EU’s Sixth Package of Russia sanctions targets oil imports, professional services, expands media ban and trade restrictions, envisages confiscation of proceeds of sanctions breaches; Belarus sanctions are strengthened

Authored by our Global Sanctions, Export Controls and Customs Teams

On 3 June 2022, the EU adopted a new round of sanctions against Russia and Belarus, banning the purchase, import or transfer into the EU of crude oil and petroleum products originating in Russia or being exported from that country, as well as certain services related to their transport to third countries.  The EU also banned the provision of various professional services to the Russian Government and entities established in Russia. Other measures include additional Russian and Belarusian banks banned from SWIFT, an expansion of the media ban and further export and import restrictions.  In addition, the EU has added 77 people and 26 entities to its asset freeze list

Additions to asset freeze and new exception for electronic communication services

In line with its previous sanctions packages, the EU imposed additional asset freeze restrictions on a number of individuals and entities from Russia¹ and Belarus.²

More specifically, the EU designated 77 individuals, including various businesspeople and their family members, propagandists and media figures, politicians and military officials, such as Colonel-General Mikhail Mizintsev and Alina Kabaeva, a close associate of President Putin.  The EU also designated 26 entities including the Russian National Settlement Depository, and companies mainly active in the defence sector, but also Belarusian companies in potash, tobacco and logistics industries.

The EU introduced a new exception to the Russia-related asset freeze, which exempts any funds and economic resources strictly necessary for the provision of electronic communication services by EU telecom operators, for the provision of associated facilities and services necessary for operation, maintenance and security of such electronic communication services in Russia, in Ukraine, in the Union, between Russia and the Union, and between Ukraine and the Union, and for data centre services in the Union.³

Ban on crude oil and petroleum products

The EU agreed to ban the direct or indirect purchase, import, or transfer into the EU of crude oil or petroleum products originating in Russia or being exported from Russia, subject to long transitional periods. The list of prohibited petroleum products is contained in Annex XXV and consists of goods falling under CN Codes 2709 00 (“Petroleum oils and oils obtained from bituminous minerals, crude”) and 2710 (“Petroleum oils and oils obtained from bituminous minerals, other than crude; preparations not elsewhere specified or included, containing by weight 70 % or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations; waste oils”).⁴  Related services are also prohibited, and cover the direct or indirect provision of technical assistance, brokering services, financing, or financial assistance, but also any other services.⁵

The Regulation provides certain transition periods, exceptions and derogations, including exceptions for:

• Purchases in Russia required to meet essential needs of the purchaser in Russia, as well as humanitarian projects in Russia.⁶
• In relation to goods falling under CN Code 2709 00, until 5 December 2022, (i) spot market transactions “for near-term delivery” concluded and executed before 5 December 2022, subject to notification by the relevant Member States to the Commission within 10 days of completion, or (ii) the execution of contracts concluded before 4 June 2022, as well as their ancillary contracts, subject to notification by 24 June 2022.⁷
• In relation to goods falling under CN 2710, until 5 February 2023, (i) spot market transactions “for near-term delivery” concluded and executed before 5 February 2023, subject to notification within 10 days of completion, (ii) or the execution of contracts concluded before 4 June 2022, as well as their ancillary contracts, subject to notification by the same date, 24 June 2022, despite the longer wind-down period.⁸
• Purchase, import or transfer of seaborne crude oil and of petroleum products listed in Annex XXV, if goods originate in a third country and are only being loaded in, departing from or transiting through, Russia, as long as their origin and owner are non-Russian.⁹
• Crude oil falling under CN 2709 00 delivered by pipeline from Russia into Member States, until otherwise decided by the Council. Importantly, pipeline crude oil imported under this exception cannot be transported/transferred to, or sold on to buyers located in, other Member States or third countries. As from 5 February 2023, this prohibition extends to petroleum products falling under CN 2710 obtained from the pipeline crude oil imported under this exception, with some temporary derogations available to Czechia.¹⁰

