On 23 February 2022, the European Council agreed a new package of restrictive measures (a.k.a. sanctions) in response to the Russian Federation's recognition of the independence of Donetsk and Luhansk in Ukraine, and its decision to send Russian troops into those areas.
All EU Member States must comply with EU Council Regulations relating to sanctions as soon as they are adopted. The new EU sanctions package was adopted on 24 February 2022.
The latest measures include: (1) restrictions on individuals and
entities associated with the situation in Ukraine; (2) restrictions
on trade between the affected regions and the EU; and (3)
restrictions on Russian state entities, including its Central Bank,
from accessing EU capital markets. The EU has reiterated its
unwavering position supporting Ukraine's independence,
sovereignty and territorial integrity and has said that it will
impose further wide-ranging sanctions if required.
EU leaders are convening in Brussels today to discuss further
measures which were agreed in principle at the emergency summit
yesterday, with a view to adopting same. These further proposed
measures will target Russia's financial, energy and transport
sectors as well as introducing new export controls and visa
restrictions.
Latest Sanctions Package
The new sanctions package imposes restrictive measures on certain Russian and related individuals and entities, restrictions impacting economic relations with the affected regions, and financial restrictions on Russian state entities.
Targeted restrictive measures on individuals and entities
Targeted restrictive measures will apply to all 351 members of the Russian State Duma (parliament's lower house), who voted in favour of the appeal to President Putin to recognise the independence of the Donetsk and Luhansk regions of Ukraine. Sanctions were also imposed on a further 27 individuals and entities for their involvement in undermining or threatening the territorial integrity, sovereignty and independence of Ukraine. These restrictive measures include an asset freeze and a prohibition on making funds or economic resources of any kind available to the listed individuals and entities, together with an EU-wide travel ban on the listed persons.
Restrictions on economic relations with Donetsk and Luhansk
New measures target trade between the Donetsk and Luhansk regions and the EU. The measures include an import ban on goods from the regions, restrictions on certain trade and investment activities, restrictions on tourism services, and an export ban in relation to certain goods and technologies.
Economic sanctions
The EU also imposed a sectoral prohibition on financing the Russian Federation, its government and the Russian Central Bank. The European Council is seeking to restrict the Russian state and government from accessing the EU's capital and financial markets.
History of EU sanctions in respect of situation in Ukraine
The first EU sanctions in relation to the situation in Ukraine
were adopted in 2014, following Russia's illegal annexation of
Crimea. Since then, the measures have been extended and expanded
throughout the years 2015-2022. The new sanctions package further
extends the scope of the restrictive measures.
Since the first sanctions were imposed, the EU has adopted the
following types of restrictive measures:
- diplomatic measures;
- restrictive measures on individuals and entities;
- restrictions on economic relations with Crimea and Sevastopol, and now, Donetsk and Luhansk;
- economic sanctions; and
- restrictions on economic cooperation with Russia.
Implications for Irish financial service providers
EU Council Regulations have direct effect in Ireland and,
therefore, must be complied with by all Irish natural and legal
persons in the same way as domestic Irish legislation. Irish
financial service providers should therefore ensure that they are
compliant with these new financial sanctions. Compliance will
necessitate conducting ongoing monitoring of transactions and
customers/investors.
The updated list of sanctioned persons in relation to the situation
in Ukraine now contains 555 individuals and 52 entities. There is a
legal obligation on financial service providers to freeze the
assets or funds of a sanctioned person or entity, and to refrain
from transferring funds or making funds or economic resources of
any kind available, directly or indirectly, to a sanctioned
person.
The Central Bank of Ireland must be notified of all relevant
information if a financial sanctions breach (or a suspected
financial sanctions breach) has been identified, known as a
sanctions 'hit'.
Central Bank Notification
The Central Bank is a competent authority for EU financial
sanctions and is responsible for the administration, supervision
and enforcement of financial sanctions in Ireland in respect of
financial service providers.
If there is a sanctions 'hit' on an individual or an
entity, the financial service provider must immediately freeze the
account of the individual or entity and/or immediately stop the
transaction. The financial service provider is obliged to
immediately report the hit to the Central Bank including all
relevant information.
A Sanctions Return Form is available from the Central Bank's
website. The Central Bank can be contacted in respect of
applications for prior authorisation/notification and to make
financial sanctions reports at sanctions@centralbank.ie.
Financial service providers should note that the Central Bank
expects, prior to submitting a report, that they take reasonable
steps to verify that the person or entity identified is the same
person or entity as that listed in the relevant sanctions list
(i.e. by verifying the name with other identifying
information).
The Central Bank also has Financial Sanctions: Frequently Asked Questions
(FAQs) for Credit and Financial Institutions available to
assist credit and financial institutions by providing further
information on the EU's and United Nation's sanctions
regimes.
A new webpage dedicated to the Russian sanctions
in relation to Ukraine was published by the Central Bank this
week.
Given the ongoing developments in Ukraine and the planned meeting
in Brussels of EU leaders today to discuss further restrictive
measures, firms are advised to monitor developments.
Source material
Council Regulation (EU) 2022/259 of 23 February 2022 amending
Regulation (EU) No 269/2014 concerning restrictive measures in
respect of actions undermining or threatening the territorial
integrity, sovereignty and independence of Ukraine.
Council Implementing Regulation (EU) 2022/260 of 23 February 2022
implementing Regulation (EU) No 269/2014 concerning restrictive
measures in respect of actions undermining or threatening the
territorial integrity, sovereignty and independence of
Ukraine.
Council Implementing Regulation (EU) 2022/261 of 23 February 2022
implementing Regulation (EU) No 269/2014 concerning restrictive
measures in respect of actions undermining or threatening the
territorial integrity, sovereignty and independence of
Ukraine.
Council Regulation (EU) 2022/262 of 23 February 2022 amending
Regulation (EU) No 833/2014 concerning restrictive measures in view
of Russia's actions destabilising the situation in
Ukraine.
Council Regulation (EU) 2022/263 of 23 February 2022 concerning
restrictive measures in response to the recognition of the
non-government controlled areas of the Donetsk and Luhansk oblasts
of Ukraine and the ordering of Russian armed forces into those
areas.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
