbH v. RusChemAlliance LLC (RCA), the UK Supreme Court held that an anti-suit injunction against proceedings brought by RCA against UniCredit should be upheld. The declarations and injunctive relief granted by the Court of Appeal on January 29, 2024, will remain in force. RCA wished to bring proceedings on the basis of non-payment by UniCredit under bonds issued to RCA. UniCredit was prohibited from making payment because of EU Russia sanctions. There were parallel proceedings in the Arbitrazh Court of the St Petersburg and Leningrad region which were adjourned pending the UK Supreme Court’s consideration of the appeal. Read more >>
UK Government Updates Russia Sanctions Guidance: On April 16, 2024, the UK Government updated its Russia sanctions guidance to reflect updates made to the Trade Licence for the acquisition of metals on April 12, 2024. Read more >> and Read more >>
UK and US Clamp Down on the Trade of Russian Metals: On April 12, 2024, the London Metal Exchange and Chicago Mercantile Exchange announced that they would no longer trade new aluminium, copper and nickel produced by Russa. This joint action builds on an existing ban on metal imports targeting $40 billion of Russian exports of aluminium, copper and nickel. Read more >>
OFSI Amends General Licence INT/2024/4576632: On April 10, 2024, OFSI amended General Licence INT/2024/4576632, which authorises certain activities relating to two Turkish shipping companies, “Active Denizcilik” and “Beks Ships”, to remove the language prohibiting funds or economic resources from being made available for the benefit of any designated person. Read more >>
OFSI to Host Oil Price Cap Webinar: At 10.30am BST on April 24, 2024, OFSI will be hosting a webinar on the oil price cap. To attend the session, contact: oilpricecap.OFSI@hmtreasury.gov.uk.
UK Ministry of Defence Publishes Defence Intelligence Update Relating to Sanctions Targeting Russia: On April 1, 2024, the Ministry of Defence published an intelligence update reporting that sanctions will likely continue to disrupt key inputs for Russia’s defence industry. Among other things, the update notes that (i) “Russia’s isolation limits the number of countries it can directly trade with”, causing disruption of “both supply and demand for Russian arms exports, as well as significantly complicating payment mechanisms to Russia”; and (ii) Russia’s share of the global arms trade has fallen to 11% in the period 2019 to 2023 from 21% in the period from 2014 to 2018. Read more >>
UK Court Has Jurisdiction to Hear Insurance Claims in Case Relating to Aircraft Grounded in Russia: On March 28, 2024, in Zephyrus Capital Aviation Partners 1D Ltd & Ors v. Fidelis Underwriting Ltd & Ors, the UK High Court held that it had jurisdiction to hear $10 billion worth of claims brought by aircraft lessors against reinsurers of an aircraft grounded in Russia. Some of the reinsurers sought a stay of the English proceedings, arguing that the Russian court has exclusive jurisdiction. The court held that “the Claimants are very unlikely to obtain a fair trial in Russia”. Other reasons included the “inevitability of increased multiplicity of proceedings and far greater risk of inconsistent findings on fundamental issues were these claims to proceed in Russia” and “an element of risk of personal attacks on individuals who in the ordinary course would attend trial”. Read more >>

IV. RUSSIA/UKRAINE SANCTIONS

Russian Court Orders Seizure of $440mn from JPMorgan: On April 24, a Russian court ordered the seizure of JPMorgan Chase funds totalling $439.5mn a week after Kremlin-run lender VTB launched legal action against the largest US bank to recoup money stuck under Washington’s sanctions regime. The seizure order, published in the Russian court register, targets funds in JPMorgan’s accounts and shares in its Russian subsidiaries. The assets had been frozen by Russian authorities in the wake of the western sanctions. Read more >>
Russian State-controlled Lender Pays the Equivalent to $8bn in Dividends, Indicating a Recovery from Western Sanctions in the Russian Banking Sector: On April 23, 2024, chief executive Herman Gref of Sberbank said that the payout amounts to half of its 2023 profit. Half of this payout will flow directly into the Russian budget. Despite this success for Russia’s largest bank, Gref said that 2024 would be “significantly more challenging” given the tightening of regulatory requirements and decrease of loan demand. Read more >>
