The Effects of New Russia Sanctions and Export Controls on the 2-Year Ukraine War Anniversary: A Closer Look
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After Russia invaded Ukraine on February 24, 2022, the US, EU, and UK, together with their allies, imposed successive rounds of sanctions at record speed to condemn Russia and restrict its ability to continue its aggressive operations against Ukraine.
The US, EU, and UK imposed further sanctions on February 22 and 23, 2024, to mark the second anniversary of Russia's war in Ukraine.
On February 22 and 23, 2024, the United States, the European Union, and the United Kingdom presented an updated list of critical objects. This list identifies commodities and technologies utilised in Russian military systems in Ukraine, and operators should use extreme caution while dealing with them.
The EU has adopted its 13th package of sanctions against Russia.
On February 23, 2024, the EU imposed its 13th round of sanctions on Russia. The new package contains further asset freeze measures and broadens sectoral penalties against Russia by introducing firms subject to harsher export control limitations on dual-use and sophisticated technology products. This would limit Russia's access to electrical components while increasing trade in iron and steel goods between the EU and the UK.
Supplemental Asset Freeze Listings
The EU Asset Freezing List contained 106 individuals and 88 entities. The 194 additions concentrate on the Russian military-industrial complex, North Korean and Belarusian parties transporting arms to Russia, Russian parties engaging in circumvention schemes, judges and officials in occupied Ukrainian territory, and parties violating children's rights.
The new designations target well-known military-industrial businesses such as Proekt-technika, NPO Bazalt, JSC Saturn, and OJSC Orsha aircraft maintenance facility, as well as JSC Peleng, a Belarusian optoelectronics company. The entries include two Russian businesses, LLC "Testkomplekt" and LLC NOVELCO, as well as their Russian general directors. These individuals have been identified as engaged in parallel imports or supply of restricted items in Russia, which is considered a major breach of EU sanctions.
Improved Export Control Limits
Annex I of Regulation 2021/821 and Annex VII of Regulation 833/2014 establish enhanced constraints on dual-use and advanced technology items. The EU added 27 enterprises to the list of organisations that must follow tighter export control criteria for dual-use and high-technology items. Russia, China, Kazakhstan, India, Serbia, Thailand, Sri Lanka, and Turkey have formally registered newly formed organisations.
Expansion of the advanced technology goods list (Annex VII of Regulation 833/2014).
The revisions to the list of export-controlled products in Annex VII of Regulation 833/2014 relate to electronic components detected in drones deployed in the Ukrainian war. Annex VII now contains "aluminium electrolytic fixed electrical capacitors (excluding power capacitors)", categorised under tariff position 8532 22 of the EU's unified nomenclature.
Increasing the list of items contributing to developing Russian industrial capabilities (Annex XXIII of Regulation 833/2014).
Annex XXIII of Regulation 833/2014 now covers all "electrical transformers, static converters (e.g., rectifiers), and inductors" that are categorised as export-controlled articles and technology under tariff category 8504 of the EU's unified nomenclature. Previously, only products with tariff positions 8504 32, 8504 33, and 8504 34 were listed.
Products with tariff numbers 8504 10, 8504 21, 8504 22, 8504 23, 8504 31, 8504 40, 8504 50, and 8504 90 are eligible for a wind-down exemption. This exception allows for the performance of contracts signed before February 24, 2024, until May 25, 2024.
No more proof of origin in trade between the EU and the UK for iron and steel
The EU has included the United Kingdom, Switzerland, and Norway on its list of partner nations for importing iron and steel. As a consequence, importers transporting iron and steel goods from the UK into the EU are no longer required to verify the materials' place of origin.
A new list of Common High Priority Items
The European Commission published a new list of Common High Priority Items on its website. However, Annex XL of Regulation 833/2014 was not updated. The "No Russia" clause does not presently apply to products classified as tariff positions 8475.10, 8458.11, 8458.91, 8459.61, and 8466.93 in the EU's unified nomenclature. Operators should exercise extra care with certain commodities and, as a recommended practice for due diligence, incorporate contractual provisions that prohibit re-exports to or usage in Russia.
On February 22, 2024, the European Commission issued a frequently asked question (FAQ) about the required "No Russia" clause. It provides a recommended template clause that defines contractual responsibilities and remedies. The provision should restrict re-exports to Russia and urge non-EU parties to exercise caution and make their best efforts along the commercial chain. It also suggests including measures for remedies such as contract termination and penalty payments.
