Following the implementation of the now eleventh sanctions package by the EU on June 23, 2023, AEB has analyzed the restrictive measures issued, and provides below comprehensive information on how AEB applications can support you.
Depending on the business area of your company, evaluate which restrictive measures are relevant and therefore need to be implemented in the software and in the organization within the company (ICP). Also check the websites of U.S., EU, or national authorities for the latest content of sanctions measures. You can find some useful links below.
- The practical implementation of sanctions measures in your company requires comprehensive expertise in the areas of sanctions law and export control. The purpose of this article is to give you an overview of the sanctions measures and to show the possibilities for implementing or applying these diverse sanctions measures in AEB Trade Compliance.
EU sanctions
The sanctions against Russia, which were published by the EU starting on February 23, 2022, cover various areas and include various legal consequences.
Part of the new sanctions' measures are based on EU regulations in place since 2014 in response to the annexation of the Crimean Peninsula by Russia. In 2022 and 2023, these embargo regulations have been significantly expanded through the various amending regulations and implementing regulations.
- Council Regulation (EU) No. 269/2014 of March 17, 2014 (consolidated unofficial version)
- Council Regulation (EU) No. 692/2014 of June 23, 2014 (consolidated unofficial version)
- Council Regulation (EU) No. 833/2014 of July 31, 2014 (consolidated unofficial version)
As a first reaction of the EU to Russia's annexion areas of Ukraine's Donetsk and Luhansk regions, further sanctions were implemented against Russia with respect to these areas.
Therefore, the above embargo regulations, amended and extended by several amending and implementing regulations, all together form the legal basis for the Russia embargo.
This official info graphic has been published by the European Council and shows the variety of sanctions the EU has currently enacted against Russia.
The sanctions measures currently in place against Russia can be divided into the following four categories:
- Personal financial sanctions (bans on direct and indirect provisions)
- Capital market restrictions
- Goods-related restrictions (prohibitions, license requirements)
- Trade restrictions in relation to the regions of Crimea, Donetsk, Kherson, Zaporizhzhia and Luhansk
Personal financial sanctions (bans on direct and indirect provisions)
This type of sanction is directed against specific individuals, companies, and organizations and means that there are comprehensive bans on direct and indirect provisions to the listed name. These name listings are consolidated on the CFSP list, the official database of the EU, from all relevant financial sanctions regulations.
With regard to the Russia embargo, the financial sanctions were ordered in Article 2 of Regulation (EU) No. 269/2014. The persons or entities concerned by these measures are listed in Annex I of Regulation (EU) 269/2014.
The CFSP list is available to all Compliance Screening users as part of the basic sanctions list package. As soon as the publishing authorities make the electronic versions available, the sanctions lists are updated in Compliance Screening with a nightly batch.
To enable you to screen your business partners against the sanctioned names from the CFSP list using Compliance Screening, include them in the screening profile you use.
- Please note that the financial sanctions also provide for the ban on indirect provisions. If a non-listed person, company, or entity is owned to at least 50% by a listed person (ban on direct provisions), then this also results in a ban on indirect provisions for this non-listed person or entity. For automated majority ownership support in Compliance Screening, AEB offers Dow Jones' paid SCO (Sanctions Control and Ownership) content.
Capital market restrictions
The restrictions on access to the capital market are ordered in detail in Article 5ff. of Regulation (EU) 833/2014. These sanctions apply generally in connection with Russian companies, conglomerates, or banks listed in Annexes III, V, VI, XII, or XIII. These sanctions concern certain capital, investment, and securities transactions with the sanctioned entities or Russian financial authorities.
If these restrictions are relevant to your company due to its business activities, you can screen against the EUCM "EU - Restrictions on access to the capital market" sanctions list in Compliance Screening. This list is available to all users as one of the AEB standard lists and can be included in the used check profile, if required.
- In general, if sanctions (both the financial sanctions and the capital market restrictions or even restrictions on trade in dual-use goods) are directed against specific individuals or entities, they can be screened using Compliance Screening and the corresponding sanctions lists either automatically or in manual individual checks.
Goods-related sanctions
Regulation (EU) 833/2014 provides for various goods-related sanctions. In the annexes to this embargo regulation, there are several lists of companies that are prohibited from trading in dual-use or "advanced technology" goods, as well as the various lists of goods whose exports to Russia are prohibited.
Prohibited is also the transit via the territory of Russia of goods and technology suited for use in aviation or the space industry, as listed in Annex XI of Regulation (EU) 833/2014, and of jet fuel and fuel additives, as listed in Annex XX of Regulation (EU) 833/2014.
