New sanctions package imposed by the EU

The European Union (“EU”) has adopted further sanctions against Russia consisting of the following six different elements: (i) a total import ban on Russian coal; (ii) an asset freeze on four key Russian banks, along with restrictions on crypto-currency; (iii) a prohibition on Russian freight road operators from transporting goods by road within the territory of EU and a ban on Russian flagged vessels from EU-ports; (iv) expansion on the scope of export bans to Russia; (v) expansion of bans on imports from Russia; and (vi) a ban on all Russian companies from participating in EU public procurement processes and excluding all EU financial support to Russian public bodies. Finally, the asset freeze list is updated with new listings of individuals and entities. Danish companies should take action to ensure compliance with these new sanctions, as well as the pre-existing sanctions.

The fifth package of EU sanctions against Russia

The new round of sanctions against Russia entered into force on 8 April 2022 and introduces a wide array of new sanctions targeting multiple different sectors of the Russian economy.

The new EU sanctions are set out in two different regulations accessible here and here.

First element: Import ban on coal from Russia

Regulation 2022/576 [1] introduces a total ban on all forms of Russian coal and other solid fossil fuels. According to the regulation, it is prohibited to purchase, import, or transfer, directly or indirectly, coal and other solid fossil fuels, as listed in Annex XXII, if they originate in Russia or are exported from Russia. The ban does not apply to the execution until 10 August 2022 of contracts concluded before 9 April 2022.

Second element: Additional financial measures

Regulation 2022/581[2] imposes additional financial restrictions. Hence, an asset freeze is introduced on the following four Russian banks:

• Otkritie FC Bank
• Novikombank
• Sovcombank
• VTB Bank

The four banks represent 23% of the market share in the Russian banking sector[3].

Further, regulation 2022/576 introduces prohibitions on providing high-value crypto-asset services to Russia, along with a prohibition on provision of certain services to certain trusts of Russian nationals, natural persons residing in Russia and legal persons, entities or bodies established in Russia.

Third element: Transport restrictions

Regulation 2022/576 bans Russian freight road operators from transporting goods by road within the territory of the EU, including in transit. Certain exceptions apply to this rule, such as pharmaceutical, medical, agricultural and food products.

Additionally, Russian-flagged vessels are banned from entering EU-ports after 16 April 2022. However, competent authorities may under certain conditions authorise a vessel to access an EU port.

Fourth element: Further targeted export bans

Regulation 2022/576  expands the existing export bans by imposing restrictions in a number of areas where Russia relies on EU supplies. This includes the addition of new types of goods and products covered by the export restrictions, for example, high-tech products and luxury goods. New bans are also introduced on a wide range of products which are said to contribute to the enhancement of Russian industrial capabilities. These measures together impose export bans on, for example, quantum computing, advanced semiconductors, sensitive machinery, transportation and chemicals. Restrictions also include specialist catalysts for use in the refinery industry. Companies exporting goods to Russia should reassess their product reviews of any products exported to Russia.

Fifth element: Additional import bans

Regulation 2022/576 further imposes additional import bans on specific goods, if they originate in Russia or are imported from Russia.

This includes cement, rubber products, wood, spirits, liquor and high-end seafood (such as caviar). The goods and products affected are diverse and any companies importing goods or products from Russia or originating in Russia should carefully assess such goods or products, including their origin and export route.

Sixth element: Excluding Russia from public contracts and European financial support

Regulation 2022/576  implements a general ban on the participation of Russian national and entities in public procurement contracts in the EU, as well as an exclusion of all financial support to Russian public bodies.

Additional individuals and entities subject to asset freezes

Separately, Regulation 2022/581 imposes asset freezes on an additional 216 individuals and 18 entities, including all 179 members of the so-called “governments” and “parliaments” of Donetsk and Luhansk. Other new listings include key oligarchs and business people, high-ranking Kremlin officials, proponents of disinformation and information manipulation, and family members of already sanctioned individuals[4]. The total list now cover more than 1000 individuals and entities[5].

Sanctions by non-EU countries

Other (non-EU) countries have also imposed new and additional sanctions on Russia. On 6[6] and 7[7] April 2022, the US government issued executive orders applying restrictions on new investments and services targeted at Russia, as well as new sectoral restrictions, and the designation of a substantial number of additional individuals and entities. On 6 April 2022, the UK government also presented new sanctions. The UK sanctions are closely aligned with the measures imposed by the EU, and also include a full asset freeze on the largest Russian bank, SberBank, along with a termination of all imports of Russian coal and oil effective by the end of 2022[8].

Impact on Danish companies

The scope of applicable sanctions targeting Russia has now been extended even further and cover a wide range of sectors. Danish companies should ensure that their sanctions compliance programs, policies, screening processes and payment processes are updated to ensure that the newly enacted sanctions are appropriately addressed.

We recommend that Danish companies conduct a re-screening in regards to products and all business partners in light of the new extensive sanctions.

We further recommend to closely monitor the situation in order to ensure compliance with potential new restrictions which may be imposed at short notice.

Gorrissen Federspiel closely follows the developments of sanctions against Russia and we can assist with the interpretation of and compliance with the applicable sanctions, as well as implementation of measures to ensure that sanctions are observed. If you have any questions, please contact a member of our CSR and Compliance team.

For more information on the previous EU sanctions packages, please see Gorrissen Federspiel’s newsletter of 16 March 2022, Gorrissen Federspiel’s newsletter of 10 March 2022, Gorrissen Federspiel’s newsletter of 2 March 2022, Gorrissen Federspiel’s newsletter of 28 February 2022 and Gorrissen Federspiel’s newsletter of 24 February 2022.