On 11 May 2022, the Russian Government sanctioned 31 entities from the EU, US, UK, Singapore and Switzerland and their controlled entities (the “Sanctioned Persons”) pursuant to Decree of the Russian President No. 252* dated 3 May 2022 (the “Decree”). The list of the above mentioned entities is set out in Russian Government Regulation No. 851* (the “Regulation”). The Russian Ministry of Finance may submit proposals to the Government to amend this list.
Under the Decree, federal state authorities, state authorities of constituent entities of the Russian Federation, other state authorities, municipal authorities, as well as legal entities and individuals under the jurisdiction of the Russian Federation (the “Regulated Persons”) are prohibited from:
- performing transactions (including foreign trade contracts) with Sanctioned Persons;
- discharging outstanding obligations to Sanctioned Persons (including obligations under foreign trade contracts); and
- carrying out financial operations with Sanctioned Persons as beneficiaries.
The Russian Ministry of Finance is entitled to issue official clarifications for paragraphs a) and b) above, and the Bank of Russia may give clarifications for paragraph c) above.
The Regulation also sets out additional criteria for qualifying the following transactions as restricted under paragraphs a) and b) above:
- transactions to the benefit of Sanctioned Persons;
- transactions providing for the call at Russian ports of vessels owned and/or chartered by, for or on behalf of Sanctioned Persons; and
- transactions providing for payments or securities transactions involving and/or to the benefit of Sanctioned Persons.
The restrictions listed above will apply if Regulated Persons are aware that the actions are taken to the benefit of Sanctioned Persons.
The Decree also imposes a ban on the export outside of the Russian Federation of products and/or raw materials produced and/or extracted in the Russian Federation if they are supplied to (i) Sanctioned Persons, and/or (ii) other persons by Sanctioned Persons.
Although the Regulation prohibits transactions with Sanctioned Persons only in the case of performance of the transactions and operations under paragraphs a) to c) above, we believe that, based on the Decree, the list of Sanctioned Persons should also apply for the purpose of prohibiting relevant export operations (unless otherwise provided for in regulations or official clarifications).
Certain transactions with Sanctioned Persons may be allowed on the basis of special permits as may be proposed to the Government by the Russian Ministry of Finance.
We will continue to monitor these developments and keep you informed of changes.
* In Russian