The Week in Review delivers the impact and analysis for the public, private, and non-profit sectors from our regular reporting of the evolving global sanctions campaign against Russia.
This week, we reviewed the recent developments since our last update on 22 April as the United States (U.S.), the European Union (EU), and the United Kingdom (UK) continue to lead a global coalition in this sanctions campaign. As the war enters its third month, countries have announced additional sanctions actions at a slower pace. Nevertheless, K2 Integrity will continue to monitor sanctions updates and provide insight into the meaning and potential outcomes of those actions.
Recent Developments Related to Sanctions Against Russia
Since the last update, numerous authorities have undertaken sanctions-related actions against Russia.
U.S. actions include:
- On 26 April, Bloomberg reported that the Department of Justice (DOJ) will request expanded authority from Congress to seize and sell Russian assets in the United States. Speaking during a U.S. Senate committee hearing, Attorney General Merrick Garland said the DOJ will back new legislation that would make it easier to seize targeted Russian assets and to provide some of the proceeds from any sales directly to Ukraine. The request for an expanded authority comes as part of an effort by President Joe Biden to provide more assistance to Ukraine.1
- On 25 April, Bloomberg reported that, in October 2021, U.S. authorities seized high-end artwork and other items from an American residence owned by Oleg Deripaska, a close Putin associate. According to Bloomberg, authorities believe Deripaska, who has been designated as a Specially Designated National by the U.S. Department of the Treasury and subject to blocking sanctions under Executive Order 13661 and 13662 since 2018, “has been evading U.S. sanctions.” Deripaska is reportedly the subject of an inquiry conducted by the DOJ’s “KleptoCapture” task force, according to New York federal prosecutor Andrew Adams.2
EU actions include:
- On 27 April, European Commission (EC) President Ursula von der Leyen warned EU energy companies that paying for Russian gas using rubles would constitute a breach of EU sanctions. The warning follows news that Russia’s Gazprom PJSC cut off gas supplies to Poland and Bulgaria.3
- On 26 April, the Polish government announced that it will impose asset freezing sanctions on 50 Russian oligarchs and companies, including Putin cronies Mikhail Fridman and Oleg Deripaska, as well as energy giant Gazprom. In addition, sanctioned individuals are banned from entering Poland. Polish Interior Minister Mariusz Kaminski noted that the companies and elites that are sanctioned “do real business” in Poland and that the “list will be widened.”4 These sanctions are based on a new law adopted this month by Poland allowing for sanctions to be issued by the Polish government independent of EU action.
- On 25 April, The Times reported that the EU is preparing “smart sanctions” against Russian oil imports. According to EC Executive Vice-President Vladis Dombrovskis, the European Union is “working on a sixth sanctions package and one of the issues we are considering is some form of an oil embargo. When we are imposing sanctions, we need to do so in a way that maximizes pressure on Russia while minimizing collateral damage on ourselves.”5 EU foreign affairs chief Josep Borrell told the newspaper Die Welt that the EU “doesn’t have a unified position” on the question of an energy embargo. He added that the Russian energy embargo will be discussed at the next EU summit due at the end of May, and he did not expect any decision on the matter before then.6
UK actions include:
- On 25 April, the UK government removed all tariffs covered by the existing UK-Ukraine Free Trade Agreement (FTA) and imposed additional trade sanctions on the Russian government. Among other measures, the UK government will remove quotas under the FTA to give Ukraine additional economic support and will provide GBP1 billion (USD1.3 billion) in loan guarantees to Ukraine. Additionally, the UK imposed an export ban on products and technologies that Russia could use to support its invasion of Ukraine, such as interception and monitoring equipment.7
- On 21 April, the UK government announced that it will expand the trade sanctions it imposed on Russia to include bans on the import of silver, wood products, and high-end goods, such as caviar, and increase import tariffs on a range of Russian and Belarusian goods. The move brings the total import tariffs and bans on Russian goods to over GBP1 billion (USD1.3 billion). In addition, the UK government announced that it will increase tariffs by 35 percent on GBP130 million (USD163 million) worth of Russian and Belarusian products, including diamonds and rubber.8
- As we enter the tenth week from the date of Russia's invasion of Ukraine, market participants around the world should continue to assess and augment compliance processes proactively to account for recent sanctions developments. Companies should consider:
- Updating lists used by sanctions filtering platforms to incorporate identifiers not included on sanctions lists such as cities located in the Donetsk and Luhansk oblasts of Ukraine or entities owned or controlled by parties subject to sanctions;
- Conducting diligence on transactions that involve red flags associated with Russian sanctions evasion as outlined in the U.S. Department of the Treasury's Financial Crime Enforcement Network’s (FinCEN) March 2022 guidance to financial institutions; and
- Training employees on the prohibitions and related changes to compliance controls.
These measures serve as core components of a sanctions compliance program to identify and mitigate potential risk.
- While the pace of new sanctions has slowed, the U.S., UK, EU, and others will continue to pursue opportunities to further pressure prominent Russian parties and narrow the range of authorized activities involving Russia. Such pressure may take the form of new sanctions but will also rely heavily upon implementation of existing sanctions prohibitions and enforcement against those who evade sanctions across various jurisdictions.
- Poland’s adoption and immediate application of new laws authorizing sanctions against Russia independent of EU action may lead to more aggressive sanctions measures by Poland moving forward. This may pressure the EU to adopt a more aggressive stance in levying further sanctions against Russia or risk fracturing the EU’s common sanctions and broader foreign and security policy, particularly with respect to Russia.
1 U.S. Seeks More Authority to Seize Russian Assets to Aid Ukraine (26 April 2022) https://www.bloomberg.com/news/articles/2022-04-26/u-s-seeks-more-authority-to-seize-russian-assets-to-aid-ukraine?sref=Pw1Mp35R
2 Diego Rivera, Prada Seized in FBI’s Pre-War Raid of Deripaska (25 April 2022) https://www.bloomberg.com/news/articles/2022-04-25/art-seized-at-u-s-homes-part-of-crackdown-on-wealthy-russians?sref=Pw1Mp35R
3 EU Warns Russian Gas Buyers That Ruble Payments Breach Sanctions (27 April 2022) https://www.bloomberg.com/news/articles/2022-04-27/eu-tells-companies-paying-for-gas-in-rubles-breaches-sanctions
4 Poland sanctions Gazprom among 50 Russian firms and oligarchs (26 April 2022) https://www.reuters.com/world/europe/poland-sanctions-gazprom-among-50-russian-firms-oligarchs-2022-04-26/
5 Brussels prepares to hit Russia with ‘smart sanctions’ on oil imports (25 April 2022) https://www.thetimes.co.uk/article/brussels-prepares-to-hit-russia-with-smart-sanctions-on-oil-imports-k3f230l3j
6 Borrell says no EU agreement on Russian energy embargo (24 April 2022) https://www.reuters.com/business/energy/borrell-says-no-eu-agreement-russian-energy-embargo-2022-04-25/
7 UK announces new trade measures to support Ukraine (25 April 2022) https://www.gov.uk/government/news/uk-announces-new-trade-measures-to-support-ukraine
8 UK announces further import sanctions against Russia (21 April 2022) https://www.gov.uk/government/news/uk-announces-further-import-sanctions-against-russia