Sanctions Weekly Update - Ukraine/Russia Conflict - August 21, 2023 - Export Controls & Trade & Investment Sanctions

I. US SANCTIONS

OFAC and State sanction several individuals and two children educational institutions on Ukrainian Independence Day:On August 24, the Department of the Treasury's Office of Foreign Assets Control ("OFAC") and the US Department of State sanctioned eleven individuals and two educational centers located in Crimea and the Chechen Republic, respectively. The sanctions were issued on Ukrainian Independence Day and included the imposition of blocking sanctions as well as US visa restrictions for the individuals and were imposed in response to activities involving the forcible transfer, deportation and "re-education" of Ukraine's children. These sanctions were announced by President Biden in his remarks in commemoration of the Ukrainian holiday. Read more >>
President Biden holds call with Ukrainian President Zelensky in the occasion of the Ukrainian Independence Day:President Biden held a phone call with President Zelensky in commemoration of Ukrainian Independence Day. Biden reiterated the United States' determination to continue its support of Ukraine's defense against Russian aggression for as long as it takes, and to hold Russia accountable for its actions. Read more >>
OFAC Sanctions Russian Founder of Virtual Currency Mixer Facilitating North Korea:On August 23, OFAC sanctioned Russian individual Roman Semenov, one of three co-founders of the sanctioned virtual currency mixer Tornado Cash, for his role in providing material support to Tornado Cash and to the Lazarus Group, a state-sponsored hacking group that is an instrumentality of the Democratic People's Republic of Korea (North Korea). Together with another co-founder of Tornado Cash, Semenov was also charged by the Department of Justice with conspiracy to commit money laundering, conspiracy to operate an unlicensed money transmitting business, and conspiracy to commit sanctions violations. Read more >>andRead more >>
BIS Removes Two Russian Parties from Unverified List:On August 21, the Department of Commerce's Bureau of Industry and Security ("BIS") announced that it is removing a total of 35 parties from the Unverified List (UVL) after the successful completion of end-use checks, including two Russian entities that were added to the Entity List on June 6, 2022. The removals are effective upon publication in the Federal Register on August 22, 2023. Read more >>andRead more >>
Crypto Platform Binance Faces Legal Risks Over Russia:On August 22,Wall Street Journal reported that Binance is helping Russians move money abroad, potentially adding to its sprawling legal problems in the U.S. The outlet said, citing externally compiled data, that despite Binance's promise to scale back business in Russia after the latter invaded Ukraine in February 2022, its exchange continues to handle substantial ruble trading volumes. The Justice Department is investigating the platform in connection with possible violations of U.S. sanctions on Russia, as well as suspected anti-money-laundering lapses. Read more >>
U.S., Japan and South Korea Pledge Support to Ukraine in Historic Camp David Summit:On August 18, U.S. President Joe Biden, Japanese Prime Minister Fumio Kishida and South Korean President Yoon Suk Yeol made several pledges and issued sharp rebukes to China and Russia in an historic Camp David summit. In an issued joint statement, the leaders pledged, among other things, to continue to provide assistance to Ukraine, impose sanctions on Russia and accelerate their "reduction of dependency on Russian energy."Read more >>andRead more >>

II. EU SANCTIONS

European Commission Explains That It Is For the Member States to Decide on the Instruments Ensuring Proper Implementation of EU Sanctions Against Russia:In response to a question on the requirement introduced by the Lithuanian authorities to submit a prior permission request for all general aviation flights to Lithuania, the European Commission explained that these are Member States that decide, within the limits of the EU law, which measures would be most suited and effective to enforce EU sanctions and to prevent their circumvention. The European Commission added that a further guidance may be published in the future to help identify high areas of risk of circumvention of EU sanction, both by EU operators and via third countries' jurisdictions. Read more >>andRead more >>
European Commission Declares Priority For Implementation of Existing Sanctions Against Russia:The European Commissioner for Environment, Virginijus Sinkevicius, told during his official visit to Lithuania that monitoring of EU sanctions is ongoing and the question is being raised about possible additional sanctions. He insisted, however, that the priority is still implementation of EU sanctions as well as the problem of circumvention. The European Commission is said to be focusing very much on third countries that may be helping to circumvent sanctions. Read more >>
Russian Oligarch Gennady Nikolayevich Timchenko and His Wife Challenge EU Sanctions:On May 24, 2023 Gennady Nikolayevich Timchenko and his wife brought two separate actions against EU measures taken against them before the General Court of the European Union. Read more >>andRead more >>
Bulgaria Increases Pressure on Lukoil to Sell Balkans' Largest Refinery:The Bulgarian government has initiated the procedure for an early termination of the import of Russian oil, which supplies the Russian company Lukoil's refinery near the Black Sea city of Burgas. In mid-2022, the European Commission granted Bulgaria an exemption from the European oil embargo on Russia, valid until the end of 2024. However, in July 2023, the parties supporting the current government in Bulgaria submitted a proposal for an early termination of the exemption, which seems to have a sufficient majority to be finalized. The move aims reportedly at pressuring Lukoil to sell its business in Bulgaria. Read more >>
German Businessman Arrested for Selling Sniper Rifle Tools to Russia:A German businessman has been arrested on August 22, 2023 at Frankfurt airport on suspicion of selling equipment to make sniper rifles to Russia in violation of EU sanctions against Russia imposed following the annexation of Crimea. Prosecutor's statement indicates that the individual maintained long-standing business relations with Russian arms manufacturers in his role as managing director of a machine tools company in southern Germany. To conceal the transactions, the businessman allegedly used other companies he had founded as well as another Russian company. The deliveries were made through third-party companies in Switzerland, and in one case via Lithuania. Read more >>
Estonian Prime Minister Kaja Kallas Urged to Clarify Husband's Russian Business Ties:Estonia's Prime Minister Kaja Kallas is under mounting pressure over a scandal involving her husband's business dealings with Russia. Kallas's husband owns a 25 per cent stake in Stark Logistics, a trucking company that has transported goods that are not under EU sanctions between Estonia and Russia. The country's president Alar Karis and the Prime Minister's coalition partner called for more answers, and opposition politicians urged her to resign. Read more >>