Russian Metals Group, Norilsk Nickel, Will Move Production to China as Western Sanctions Cause Difficulties in International Payments: On April 22, 2024, Russia’s richest man Vladimir Potanin (controller of Norilsk Nickel) said in an interview the Nadezhda plant in the Russian Arctic would be replaced with new facilities in China from 2027 onwards. Potanin described how Western sanctions are impeding the country’s commodities exports, one of the Kremlin’s key sources of funding its invasion of Ukraine and how Norilsk Nickel’s revenues have fallen by at least 15 per cent since 2022 due to various difficulties, including international payments, delivery refusals, and pricing discounts. Read more >>
Russia’s Coal Shipments to China Dragged Down By Sanctions and Import Tariffs: On April 20, 2024, customs data showed that Russia’s coal shipments to China fell 21% in March. These shipments have been hit by US sanctions on top exporters Suek and Michel. China also reinstated import tariffs of 3-6% this year which resulted in exporters cutting prices. Read more >> and Read more >>
US Proposes Raising Tens of Billions of Euros in Debt for Ukraine Secured against Future Profits from Russian Frozen Assets and Urges Tax on Profits on These Assets to Be Reduced: On April 17, 2024, the G7 group of nations met and continued to debate the use of the €260bn worth of Russian assets frozen by the West since Russia’s invasion of Ukraine in February 2022. Europeans have already shown a willingness to transfer interests from the reserves to Ukraine on a biannual basis. There is an EU plan to use future profits for both purchase of weapons for authorities in Kyiv and for reconstruction of the country. The goal is to reach a decision on the matter at the G7 leasers’ annual summit in June. At the G7 meeting, Ukraine’s Minister of Finance emphasized the need for immediate funds and insisted on the acceleration of the development of procedures for using Russian assets for the needs of Ukraine. Read more >>, Read more >> and Read more >>
Russia Updates Import Customs Duties for Goods from “Unfriendly” States: On 17 April 2024, Russia updated the list of import customs duties applicable to goods from “unfriendly” states. The list includes specific goods with import duties up to 50% depending on the country of origin. The amendments enter into force on April 26, 2024. The original duties were imposed by the Regulation of the Government of the Russian Federation No. 2240 dated 7 December 2022. Read more >>
Russia Summons South Korean Ambassador in Protest over Sanctions: On April 5, 2024, The Russian Foreign Ministry said it had summoned South Korea's ambassador to protest over the sanctions South Korea imposed against two Russian vessels, two Russian organisations and two Russian citizens. The vessels were sanctioned for allegedly carrying military cargo to North Korea, while the organisations and individuals were sanctioned for links to Pyongyang's nuclear and missile programmes. Read more >>
Prime Minister of Ukraine Emphasises the Importance of Banning Russian Agricultural Imports to the EU with the President of Latvia: On April 4, 2024, the Prime Minister of Ukraine Denys Shmyhal discussed Ukraine’s potential accession to the EU and NATO and the important of standing together against “Russian terrorism”, developing new ways to confiscate Russian assets in Latvia and the importance of the ban on imports of agricultural products from Russia to the EU. Read more >> and Read more >>
Estonia Completes the Development of a Compensation Mechanism Providing for the Use of Russian Funds for the Needs of Ukraine: On April 3, 2024, the Prime Minister of Ukraine Denys Shmyhal had a bilateral meeting with the Prime Minister of Estonia, discussing defence and humanitarian aid to Ukraine, stressing the importance of a decision to extend autonomous trade liberalisation measures and highlighting the importance of sanctioning agricultural products originating in Russia and Belarus. The Prime Minister of Estonia stated that "there is no doubt that the losses should be compensated at the expense of frozen Russian assets. Estonia has already completed the development of a compensation mechanism that provides for the use of funds from Russia for the needs of Ukraine.” Read more >>
Russia Bans Entry to 247 Citizens of Baltic States in Response to Sanctions: On March 12, 2024, The Ministry of Foreign Affairs of the Russian Federation published a press release on banning representatives of certain Baltic states “hostile to [Russia]” entry to the Russian Federation. These states include Latvia, Lithuania and Estonia, and the individuals added to Russia’s “stop list” include ministers, parliament members, public figures and journalists. Read more >>
Russian Economy Ministry Cuts Oil Price Forecast to $65 per Barrel in 2024-2027: Sanctions from the West since the conflict in Ukraine, including restrictions on Russian oil purchases and a price cap of $60 per barrel have contributed to a downward revision of the forecast for Russian oil prices. This is likely to put pressure on Russia’s budget which saw a shortfall of $6.56 billion, or 0.3% of gross domestic product, in the first quarter. According to the forecast of Russia's socio-economic development until 2027, oil exports from Russia are slightly risinh this year to 240 million tons from 238 million tons in 2023. Read more >>
