New wave of US, EU and UK sanctions against Russia
Yesterday, 22 February 2022, the US, UK and EU announced a new wave of sanctions against Russia. These sanctions build on those announced on 21 February 2022 and are a response to Russia's movement of troops across the Ukrainian border.
President Biden stated that yesterday's wave of sanctions is an incremental increase and that additional sanctions will be imposed if Russian aggression continues. EU and UK officials have taken a similar stance: the Presidents of the European Council and European Commission have made it clear that the EU is prepared to adopt additional measures if needed (link available here), and the UK Foreign Secretary has underlined that the UK would be willing to "go much further" if Russia does not pull back (link available here).
The US sanctions are relatively limited in scope. They block any dealings with two Russian state-owned financial institutions—VEB and Promsvyazbank—as well as 42 of these financial institutions' subsidiaries and five vessels owned by Promsvyazbank. The sanctions also add a number of prominent government officials and their family members to the Specially Designated Nationals ("SDN") list. Finally, the sanctions prohibit US financial institutions from dealing in Russian sovereign debt.
VEB and Promsvyazbank have limited business banking operations and their role is primarily to prop up Russia’s defense capability and its economy. VEB is described by the US Treasury to be the servicer of Russia’s sovereign debt, financier for exports, and the funding source for Russian development projects. Promsvyazbank is described to finance Russia's defense sector, and reportedly services Russia’s defense contracts and provides banking and personal finance to Russian military personnel. The individuals added to the SDN list are primarily linked to the Russian security services. Nevertheless, clients should immediately review the list of entities and individuals that have been targeted (available here) to determine whether they have any connections or dealings with them.
EU member states have unanimously agreed on a new package of sanctions, which will be finalised without delay – potentially by the end of the week.
While formal sanctions legislation has yet to be issued, the sanctions are expected to target: (a) Russian individuals and entities involved in Russia's recognition or invasion of, or destabilising actions related to, the Donetsk and Luhansk regions and the undermining of Ukrainian territorial integrity, sovereignty and independence (including 351 members of the Russian State Duma and 27 other individuals and entities); (b) banks that finance Russian the Russian military apparatus and contribute to the destabilisation of Ukraine; (c) EU imports and exports to/from the Donetsk and Luhansk regions; as well as (d) restrictions on the Russian government's ability to raise capital on the EU's financial markets (press statements available here, here and here).
The individuals and entities to be targeted by the sanctions have not yet been publicly identified.
Norway would likely align its sanctions regime against Russia with any sanctions adopted by the EU, including the above restrictions.
The UK has placed five Russian banks and three individuals on its sanctions list, pursuant to the recently amended Russia (Sanctions) (EU Exit) Regulations 2019.
The banks that have been added are IS Bank, Bank Rossiya, Promsvyazbank, JSC Genbank, and JSC Black Sea Bank Development and Reconstruction. The designated individuals are Gennadiy Timchenko, Boris Rotenberg and Igor Rotenberg (HM Treasury notice available here).
The UK's actions impose asset freezes, including prohibitions on making funds or economic resources available to, or for the benefit of, designated persons. Hence, clients should immediately map whether they have any connections or dealings with the listed entities or individuals.
Should the UK find it necessary to impose further sanctions against Russia, the UK Foreign Secretary has indicated that these will extend to prohibition of tech exports; restrictions on Russia raising sovereign debt in UK money markets; extension of the territorial sanctions imposed on Crimea to non-government controlled territory in the breakaway republics of Donetsk and Luhansk; and targeting of the members of the Russian Duma and Federation Council who voted to recognise the independence of Donetsk and Luhansk.