Global Update and Review: Russia Sanctions and Asset Capture Initiatives
The Russia-Ukraine crisis has created a fast-moving compliance nightmare – sanctions and export controls around the globe are changing each day. Some major companies are pulling out of Russia completely in response to the crisis. Others are trying to keep up with sanction requirements and adjusting specific controls each day. Whatever approach is taken, trade compliance officers have their hands full.
On the United States side, we are still waiting to learn how the SWIFT blocking measure will be implemented. We can expect an announcement sometime this week. It is not clear howmany financial institutions will be subjected to the SWIFT ban.
The Department of Justice announced a new task force known as “KleptoCapture,” which will seek to capture Russian Oligarch assets as another means to increase the financial strain on Russia. The task force will consist of an interagency law enforcement task force dedicated to enforcing sanctions, export restrictions and other economic measures. The task force will seek to freeze and seize Oligarch assets around the globe.
In his State of the Union address, President Biden announced that all Russian aircraft would be banned.
Earlier this week, the EU designated 26 additional persons, placed new restrictions on aviation and imposed comparable restrictions against the Central Bank of Russia, Russia’s Sovereign Wealth fund and the Ministry of Finance, which could have implications for payment of Russian taxes. The new EU designations match those of the United States, including members of the oil, banking and financial industries.
The EU sanctions prohibit access to EU airports and overflight of EU airspace by any Russian carriers or registered aircrafts. The new EU restrictions exempt emergency overflights and humanitarian aid.
The UK issued new financial and trade sanctions against Russia earlier this week. The new financial sanctions mirror those announced by the United States and include: (1) prohibitions on sovereign debt; (2) prohibitions against designated banks, including Sberbank; VTB Bank; Gazprombank; Vnesheconombank; Rosselkhozbank; OPK Oboronprom; United Aircraft Corporation; Uralvagonzavod; Rosneft; Transneft; and Gazprom Neft; and (3) prohibition on Sberbank initiating or maintaining correspondent banking relationships and processing UK Sterling payments. The UK has included a general wind down period of March 8 for new sovereign debt; March 31 for Sberbank prohibition on correspondent banking relationships; and June 24 2022 for processing of Sberbank transactions that are energy related.
With respect to dual-use items, the UK prohibited export to Russia of dual use and critical-industry goods, the making or transfer of dual-use technology, and financial services related to dual use goods and technology. The prohibition includes exemptions for international organizations and diplomatic missions.
Finally, the UK issued shipping sanctions prohibiting Russian ships from entering UK ports and a ban on various Russian media organizations, including RT and Sputnik.