Russian Copper Producer RCC Avoids Taxes and Skirts the Impact of Western Sanctions by Trading in New Copper Disguised as Scrap: Russia's export duty on copper rod was 7% in December, lower than the 10% levy on scrap, while imports of copper rod into China are taxed at 4%, but there is no duty on Russian scrap imports. Some Chinese companies face a dilemma whereby there are no legal obstacles preventing China from buying metal from Russian companies under Western sanctions, but manufacturers could lose US and UK export business as a result, as well as risk encountering problems with processing dollar payments due to US sanctions. Read more >>
Russia's Oil and Gas Revenue to Almost Double Year on Year to $14 Billion Due to Rising Prices: It is calculated (based on data from industry sources and official statistics on oil and gas production, refining and supplies on domestic and international markets) that Russia’s oil and gas revenue will almost double each year, despite Western nations’ efforts to limit Kremlin income and reduce its military resources. Russia's Finance Ministry will publish the April data in early May. For 2024, the Russian government has budgeted for federal revenue of 11.5 trillion roubles from oil and gas sales, an increase of 30% from 2023. Read more >>
Ukraine Updates Sanctions List: On April 4, 2024, Ukraine updated its sanction lists adding 7 individuals and 86 legal entities. The relevant decision was adopted by the Order of the President of Ukraine No. 219/2024 dated 4 April 2024. Read more >>
Russian Payment System “Mir” Stops Working in Kirgizia: The payment system of Kyrgyzstan has disabled the operation of “Mir” cards in the network of its participating banks from April 3. The decision was made to avoid the risk of secondary US sanctions, whereas the Russian payment system “Mir” is under the sanctions of OFAC. Earlier in March, the operation of “Mir” cards was disabled by Armenia. Read more >>
Russia Faces Difficulties in Payments with Third Countries: After the tightening of the secondary sanctions regime at the end of 2023, banks in third countries sharply increased the number of refusals to make payments related to Russia. According to the head of the Russian bank VTB, “the number of refusals to make payments by compliance control without explaining the reasons increased sharply. This applies primarily to banks of friendly jurisdictions.” Read more >>
The Russian Foreign Ministry Imposed Sanctions against Australian Members of Parliament: Russia has banned the entry of 235 members of municipal assemblies of Victoria and South Australia into the Russian territory. The move was taken in retaliation against Australian sanctions. Earlier in February, Australia announced new sanctions against Russia which targeted Russian defence, energy, mining sectors and media companies. Read more >>

V. OTHER NOTABLE DEVELOPMENTS

Switzerland Freezes $14 Billion in Russia Assets: On April 23, Switzerland blocked 13 billion francs (approximately $14.3 billion) in Russian assets held in the country, including more than 7 billion francs in reserves and assets of Russia’s central bank. Read more >>
Canada Allows Use of Russian Titanium for Airbus: On April 23, Canada granted Airbus a waiver to allow it to use Russian titanium in its manufacturing after becoming the first Western government to ban supplies of the strategic metal in its latest package of measures triggered by the war in Ukraine. The move gives Airbus flexibility in its Canadian plants and is expected to allay concerns that its core operations could be hit by effectively banning the import to Canada of its European-built jets that rely most heavily on lightweight titanium. Read more >>
Swiss Activists Trigger Referendum that Could End Sanctions on Russia: On April 11, activists in Switzerland triggered a referendum on proposals that would end the country’s harsh economic sanctions on Russia and rule out any punitive restrictions on trade with China. The campaign proposes four new clauses that would more precisely define what the Alpine country’s long-held neutrality means in practice. This would explicitly prevent the government from imposing or joining any form of coercive sanctions regime unless it was granted a mandate to do so by the UN Security Council. Read more >>
Australia Federal Court Holds Transporting Coal within Russia is Prohibited by Sanctions: On April 10, the Federal Court of Austria held that the movement of coal in Russia by Russian subsidiaries of an Australian company is prohibited under Australian sanctions. Read more >>