Although the European Union and the United Kingdom did not introduce new sanctions against Russia over the summer, they extensively focused on the implementation of the existing measures and their enforcement. This week, however, a new package of sanctions aimed at tackling hybrid operations by the Russian government has been agreed upon, and is expected to be published in the coming weeks. In the same period, the Court of Justice of the European Union (CJEU) issued a number of landmark judgments clarifying certain aspects of the EU sanctions regime and has, in one instance, openly disagreed with the interpretation of the regime by the European Commission.
Furthermore, in line with the overarching goal of EU sanctions against Russia, which is to support Ukraine, for the first time, the European Union has transferred profits from frozen assets of the Russian Central Bank to the European Peace Facility and the Ukraine Facility, which will used the monies in support of Ukraine’s military and reconstruction needs.
Finally, acknowledging the current geopolitical situation in the Middle East, the European Union and United Kingdom continued to issue new sanctions against Hamas and Iran. The United Kingdom has also revoked certain licences allowing the sale of arms to the Israeli government.
In this Quarterly Sanctions Update, our team summarizes the most recent changes introduced between July 2024 and September 2024.*
In Depth
Russia Sanctions
G7 Level
- G7 Guidance: The G7 group published joint guidance for industry on preventing evasion of Russia sanctions. The guidance contains: (i) a list of items which pose a heightened risk of being diverted to Russia, (ii) updated red flag indicators of potential export control and/or sanctions evasion, (iii) best practices for industry to address red flags, and (iv) screening tools and resources to assist with due diligence. See the full text here.
European Union
United Kingdom
- Office of Trade Sanctions Implementation (OTSI): On September 12, 2024, the UK government published the regulatory framework outlining the scope and powers of OTSI, the authority responsible for the implementation and enforcement of certain trade sanctions in the United Kingdom. OTSI will have the authority to impose monetary penalties on a ‘strict liability’ basis, and will be allowed to publicly disclose information about trade sanctions breaches. For further details, see the regulatory framework here.
- Updated guidance on ownership and control: The UK government clarified, amongst other things, that control can be established through ownership of more than 50% of shares, the right to appoint a majority of directors, or the ability to influence an entity’s operations. Read the updated guidance here.
- Changes to the legal advisory prohibition & revocation of the General Licence: On September 5, 2024, the United Kingdom modified the prohibition on legal advisory services set out in Regulation 54D of the Russia (Sanctions) (EU Exit) Regulations 2019 (“UK Russia Regulations”), expressly permitting legal advisory services related to compliance with all UK or non-UK sanctions, Russian countermeasures, and criminal legislation from any jurisdiction. As a result, the General Licence, which previously allowed said activity, became defunct, and was revoked on September 6, 2024. Read more here.
- Changes to the business services prohibition in the context of Russian subsidiaries: From October 31, 2014, UK parent companies intending to provide professional and business services to their Russian subsidiaries will not be able to rely on an intra-group services licencing group, but will have to demonstrate that the services fall within the scope of any of the remaining exemptions (i.e., those covering humanitarian activity or divestments from Russia). Read more here.
- Enforcement: The UK authorities have published the outcomes of their sanctions-related investigations. Specifically:
- GBP 15 thousand penalty for breach of licence reporting obligations: On August 29, 2024, the UK Office of Financial Sanctions Implementation imposed a penalty against a UK company specialised in concierge services for breaching reporting requirements under the Gas and Electricity General Licence. Read the press release here.
- GBP 29 million penalty for sanctions compliance failings: On October 10, 2024, the UK Financial Conduct Authority imposed a penalty against a UK bank for failings in financial sanctions screening systems, calling the controls “shockingly lax”. Read the press release here.
Other Sanctions
- New sanctions against Iran: On September 10, 2024, Germany, France, the United Kingdom and others condemned Iran for allegedly supplying ballistic missiles to Russia for use in the war in Ukraine, and announced new sanctions targeting air transport, bilateral air services agreements, and Iran Air airlines.
European Union
- New sanctions against Hamas: The EU has sanctioned several persons and entities under sanctions against Hamas and the Palestinian Islamic Jihad introduced on January 19, 2024. For further details, see Decision (CFSP) 2024/385 here.
United Kingdom
- Restriction on the sale of arms to Israel: On September 2, 2024, the UK Foreign Secretary announced the suspension of 30 export licenses to Israel. These include components for fighter aircraft (F-16s), parts for Unmanned Aerial Vehicles (UAVs or drones), naval systems, and targeting equipment.
*Trainee Marine Bahaderian also contributed to this update.
Explore Further Insights
- Vilnius Arbitration Day 2024: Partner, Raminta Dereskeviciute participated in the 2024 Vilnius Arbitration Days and had the opportunity to discuss sanctions and export control matters with fellow lawyers and regulators. A number of panels related to sanctions and export controls, specifically: ‘National Security in Investment and Commercial Arbitrations’, ‘Compensation of Damages to Investors Caused by Russia’s Military Action in Ukraine’, and ‘Sanctioned Parties and Awards: Cause for Concern?’ and ‘Are Energy and Infrastructure Disputed Forerunners of Turbulence?’.
- Association of Certified Sanctions Specialists, Le French Chapter: Associate Michal Chajdukowski participated in the conference on ‘The Latest in Global Enforcement Trends’ in Paris and had the opportunity of discussing with officials from the US Office of Foreign Assets Control and the French Treasury and Customs.
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