The United Kingdom has added over 50 names to its sanctions list targeting individuals affiliated with the Russian and Belarus regimes.
On February 22, 2024, the UK implemented new asset-freezing restrictions under its Russia and Belarus regimes to mark the second anniversary of Russia's full-scale invasion of Ukraine. In collaboration with its worldwide partners, the United Kingdom expanded the Common High Priority List while implementing its first sanctions programme.
Additional asset freeze targets identified by the Russian and Belarusian governments
On February 22, 2024, the UK government identified more than 52 individuals and companies tied to Russia's invasion of Ukraine. The sanctions target key sources of Russian wealth, such as metals, diamonds, and the energy industry, as well as arms suppliers to Russia. The new targets include munitions manufacturers, electronics businesses, diamond and oil merchants, and oil and gas companies, including Arctic LNG 2, one of its directors, and six directors of PJSC Novatek, Arctic LNG 2's primary owner.
UK revises the Common High Priority List.
On February 22, 2024, the UK government and its foreign partners expanded the Common High Priority List, which includes critical Western components for Russia's weapon systems and military growth. Five more codes for Computer Numerical Control ("CNC") machines, which are required to manufacture and maintain key military equipment, were added to the list.
The UK government released its first sanctions policy.
On February 22, 2024, the UK government released its first sanctions policy. This plan explains the UK's approach to employing sanctions to address global threats, enforce international norms, and protect the UK. The strategy specifies that the UK utilises fines to deter or end harmful activity, disrupt continuing harmful activities, and highlight its commitment to maintaining international norms.
U.S: Many more sanctions against Russia
On February 23, 2024, the US Department of the Treasury's Office of Foreign Assets Control (OFAC) imposed sanctions on nearly 300 individuals and entities, including targets in Russia's financial infrastructure and military-industrial base, as well as over two dozen third-country sanction violators in Europe, East Asia, Central Asia, and the Middle East.
OFAC attacked Russia's critical financial infrastructure by slapping sanctions on the National Payment Card System Joint Stock Company ("NSPK"), the state-owned operator of Russia's Mir National Payment System. The NSPK is a financial entity managed by the Central Bank of Russia that is important in facilitating domestic and international financial transactions.
U.S. Sanctions Against Individuals & Entities
On February 23, 2024, the OFAC slapped sanctions on more than 250 firms and individuals. This includes people engaged in avoiding sanctions and bolstering Russia's future oil, metals, and mining production. The punishments targeted people who contributed to Russia's war, namely those who illegally transferred and deported Ukrainian youngsters.
The Department of State has announced preparations to impose visa restrictions on Russian Federation-appointed officials accused of human rights crimes, including the transfer, expulsion, and incarceration of Ukrainian children.
Additional penalties imposed by the US Price Cap Coalition.
On February 23, 2024, the United States, with OFAC and a worldwide coalition of nations known as the "Price Cap Coalition," which includes the G7, the EU, and Australia, decided to prohibit importing Russian crude oil and petroleum products. Consequently, the Joint Stock Company Sovcomflot ("Sovcomflot"), Russia's state-owned shipping and fleet operator, was established. OFAC named Sovcomflot and identified 14 crude oil vessels in which Sovcomflot had a share.
OFAC issues new general licences
Aside from the sanctions measures outlined above, OFAC issued further general licences allowing transactions involving the gradual termination and disposal or transfer of debt or equity involving specified entities. These general permits often give limited and conditional authorisations. Parties seeking to utilise them should do a thorough analysis to ensure that their proposed transactions comply with the terms of the appropriate general licence.
General Licences 88 (GL 88), 88A (GL 88A), and 89 (GL 89) apply to Russia.
GL 88, GL 88A, and GL 89 authorise transactions that are usually necessary to complete any interactions with certain entities sanctioned on February 23, 2024, until 12:01 a.m. Any payment to a banned individual must be sent into a blocked account before April 8, 2024, at Eastern Daylight Time, according to the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR Part 58.
General Licence 90 (GL 90) is linked to Russia.
