Major Sanctions Developments
EU Imposes Additional Economic Sanctions Against Russia. The European Union announced the fourth round of sanctions against Russia as a punitive action against its invasion of Ukraine. In a statement, the European Commission announced the latest sanctions include the suspension of Russia’s privileged trade and economic treatment, a crackdown on its use of crypto assets, and a ban on the export of luxury goods to Russia. Additionally, the EU will no longer be importing iron and steel goods from Russia. European Commission President Ursula von der Leyen said the new measures seek to isolate Russia and drain its resources.
United States Imposes Restrictions on Russian Elites, Leaders for Supporting Ukraine Invasion. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a new round of sanctions that targets Russian elites, oligarchs, and political and national security leaders who supported Moscow’s attacks on Ukraine. The targeted individuals include:
- Three immediate family members of President Vladimir Putin’s spokesperson, Dmitriy Sergeevich Peskov, including Nikolay Peskov, who grew up in the UK, and Elizaveta (Liza) Peskova, who interned for a member of the European Parliament who publicly supported Russia’s occupation of Crimea;
- Viktor Vekselberg, longtime Kremlin insider, former director and president of the Skolkovo Foundation, and previously designated on 6 April 2018 pursuant to E.O. 13662 for operating in the energy sector of the Russian Federation economy;
- The management board of the designated and state-owned VTB Bank; and
- 12 members of the Russian State Duma, including Vyacheslav Victorovich Volodin, who is also a permanent member of Russia’s Security Council.
Canada Announces New Sanctions Against Russian Defense Sector, Elites. Canadian Prime Minister Justin Trudeau unveiled a new round of sanctions against Russia, targeting 31 entities in the country’s defense sector and five current and former Russian senior officials and associates of President Vladimir Putin’s regime. The measures build on previously announced sanctions imposed on Russia over its aggression toward Ukraine. The new sanctions follow Trudeau’s trip to Europe, including visits to the United Kingdom, Latvia, Germany, and Poland, to coordinate the response against Russia’s invasion. The individuals designated under the Special Economic Measures Act include:
- Roman Abramovich, owner of London’s Chelsea FC, stakeholder in steel giant Evraz and Norilsk Nickel, and one of Putin’s closest and most prominent allies; and
- Alisher Usmanov, former co-owner of Premier League clubs Arsenal, who was also designated by the United States and UK on 3 March and the European Union on 28 February.
Australia Imposes Sanctions Against Prominent Russian Oligarchs and Elites. The Canberra government followed the US and Britain in announcing sanctions on key Kremlin linked businessmen. The sanctions cover 33 “prominent businesspeople and their immediate family members,” including:
- Roman Abramovich, owner of Chelsea Football Club;
- Alexey Miller, the CEO of Gazprom;
- Dmitri Lebedev, Chairman of the bank Rossiya;
- Sergey Chemezov, chair of state-owned defense conglomerate Rostec;
- Nikolay Tokarev, CEO of Transneft;
- Igor Shuvalov, chairman of Vnesheconombank (VEB.RF); and
- Kirill Dmitriev, CEO of the Russian Direct Investment Fund (RDIF).
UK Hits 386 Russian Lawmakers with Sanctions for Recognizing Ukrainian Breakaway Regions. UK Foreign Secretary Liz Truss unveiled restrictive measures targeting 386 members of the Russian parliament’s lower house for providing support for the Ukrainian breakaway regions of Luhansk and Donetsk. The Russian State Duma ratified treaties in February recognizing the independence of the Ukrainian regions and authorized the deployment of the Russian military, which marked the beginning of Russia’s invasion. The restrictive measures ban the designated individuals from traveling to Britain, accessing assets held in the UK, and doing business in the country.
Export Controls
U.S. Commerce Department Restricts Export of Luxury Goods to Russia, Belarus. The U.S. Commerce Department’s Bureau of Industry and Security (BIS) imposed an export ban on luxury goods to all end users in Russia and Belarus and to certain Russian and Belarusian oligarchs and malign actors located worldwide. Secretary of Commerce Gina Raimondo said the decision further isolates Russia and the individuals that profited from President Vladimir Putin’s “rampant corruption and the exploitation of the Russian people.” The rule provides a list of U.S.-origin luxury goods that are impacted by the sanctions and includes certain spirits, tobacco products, clothing items, jewelry, vehicles, and antique goods.
