Since February 2022, the European Union has imposed various sanctions packages against Russia, including targeted restrictive measures against individuals (individual sanctions), economic sanctions, and diplomatic actions. Due to the ongoing Russian invasion, the European Union last adopted the 6th sanctions package against Russia at the beginning of June 2022. Some of the member states are calling for a 7th sanctions package, but work is unlikely to have begun, according to media reports.

Following our blog post "EU sanctions against Russia - What to watch out for when doing business with Russian companies", we hereby provide an update on the most important changes to the EU sanctions against Russia.

Economic sanctions

In the past, the European Union has imposed a number of import and export restrictions (especially goods and services-related restrictions as well as regional sanctions), restrictions on access to the EU capital and financial markets as well as on payment transfer and road transport, aviation, and maritime transport sanctions against Russia.

In order to restrict access to the EU capital and financial market as well as payment transfer, among other things, the acceptance of deposits from Russian citizens or natural persons resident in Russia or legal persons, entities or bodies established in Russia has been prohibited. This prohibition applies if the total value of the deposits of the afore-mentioned persons per credit institution exceeds EUR 100,000. A similar prohibition applies in connection with crypto-asset wallets, accounts or custody services if the total value of crypto assets per wallet, account or custody provider exceeds EUR 10,000. In addition, other Russian banks have been disconnected from SWIFT.

The goods-related restrictions have been extended to include import bans on crude oil or petroleum products as listed in Annex XXV of Regulation 833/2014 (as amended by Annex VI of Regulation (EU) 2022/879), for coal and other solid fossil fuels as listed in Annex XXII of Regulation 833/2014 (amended by Annex VI of Regulation (EU) 2022/576) and for goods such as caviar, which generate significant revenue for Russia, according to Annex XXI of Regulation 833/2014 (amended by Annex VI of Regulation (EU) 2022/576). The goods must originate in Russia or be exported from Russia. 

Furthermore, an export ban has been imposed on certain items listed in Annex XXIII of Regulation 833/2014 (as amended by Annex VI of Regulation (EU) 2022/576), which could contribute to the enhancement of Russian industrial capacities. The extensive list includes a wide variety of goods, including chemical substances such as hydrogen and nitrogen.

The service-related restrictions have been extended to, among other things, the provision of certain trust and fiduciary services to settlors or beneficiaries who are Russian citizens, individuals or legal entities resident or established in Russia, legal entities whose shares are held directly or indirectly to more than 50% by the persons described above, or legal entities controlled by the persons described above or persons acting in a fiduciary capacity for the persons described above. An exception exists for trustors or beneficiaries who can present a temporary or permanent residence permit in a Member State. Similarly, the provision of audit services, including auditing, accounting and tax consulting services, as well as business and public relations consulting services to the Russian government or to legal persons, entities or bodies established in Russia is prohibited.

Furthermore, it is prohibited to directly or indirectly conduct business with persons listed in Annex XIX of Regulation 833/2014 (including Gazprom Neft, United Aircraft Corporation, etc.). The prohibition also applies to legal entities outside the EU whose shares are held directly or indirectly to more than 50% by one of the organizations listed in Annex XIX and to legal entities acting on behalf of or at the direction of one of the aforementioned organizations. Regulation 833/2014 does not provide a legal definition of the term "transaction"; however, the term will have to be interpreted broadly in order to achieve the objective of the sanctions.

Impact of EU sanctions on business relations and transactions

Business relations of credit institutions with Russian citizens or natural persons resident in Russia or with legal entities, organizations or institutions established in Russia may be affected by the sanctions: In particular, credit institutions are prohibited from accepting deposits from such persons if the total value of the deposit exceeds EUR 100,000. An exception exists for persons with a temporary or permanent residence permit in a member state of the European Union, a country belonging to the EEA or Switzerland. Fur-thermore, a permit can be obtained from the competent authority (in Austria, this is the Austrian National Bank). Since this prohibition not only expressly covers sanctioned natural and legal persons, entities and bodies, but rather Russian nationals or natural or established legal persons resident in Russia in general, Austrian credit institutions are encouraged to intensify the verification on the nationality and residence of depositors.

The oil embargo will be established gradually: crude oil imported by sea the spot transactions and the fulfillment of existing contracts are still permitted for a period of six months and for petroleum products for a period of eight months.

Transactions subject to the new goods-related restrictions are generally prohibited and may thus affect domestic business relations or transactions. Exceptions apply primarily to the performance of contracts entered into prior 9th April 2022 and executed by 10th July 2022 at the latest (with respect to the ban on imports of goods that generate substantial revenues for Russia as well as the ban on exports described above) or 10th August 2022 (with respect to the ban on imports of coal or other solid fossil fuels described above).

The ban on maintaining business relations with certain persons listed in Annex XIX of Regulation 833/2014 has the same effect on the domestic economy. However, there are in particular the following exceptions to this prohibition. The following transactions are allowed:

1. Accepting payments from listed persons under contracts executed prior to 15th May 2022.
2. Transactions strictly necessary for the purchase, import or transportation of fossil fuels (in particular oil and natural gas) from or through Russia. In the case of coal this exemption applies until 10th August 2022.
3. Transactions related to energy projects outside Russia in which a listed person is a minority shareholder.

Sanctioned natural and legal persons, entities and bodies shall be affected, in particular, by the freezing of their funds (these are assets and benefits of any kind). Therefore, no such funds may be made available to these persons. The relevant sanctions lists are continuously updated, which is why domestic companies must constantly review them before transferring funds to potentially named persons.