Due to their particular exposure and geographic situation, derogations were granted to Bulgaria and Croatia.¹¹ As of 5 December 2022, Bulgarian authorities may authorise the execution of contracts concluded before 4 June 2022 for the purchase, import or transfer of seaborne crude oil and petroleum products listed in Annex XXV originating in Russia or exported from Russia, as well as their ancitllary contracts until 31 December 2024.  In the case of Croatia, authorisation may be obtained as of 5 February 2023 for the purchase, import or transfer of vaccum gas oil originating in Russia or exported from Russia, providing certain conditions are met, in particular no other supply alternative is available. Importantly, goods imported under such derogations cannot be sold on to buyers located in another EU Member State or in a third country.¹²

The EU also prohibited the direct and indirect provision of services related to the transport of the restricted items to third countries, in particular ship-to-ship transfers, including technical assistance, brokering services, financing or financial assistance.¹³ This prohibition does not apply to the execution until 5 December 2022 of contracts concluded before 4 June and their ancillary contracts. It also does not apply to the transport of restricted items that originate in a third country and are only being loaded in, departing from or transiting through Russia, but origin and the owner are non-Russian.¹⁴

Ban on professional services to Russian companies and the Russian Government

The EU prohibited the direct or indirect provision of accounting, auditing (including staturoty audit), bookkeeping and tax consulting services, as well as business and mangement consulting and public relations services to the Government of Russia or legal persons, entities, or bodies established in Russia.¹⁵

An exemption allows the provision of these services if strictly necessary for the termination by 5 July 2022 of non-compliant contracts concluded before 4 June 2022 and their ancillary contracts.  In addition, the prohibition does not apply if these services are strictly necessary for the exercise of the right of defence in judicial proceedings and of an effective legal remedy, or if services are intended for the exclusive use of legal persons established in Russia owned by or controlled by a legal person incorporated or constituted under the law of a Member State.  Further, authorisations may be obtained for humanitarian purposes and civil society activities directly promoting democracy, human rights or the rule of law in Russia. 

Expanded trade sanctions 

The EU modified Annex VII, listing various goods and technologies which may contribute to Russia’s military and technological enhancement, or the developments of its defence and security sector, and which are subject to an export ban.  

Specifically, the EU replaced “frequency changers capable of operating in the frequency range from 300 up to 600 Hz, other than those specified in the CML or in Regulation (EU) 2021/821” with “[f]requency changers and their specially designed components, other than those specified in the CML or in Regulation (EU) 2021/821”.  It also added two categories to the list: “special materials and related equipment”, including 82 chemicals, and ”materials processing”, with certain automated nucleic acid assemblers, and certain automated peptide synthesizers.¹⁶

In addition, the list of Russian goods and technology banned from import into the EU has been expanded by adding ethyl alcohol and starch manufacture residues.¹⁷

Expansion of the list of partner countries 

The EU expanded the list of partner countries (already the United States and Japan) to include the United Kingdom and South Korea.¹⁸ Partner countries are considered to apply export control measures substantially equivalent to those of the EU and may benefit from improved access to EU dual-use goods, sensitive technology, and information that is otherwise restricted under the EU’s sanctions regime.  

SWIFT ban extended

The EU expanded the ban on SWIFT services to Sberbank, Credit Bank of Moscow, and JSC Russian Agricultural Bank, as well as Russian entities directly or indirectly owned for more than 50% by them, and this as from 14 June 2022.²⁰ Under the Belarus sanctions, the EU banned Belinvestbank (Belarusian Bank for Development and Reconstruction) from SWIFT, along with any Belarusian entities directly or indirectly majority owned by them, also from 14 June 2022.²⁰

Media ban expansion

The prohibition for operators to broadcast or to enable, facilitate or otherwise contribute to broadcast, any content by listed entities was expanded to cover the advertisement or products or services in any content produced or broadcasted by such entities. The EU has also expanded the list of entitites subject to this media ban by adding, effective as from 25 June 2022, Rossiya RTR/RTR Planeta, Rossiya 24/Russia 24, and TV Centre International.²¹