III. UK Sanctions

UK Government Fines Unnamed UK Company for Russian Sanctions Breach:On August 22, 2023, the UK Government announced that His Majesty's Revenue and Customs (HMRC) had fined an unnamed UK company £1 million, in relation to 'the unlicensed trade in goods' in breach of the UK's Russian sanctions regime. Read more >>
OFSI Publishes Information on Sanctions Webinars and Events:On August 22, 2023, the UK Office for Financial Sanctions Implementation (OFSI) published information on its upcoming events and webinars, which it says will 'provide guidance on financial sanctions and how to be compliant with UK financial sanctions regulations'. The first event is an introductory webinar, scheduled for October 2023. Read more >>
UK Judge Rejects First Appeal Against UK Targeted Sanctions by Abramovich Business Partner Eugene Shvidler:On August 18, 2023, Mr Justice Garnham handed down judgment in the first sanctions designation appeal case to take place in the UK courts. The case was brought by Eugene Shvidler, an associate of Roman Abramovich, who was sanctioned by the UK on March 24, 2022. Mr. Justice Garnham rejected Mr Shvidler's appeal, holding that the UK's decision to include him on the sanctions list was 'proportionate and non-discriminatory'. Read more >>

IV. Russia/Ukraine Sanctions

Russia Imposes Travel Bans on UK Journalists and Politicians:On August 18, 2023, the Guardian reported on a press release issued by the Russian foreign ministry, which stated that the country has banned 54 UK nationals from entry into Russia. The list included journalists from the Guardian, the BBC and the Daily Telegraph, and politicians including Minister of State for Defence Baroness Goldie - banned for 'helping to supply weapons to Ukraine' - and Culture Secretary Lucy Frazer - banned for 'lobbying for the international sports isolation of Russia'. Read more >>
Russia Offers to Swap Frozen Assets with the West:Russia is offering to swap western investors' stranded assets in the country for some Russian assets frozen by the west following President Vladimir Putin's invasion of Ukraine. The scheme for exchanging assets with foreigners, announced by the Ministry of Finance of Russia and Russian Central Bank, would give interested western investors the opportunity to buy the assets of Russian companies that have been immobilised in Europe by using their own funds held in restricted accounts in Russia. Western officials have stated that they are not aware of the proposal and that no talks are taking place on a potential asset swap. Read more >>
Russian Ministry of Finance and the Central Bank Have Softened the Rules for Paying Dividends to Foreigners:The Ministry of Finance and the Bank of Russia decided to soften the terms of dividend payments from Russian companies to shareholders from "unfriendly" countries. Now the transfer of remuneration to foreign owners can be carried out in an amount equivalent to the amount of investments of a non-resident in the Russian economy. Investments made after 1 April 2023 and aimed at "expanding the volume of production in Russia and developing new technologies" will be taken into account. Read more >>
Canada Imposed Sanctions against Russian Companies Uralsib, Severstal, Rosbank and Interros:Canada imposed sanctions against 29 legal entities and four individuals, including Severstal, Interros Invest, General Director of the Kalashnikov Concern Lepin and Rector of the RANEPA, Komissarov. In total, there are 1319 individuals and 448 legal entities from Russia on the sanctions list of Canada.Read more >>
Hungary Wants EU to Extend Ukrainian Grains Import Ban Beyond 15 September:Hungary wants the EU's ban on domestic sales of Ukrainian grain to be extended in the five EU member states bordering Ukraine after the current measure ends on 15 September 2023, Prime Minister Viktor Orban's chief of staff told a briefing on Thursday. "Hungary will ask the EU to extend the ban from September 16" Gergely Gulyas said, adding Hungary was ready to reimpose a national import ban if the EU does not extend the measure. Read more >>
Ukraine Nears Deal with Global Insurers to Cover Grain Ships:Ukraine is finalising a scheme with global insurers to cover grain ships travelling to and from its Black Sea ports, a vital step in the country's attempts to create a safe corridor for exports after Russia withdrew from a UN-brokered deal last month. The scheme could be put in place as early as next month, and could see as many as five to 30 ships covered to travel through what he described as the "danger spot" of Ukrainian waters. Read more >>