GL 90 permits transactions usually needed for the sale or transfer of debt or equity issued or guaranteed by specific restricted organisations ("Covered Debt or Equity") to a non-US person until 12:01 a.m. on April 8, 2024, Eastern Daylight Time. The licence allows transactions until 12:01 a.m. Eastern Daylight Time on April 8, 2024, that are often happening and necessary for the process, ratify, and finalise Covered Debt or Equity transactions completed by 4:00 p.m. February 23, 2024, Eastern Standard Time. The completion of derivative transactions executed before 4:00 p.m. Eastern Standard Time on February 23, 2024, involving specific organisations as counterparties or tied to Covered Debt or Equity as long as the payments adhere to the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587.
Russia-specific General Licences 91 (GL 91) and 91A (GL 91A)
GL 91 and GL 91A accept transactions till 12:01 a.m. On May 23, 2024, Eastern Daylight Time, actions are permitted that are necessary for the safe docking and anchoring of vessels owned by specific individuals, ensuring the crew's well-being, and carrying out emergency repairs or environmental protection activities related to these vessels. All payments to a sanctioned person under GL 91 must be sent to a restricted account specified in the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587.
Russia-related General Licences 92 (GL 92) and 93 (GL 93).
GL 92 enables transactions till 11:59 p.m. On April 8, 2024, Eastern Daylight Time, operations linked to emptying cargo from boats designated on OFAC's SDN List owing to Sovcomflot's property interest are permitted if the cargo was loaded prior to February 23, 2024.
GL 93 allows transactions with any vessel that is forbidden due to Sovcomflot's property interest or any firm in which Sovcomflot owns 50% or more, as long as the vessel is not on OFAC's SDN List.
The US Department of Commerce has added 93 Russian firms to its Entity List.
On February 23, 2024, the US Department of Commerce's Bureau of Industry and Security (BIS) imposed additional export restrictions on 93 Russian organisations and seven other places. These limits were enforced due to their assistance for Russia's defense-industrial industry and war operations. Over 50 new enterprises will be classified as Russian-Belarusian military end customers with a "footnote 3" status. Entities marked with a footnote 3 are subject to rigorous Export Administration Regulations ("EAR"). All commodities subject to the EAR need a licence, except food and medicine classified as EAR99, which will be examined case by case by BIS with a refusal policy.
Risk Advisory from the US Department of State
On February 23, 2024, the Department of State published a risk advisory advising enterprises and individuals in the Russian market to analyse the sanctions risks associated with their activities and any applicable exemptions or authorisations. The Department of State urges enterprises and people working in Russia and Ukraine's occupied territories to mitigate risk by undertaking full due diligence, which includes compliance and human rights evaluations.
After Russia invaded Ukraine in February 2022, the US, EU, and UK imposed sanctions. On February 23, 2024, the EU imposed its 13th wave of penalties, including asset freezes and stricter export controls on dual-use and high-tech items. The amended asset freeze targets Russian military-industrial enterprises, North Korean and Belarusian parties smuggling armaments to Russia, circumvention schemes, judges and officials in occupied Ukraine, and children's rights violations. The EU enlarged its list of Russian industrial development aids.
In the UK, over Russian and Belarusian government members have been sanctioned by the EU. The UK also targeted Russia's metals, diamonds, and energy industries by adding over 52 persons and firms linked to the invasion of Ukraine. The UK's new Common High Priority List includes Western components for Russia's weapon systems and military expansion.
In the U.S, over 1000 new US sanctions now target Russia's financial infrastructure and military-industrial basis.
The US Department of Commerce also put 93 Russian entities on its Entity List, restricting exports to them and seven others. The Department of State issued further risk advice encouraging Russian businesses and people to assess sanctions risks and obtain exemptions or authorisations.
Read all the other this week's update in this week's edition of "The Export Controls & Sanctions" Manager.
Our Recommendation
After Russia invaded Ukraine in February 2022, the US, EU, and UK imposed sanctions, including asset freezes and stricter export controls on dual-use and high-tech items. Enhanced Due Diligence and an internal export control programme to ensure compliance are key to navigating sanctions imposed. find out everything you need to know from the experts at the Customs Manager Ltd about Sanctions and update yourself on important relevant topics by taking out a low-cost subscription to our trade intelligence service, which unlocks the paywall and keeps you up to date with this and twenty other topics that any serious Export Control and Sanctions Professional needs without. Also, you can find our helpful sanctions and export control training here.
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