New UK Sanctions:On July 21, 2022, the UK introduced a new tranche of restrictions in the 14th amendment to its Russian Sanctions Regulations. Several of the new restrictions are detailed below.
The UK prohibited UK persons from directly or indirectly providing accounting services, business and management consulting services, and public relations services to “persons connected with Russia,” and also prohibits “the provision of services to Russian residents who are temporarily located in another country, including the UK.” There is an exemption for activity that are required by another UK legal requirement. However, there is not an exemption for services to subsidiaries of UK-parented companies. The definition for each of these services can be found here. These prohibitions provide long-awaited clarity to the scope of the UK’s May 4, 2022, announcement banning the export of UK management consulting, accounting and PR services to Russia, which announcement provided very little detail as to scope.
The UK also banned the export to Russia of a broad range of items listed on the G7 dependencies and energy-related goods list (found here). Further, the UK expanded the scope of prohibitions on the export of “energy-related goods” to include all energy exports to Russia, regardless of the eventual point of use. The regulation also prohibits the provision of technical assistance, financing, financial services, and brokering related to such goods, as well as services necessary for oil and gas exploration or production in Russia.
Finally, the UK introduced bans on the import of Russian (i) oil and oil products, (ii) coal and coal products, and (iii) gold. All three prohibitions ban the import of such products that originate in or are consigned from Russia, or the acquisition or supply and delivery of the products with the intention of those goods entering into the UK (as well as related technical assistance, financial services, funds, and brokering services). The oil ban takes effect on December 31, 2022 and, according to the UK explanatory memorandum, the coal ban takes effect on August 10, 2022. The gold ban took effect upon announcement.
New EU Sanctions: On July 21, 2022, the EU introduced its seventh package of Russian sanctions, which added several new prohibitions and clarified prior regulations. Several of the new provisions are detailed below.
The EU made dozens of additions to the list of controlled items that might contribute to Russia’s military and technological enhancement or the development of its defense and security sector. These additions include certain law enforcement equipment, certain oil and gas exploration equipment, certain processing equipment, and certain software. The regulations prohibit the sale, supply, transfer, or export of listed items.
Like the UK, the EU also prohibited the import, purchase, or transfer of Russian-origin gold in the EU.
The EU also extended its port access ban to locks (in canals and other bodies of water) in order to prevent circumvention of EU sanctions. It also updated its regulations to allow the sharing of technical assistance with Russia when related to establishing technical standards for the International Civil Aviation Organization.
Finally, the EU updated its regulations to permit transactions with certain EU member state-owned entities for transactions relating to agricultural products and the supply of oil and petroleum products to third countries. The EU further clarified that none of its measures target the trade in agricultural and food products. The EU also noted that its measures do not prohibit third countries and their nationals operating outside of the EU from purchasing pharmaceutical or medical products from Russia.
Additional Sanctions Designations: In addition to the above updates, the UK made minor amendments to the entries of several designated individuals and entities, and delisted two individuals. The EU designated six individuals and one entity involved in the recruitment of Syrian mercenaries to fight in Ukraine alongside Russian troops. In its seventh sanctions package, the EU also designated dozens of additional individuals, and ten additional entities. The individuals include certain members of the National Guard of the Russian Federation, regional Russian political figures, and members of the nationalist motorcycle club, the Night Wolves. The EU also designated Sberbank, Russia’s largest bank, which accounts for about a quarter of Russian banking assets and a third of Russian banking capital.
General Licenses: The UK issued general license (“GL”) INT/2022/2002560, which allows for a seven-day wind-down period for the UK’s Russian investment ban. For example, the GL allows a person to (i) directly or indirectly acquire any ownership interest in land located in Russia, (ii) directly or indirectly acquire any ownership interest in or control over a person, other than an individual, connected with Russia, or (iii) open a representative office or establish a branch or subsidiary located in Russia. The GL expires on July 26, 2022.
For further information, please contact:
Edward Goetz, Partner, Crowell & Moring
egoetz@crowell.com