Fine-tuning existing sanctions on State-owned entities and trusts

With respect to the ban on transactions with certain Russian SOEs, further exemptions allow (i) the reception of payments due by restricted SOEs pursuant to contracts performed before 15 May 2022, (ii) transactions, including sales, which are strictly necessary for the wind-down, by 5 September 2022, of a joint venture or similar legal arrangement concluded before 16 March 2022, involving restricted SOEs, and (iii) transactions related to the provision of electronic communication services, data center services, and the provision of services and equipment necessary for their operation, maintenance, security, including the provision of firewalls, and call center services, to restricted SOEs.²²

With regard to the ban on servicing trusts for Russian beneficiaries²³ the date for completing wind-down of relevant services was changed from 10 May 2022 to 5 July 2022.²⁴
 

Confiscations and criminal penalties

Council Regulation (EU) No 833/2014 containing the EU Russian sanctions now requires EU Member States to adopt measures for the confiscation of proceeds of infringements of its provisions.²⁵  The regulation also explicitly requires Member States to provide for criminal penalties for breaches of its provisions.  A similar provision was added to Council Regulation (EU) 765/2006 in relation to Belarus sanctions.²⁶

_{1 Annex I of Council Regulation (EU) 269/2014, as amended by Council Regulation (EU) 2002/878.
2 Annex I of Council Regulation (EU) 765/2006, as amended by Council Regulation (EU) 2022/876.
3 Article 6c of Council Regulation (EU) 269/2014, added by Council Regulation (EU) 2022/880.
4 Article 3m(1) of Council Regulation (EU) 833/2014, added by Council Regulation (EU) 2022/879.
5 Article 3m(2) of Council Regulation (EU) 833/2014, added by Council Regulation (EU) 2022/879.
6 Article 3m(9) of Council Regulation (EU) 833/2014, added by Council Regulation (EU) 2022/879.
7 Article 3m(3)(a) of Council Regulation (EU) 833/2014, added by Council Regulation (EU) 2022/879.
8 Article 3m(3)(b) of Council Regulation (EU) 833/2014, added by Council Regulation (EU) 2022/879.
9 Article 3m(3)(c) of Council Regulation (EU) 833/2014, added by Council Regulation (EU) 2022/879.
10 Article 3m(8) of Council Regulation (EU) 833/2014, added by Council Regulation (EU) 2022/879.
11 Articles 3m(5) and (6) of Council Regulation (EU) 833/2014, added by Council Regulation (EU) 2022/879.
12 Article 3m(7) of Council Regulation (EU) 833/2014, added by Council Regulation (EU) 2022/879.
13 Article 3n(1) of Council Regulation (EU) 833/2014, added by Council Regulation (EU) 2022/879.
14 Article 3n(2) of Council Regulation (EU) 833/2014, added by Council Regulation (EU) 2022/879.
15 Article 5n(1) of Council Regulation (EU) 833/2014, added by Council Regulation (EU) 2022/879.
16 Annex VII of Council Regulation (EU) 833/2014, as amended by Council Regulation (EU) 2022/879.
17 Annex XXI of Council Regulation (EU) 833/2014, as amended by Council Regulation (EU) 2022/879.
18 Annex VIII of Council Regulation (EU) 833/2014, as amended by Council Regulation (EU) 2022/879.
19 Annex XIV of Council Regulation (EU) 833/2014, as amended by Council Regulation (EU) 2022/879.
20 Annex XV of Council Regulation (EU) 765/2006, as amended by Council Regulation (EU) 2022/877.
21 Annex XV of Council Regulation (EU) 833/2014, as amended by Council Regulation (EU) 2022/879.  This measure was confirmed by Council Implementing Regulation (EU) 2022/994 of 24 June 2022, available here. 
22 Article 5aa of Council Regulation (EU) 833/2014, as amended by Council Regulation (EU) 2022/879.
23 See White & Case client alert on the 5th Package, available here. 
24 Article 5m of Council Regulation (EU) 833/2014, as amended by Council Regulation (EU) 2022/879.
25 Article 8(1) of Council Regulation (EU) 833/2014, added by Council Regulation (EU) 2022/879
26 Article 9(1) of Council Regulation (EU) 765/2006, added by Council Regulation (EU) 2022/877.}
 

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