Ukraine Adds Philip Morris International and Japan Tobacco International to the List of International Sponsors of the War:Ukrainian National Agency for the Prevention of Corruption included two global tobacco companies Philip Morris International and Japan Tobacco International into the list of international sponsors of the war. It is emphasized that both companies continue to do business in Russia, pay significant taxes to its budget and support the Russian military. Read more >>
Raiffeisen's Russian Division Imposes 50% Commission on Incoming Dollar Transfers:The Russian division of Austria's Raiffeisen Bank will start charging 50% commission on all incoming U.S. dollar transfers, the bank announced Monday in a statement, citing unspecified "market conditions." The minimum commission charged will be $1,000, up to a maximum of $10,000. The new rules will come into force on Sept. 1, the bank said, and will apply to incoming transfers from other banks. A combination of Western sanctions and Russian countermeasures have made it either impossible - or increasingly expensive - for Russia-based banks to deal with U.S. dollars. Read more >>
Domino's Pizza Files for Bankruptcy in Russia:The franchise operator of Domino's Pizza in Russia said Monday that its Russian business will file for bankruptcy after reportedly failing to sell off its assets. The process "will bring about the termination of the attempted sale process of DPRussia," it added without stating the reason for the failed sale. DP Eurasia acknowledged an "increasingly challenging environment" for its Russian operations over the past several months, following Moscow's invasion of Ukraine and an exodus of Western companies. Read more >>
French Alcohol Concern Pernod Ricard Closes Russian office:The French alcohol concern Pernod Ricard, which owns brands Jameson and Chivas Regal, will close its representative office in Russia. The company states it is now undergoing procedures to stop operations and has no other plans. Almost the entire team has already left the company, and the remaining employees may leave before the end of August. In March 2022, the concern suspended the export of alcohol to Russia. Read more >>
Prosecutor's Office of Ukraine Opens Criminal Case Against Russian Oligarch Mikhail Fridman:The Prosecutor's Office of Ukraine opened a criminal case against the co-founder of Alfa Group Mikhail Fridman on suspicion of withdrawing funds from Sens-Bank, which previously worked under the Alfa- Bank Ukraine brand. According to investigators, Fridman, being a co-owner of Sens Bank (now nationalized), "brought the bank's assets out under the guise of paying royalties". Read more >>
Russian Investors File First Lawsuit Against Clearstream in Russia:Private Russian investors filed the first lawsuit against the Luxembourg depositary Clearstream in the Moscow Arbitration Court. Investors demand about 200 million rubles in reimbursement of the value of assets blocked a year ago and collection of accrued but not received amounts on them (coupons, bond redemptions, dividends). The lawsuit has not yet appeared in the filing cabinet. Read more >>

V. Other Notable Developments

Canada Designates Individuals and Entities Under Russia Sanctions:On August 23, 2023, Canada designated 4 individuals and 29 entities with ties to Russia's military, financial and nuclear sectors. Those sanctioned include Sergey Borisovich Muchkayev - a Russian colonel linked to the downing of flight MH17 over Ukraine in 2014 - three different Russian businessmen, and companies responsible for developing products for military and industrial use. Read more >>
Canada Designates Russian Government and Judicial Officials:On August 18, 2023, Canada designated 15 senior Russian officials, including members of the government, judiciary and investigative committee, in addition to three federal courts, which have allegedly been involved in human rights abuses against Russian opposition leaders, including Vladimir Kara-Murza and Alexei Navalny. Read more >>
Switzerland Gives Greater Weight to Sanctions and Export Control by Reorganizing Competent Administrative Services:On August 21, 2023 the State Secretariat for Economic Affairs of Switzerland announced reorganization as of September 1, 2023 of its services in charge of sanctions, export control of industrial goods and export control of military equipment goods to account for expansion of sanctions and export control since the war in Ukraine. Read more >>
Norway Issues First Fine of NOK 50,000 for Unauthorized Car Sale to Russia in Breach of Sanctions Rules:The Norwegian Police Security Service found that a car dealer in Norway violated sanctions rules by selling Hongqi E-HS9 car to a buyer in Russia through an intermediary. The car dealer had allegedly verified that the ultimate buyer was not on the list of sanctioned persons or entities but failed to consider the prohibition against the direct or indirect sale or export of luxury goods to Russia or for use in Russia. Read more >>

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