The latest EU sanctions

The latest EU sanctions exclude Russian banks from SWIFT and restricts the transfer of euro banknotes to Russia

This afternoon, the European Union (“EU”) adopted another comprehensive sanctions package. The latest round of sanctions is a response to the continued escalation of the invasion of Ukraine and is considered by the EU Commission to be unprecedented and the most wide-ranging ever adopted by the Union. Danish companies should take actions to ensure that they are in compliance with these new sanctions, as well as the pre-existing sanctions, and should keep monitoring the situation as new sanctions may still be imposed.

Latest package of EU sanctions against Russia

The latest round of sanctions entered into force on 2 March 2022 as they were published in the Official Journal of the European Union, imposing additional financial restrictions on Russia, in response to Russia’s escalation of the invasion of Ukraine.

The sanctions effectively exclude seven key Russian banks from the SWIFT system, the world’s dominant financial messaging system. The ban will take effect as of 12 March 2022.

The new sanctions also prohibit Euro denominated banknotes from being sold, supplied, transferred or exported to Russia. Furthermore, the sanctions prevent EU operators from broadcasting any content from certain Russian media outlets.

According to a press release from the European Commission “Depending on Russia’s behaviour, the Commission is prepared to add further Russian banks at short notice” [1].

The new EU sanctions consist of two different EU regulations that can be found here and here.

Exclusion from SWIFT

Regulation 2022/345[2] prohibits EU-entities from providing specialised financial messaging services, which are used to exchange financial data, to seven Russian banks. This will include the SWIFT system. The seven banks are:

• Bank Otkritie
• Novikombank
• Promsvyazbank
• Bank Rossiya
• Sovcombank
• VNESHECONOMBANK (VEB)
• VTB BANK

The prohibition also extends to any legal person, entity or body established in Russia whose proprietary rights are directly or indirectly owned by more than 50 % by one of the abovementioned banks. The prohibition will be effective as of 12 March 2022.

Sanctions related to Euro banknotes

Regulation 2022/345 expands the existing financial restrictions, in regards to circulation of Euro banknotes in Russia.

The new sanctions prohibit Euro banknotes from being sold, supplied, transferred or exported to any natural or legal person, entity or body in Russia, including the government and the Central Bank of Russia, or for use in Russia. The sanctions on Euro banknotes do, however, contain certain exceptions, and will not be applicable if the banknotes are necessary for personal use during travel or are necessary for diplomatic missions. The prohibition entered into force on 2 March 2022.

Sanctions related to Russian media outlets

Regulation 2022/347[3] introduces sanctions on certain Russian media outlets.

According to a press release from the EU Commission[4] six different media outlets “are part of a coordinated information manipulation effort, including disinformation”. The rules prohibit EU operators from broadcasting, enabling, facilitating or otherwise contributing to any content from the listed media outlets. The prohibition entered into force on 2 March 2022.

Asset freezes – Belarus

Separately, additional asset freezes were imposed today on 22 individuals as a result of the rule of Belarus in the invasion of Ukraine[5].

Sanctions by non-EU countries and Russian countermeasures

Other (non-EU) countries have also imposed new and additional sanctions on Russia. On 1 March 2022, the United Kingdom banned Russian ships from UK ports, and added new individuals and entities to the UK sanctions list[6].

Further, Russia has imposed certain countermeasures relating to foreign exchange, securities etc. and it is our understanding that additional restrictions on foreign investors may potentially be imposed shortly.

Impact on Danish companies

The scope of applicable sanctions targeting Russia is now very extensive, and 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 addressed, in particular in regards to the banks targeted by the SWIFT ban.

We recommend to closely monitor the situation in order to ensure compliance with potential new 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 28 February 2022 by accessing the following link and Gorrissen Federspiel’s newsletter of 24 February 2022 by following this link.