Japan Imposes Ban on Semiconductor Exports to Russia. Koichi Haguida, the trade minister of Japan, announced that the country is suspending the export of Japanese semiconductors to Russia in solidarity with global efforts to cripple Russia’s military capability. The export ban was approved by the cabinet and is set to take effect on 18 March. The prohibition includes chips, machine tools, and communication equipment in line with items already targeted by the United States and the European Union. Belarus will also be affected by the ban. The Japanese export ban of semiconductors follows a similar ban implemented by both Taiwan and the United States in late February. Additionally, the United States is reportedly warning Chinese semiconductor producers that they could be added to a trade blacklist that would cut them off from American equipment and software if they skirt new export curbs against Russia.
Sanctions Effects and Enforcement
Department of Justice Announces “KleptoCapture” Task Force Aims. The U.S. Department of Justice (DOJ) recently launched the “KleptoCapture” task force, aimed at strengthening sanctions enforcement. A DOJ official commented, “Financial institutions, banks, money transmission services, cryptocurrency exchanges who willfully fail to maintain adequate anti-money laundering policies and procedures and allow these oligarchs to move money […] will be in the crosshairs of this investigation.” Accountants and lawyers who have aided sanctioned individuals will also be targeted and potentially prosecuted.
UK FCA Orders Banks to Share Information on Sanctioned Individuals. UK financial regulators ordered banks to share information on how sanctioned individuals and businesses move their money around the world. The Financial Conduct Authority (FCA) declared it will not be enough for banks to sever ties with oligarchs and companies under sanctions, but that they must inform on their former clients and any moves by them to dodge restrictions. The FCA said it had a “full toolkit” for dealing with banks that do not keep to the terms of their operating licenses, which includes an “open and transparent relationship” with regulators, which banks that withhold information will not be deemed to be maintaining.
World Athletics Council Bans Belarus from Participating in International, European Sporting Events. The World Athletics Council announced that it will ban the Belarus Athletic Federation in response to Belarus’s involvement in Russia’s invasion of Ukraine. The sanctions ban the Belarusian sporting organization from:
- Hosting any international or European athletics event;
- Having any representation at the World Athletics Congress or in decisions that require congressional votes;
- Receiving accreditation for any World Athletics Series events; and
- Joining any World Athletics development or professional programs.
Discussions about the exclusion of Russian authorized neutral athletes and Belarusian athletes from the council’s meetings are also being discussed.
Art Gallery Severs Ties with Sanctioned Oligarchs. The London-based Tate gallery group removed Viktor Vekselberg as an honorary member of the Tate Foundation, its fundraising charity, after he was among those listed in US sanctions. Tate also cut ties with EU-sanctioned Petr Aven, until recently head of Alfa-Bank and LetterOne. Vekselberg had earned the title after donating to the gallery seven years ago.
Sanctions Outlook
European Banking Authority Urges Financial Institutions to Comply with Sanctions Imposed on Russia, Belarus. The European Banking Authority (EBA) called on financial institutions to comply with sanctions against Russia and Belarus, which were imposed following Moscow’s invasion of Ukraine. The EBA will accept questions related to the restrictive measures, and the organization is also encouraging financial institutions to facilitate access to basic payment accounts for Ukrainian refugees. Organizations should follow a risk-based approach when providing financial products to prevent money laundering and financial terrorism.
UK Financial Authorities Remind Financial Institutions to Comply with Russian Sanctions. British financial regulatory authorities announced that all financial services firms operating in the UK, including crypto asset providers, are expected to remain in compliance with sanctions imposed against Russia. In a joint statement published by the UK Financial Conduct Authority (FCA), authorities noted that they work with international allies to share intelligence and act to prevent sanctions evasion, including through crypto assets. The use of crypto assets to circumvent economic sanctions is a criminal offense under the Money Laundering Regulations 2017 and regulations made under the Sanctions and Anti-Money Laundering Act 2018.
Curbs on Trade with Russia. G7 nations provided further clarity on proposed restrictions on trade with Russia (covered in K2 Integrity’s update of 11 March 2022). Russia’s “most-favored nation” trading status will be revoked, and the country will no longer be able to obtain any financing from international institutions such as the IMF and the World Bank. Measures are also expected to ensure cryptocurrencies cannot be used to circumvent sanctions and move money in and out of Russia. The United States and EU announced that they would ban exports of luxury goods to Russia and impose further curbs on members of the country’s elite, and the United States will also create the legal authority for bans on investment in any sector of the Russian economy besides energy. The move is expected to be approved by the EU’s member states this week.
