Author: Dr. Angelika Hellweger
15 August 2022
5 min read
Dr. Angelika Hellweger of Rahman Ravelli details the action taken by the EU.
In response to Russia’s recognition of the Donetsk and Luhansk regions of Ukraine on 22 February 2022 and its military action against Ukraine that started the following day, the European Union (EU) has so far adopted seven packages of sanctions severely restricting economic relations with Russia, Russian entities and persons. The aim is to block the ability of the Russian state and government to access the EU’s capital and financial markets and services, and to limit the financing of escalatory and aggressive policies.
In parallel, the EU sanctions regime concerning Belarus has been expanded as a response to that country’s involvement in Russia’s military action against Ukraine. This comes as an addition to the sanctions that were already in place in view of the situation in Belarus, and involve a range of financial, economic and trade measures.1
By the end of July 2022, the EU sanctions list included over 1000 individuals and more than 80 legal entities. The sanction lists include oligarchs and business elites linked to the Kremlin, as well as companies active in military and defence areas - which are logistically and materially supporting the invasion - as well as of actors of active disinformation. The entities include companies active in the energy, defence, shipbuilding, and transportation sectors and numerous Russian banks and financial institutions.
To target persons and entities who played a role in undermining or threatening the territorial integrity and independence of Ukraine, the EU has ordered the freezing of assets belonging to persons and entities listed in Annex I to (amended) Regulation 269/2014 and has prohibited listed persons from entering the EU territory. The assets of persons and entities not included in the EU sanctions list but owned or controlled by listed persons or entities must also be frozen. It is also prohibited to make funds and economic resources, including crypto-assets, available to listed persons and entities, and entities owned or otherwise controlled by a listed person or entity.
The EU issued guidance documents in the form of frequently asked questions2 (FAQ) which provide advice and clarification on significant matters relating to Russia sanctions. For instance, as regards assets freezes it was noted: “Only the persons and entities who/which appear under the column ‘Name’ in Annex I to Council Regulation (EU) 269/2014 are directly subject to an asset freeze and a prohibition to make funds and economic resources available to them or for their benefit. However, these restrictions can affect transactions with natural or legal persons, entities or bodies associated with them. If non listed entities are deemed to be owned or controlled by listed persons or entities, their assets must be frozen as well, and no funds or economic resources can be made available to them. This presumption can be rebutted on a case-by-case basis by the entity concerned, if it can be demonstrated that some or all of its assets are outside the control of the listed person, and/or that funds or economic resources made available to it would in fact not reach or benefit the listed person.”
EU sanctions only apply when there is EU jurisdiction (i.e., a nexus linking a certain activity to the EU). An EU nexus arises in situations:
This means that EU Member State nationals and companies or other entities incorporated in an EU Member State must comply with EU sanctions. It also means that even non-EU companies and persons may be subject to EU sanctions, depending on the particular circumstances under which they perform their business activities in the EU and how they are connected to any activities restricted by these sanctions
Regulations implementing the sanctions decisions unanimously adopted by the Council were published in the Official Journal on 23 February 2022 (“first package”) and 25 February 2022 (“second package”). Between 28 February 2022 and 10 March 2022, a third set of measures was published (“third package”). On 15 March 2022, an additional set of sanctions was adopted (“fourth package”). In response to Russia’s targeting of civilians, the Council adopted a fifth package of sanctions on 8 April 2022 (“fifth package”). On 3 June 2022, the Council agreed on a further set of sanctions (“sixth package”). On 21 July 2022, the Council adopted a further set of measures (“the maintenance and alignment package” or seventh package).
The EU implemented three different main types of sanctions:
The issuing of short-term visas for Russian government and business people is suspended and there is a comprehensive list of people subject to travel sanctions. In addition, EU persons are prohibited to broadcast / contribute to broadcast content produced or broadcast by Russian media outlets.
Member States and the respective national authorities are responsible for the implementation and enforcement of EU sanctions, as well as for identifying breaches and imposing penalties. The Commission monitors the correct and uniform implementation of EU sanctions and provides guidance to Member States in this regard.
One main criticism when it comes to EU sanction enforcement is the lack of uniformity in application and enforcement between Member States. It is thought that these inconsistencies create uncertainty, weak enforcement and assist in sanctions evasion.
Angelika is a specialist in international, high-level economic crime investigations and large-scale commercial disputes. She has widely-recognised expertise in representing corporates and conglomerates in Europe, the Middle East, Africa and United States.