The restrictions on deliveries of goods are also ordered in the embargo regulations (EU) 692/2014 (concerns Crimea) and (EU) 2022/263 (concerns Donetsk, Luhansk). The specifics are described in the next chapter "Trade restrictions in relation to Crimea, Donetsk, and Luhansk".
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Restrictions on goods with respect to certain Russian entities
On the one hand, based on Regulation (EU) 833/2014, a prohibition exists to sell, deliver, transfer, or export goods to the entities listed in Annex IV.
If your company is affected by the prohibition and you want to check whether your business partner is one of these listed organizations, you need to include the sanctions list EUDU "Restrictions for dual-use goods intended for listed organizations" in the check profile of Compliance Screening.
On the other hand, most restrictions on goods apply regardless of the specific recipient in Russia. Considering your company's business or product portfolio, in addition to Compliance Screening, the other components of the Trade Compliance software, such as Export Controls, License Management, or Risk Assessment, may also be required for the implementation of the Russia embargo.
Goods restrictions regardless of the recipient
Regulation (EU) 833/2014, adds a prohibition to export, sell, and transfer or supply of any dual-use goods and technologies listed in Annex I of the EU Dual-Use Regulation to Russia or for use in Russia, regardless of the recipient or end-user (Art. 2). The same prohibition applies to goods from Annex VII of the Embargo Regulation (EU) 833/2014, which contains "advanced technology goods", whose technical characteristics are similar to dual-use goods. Regulation (EU) 833/2014 contains other lists of goods that are subject to various restrictions in connection with Russia.
- Please note that Compliance Screening is not intended for checking export or import restrictions that apply independently of the specific business partner (recipient) and relate to specific goods. You can map and check such goods-related embargo rules using Export Controls.
If you want to implement these goods-related restrictions in detail for your company using Export Controls from AEB, consider whether they affect imports from Russia or exports to Russia. For example, the goods restrictions for iron or steel products from Annex XVII of Regulation EU 833/2014 are subject to an import ban. In contrast, restrictions on oil refinery goods (Annex X) or aerospace-related goods (Annex XI) and restrictions on maritime goods include export bans. Likewise, the luxury goods embargo (Annex XVIII) is an export ban.
To implement goods-related embargoes, you must first enhance the master data in Export Controls (Master data you can maintain for Export Controls). This mainly concerns the goods attributes and the lists of goods relevant for your company.
- The EU dual-use list, the German export control list and the US Commerce Control List are the standard master data that AEB always keeps up to date. You can use these goods attributes and lists of goods to map the restrictions relevant to your company using manual restrictions.
In the article Maintaining master data required for manual restrictions you will find the necessary steps to configure the embargo rules as manual restrictions.
Trade restrictions in relation to Crimea, Kherson, Donetsk, Luhansk, and Zaporizhzhya
Another part of the EU sanctions was introduced by Regulation (EU) 692/2014 (concerns Crimea) and Regulation (EU) 2022/263 (concerns Kherson, Donetsk, Luhansk, and Zaporizhzhya). They include the ban on import as well as export of all goods from the territories not controlled by the Ukrainian government.
- If you are affected by this, you must take action to map these restrictions in the AEB applications. In Export Controls and Compliance Screening, you use the functionalities for defining “areas” for this purpose.
Since Ukraine is not an embargoed country and only the delivery of goods from or to individual regions are sanctioned, with this function you can define an embargo specifically for these areas. Use a combination of postal codes and/or cities and add them to the check profile. The area can either be stored in Compliance Screening (as a kind of restricted part list) or in Export Controls (as a manual restriction).
The sanctioned regions are partially located within the borders of regions of Ukraine with the same names (Kherson, Donetsk, Lugansk, and Zaporizhzhya or Crimea regions). Postal codes in Ukraine have 5 digits and are unique for each region.
- Kherson region has postal code zones 73000-75999
- Donetsk region has postal code zones 83000-87999
- Luhansk region has postal code zones 91000-94999
- Zaporizhzhia region has postal code zones 69000-72999
- Crimea region has postal code zones 95000-99999 or
6 digits for Russian Post 295000-299999
Tips & Tricks
Compliance Screening: Screening against embargo areas defined by you
Export Controls: Export Controls: Defining areas and configuring manual restrictions
Sanctions of other countries
Other states have ordered similar national sanctions measures, such as personal financial sanctions or restrictions on trade in certain goods, against Russia or against the Crimea, Luhansk, or Donetsk regions. More details can be found on websites of national authorities.
Comments
The article "Current developments in the conflict between Russia and Ukraine" was updated today with the current status of March 2, 2022.
The article “Implementation and screening of the Russia embargo in AEB Trade Compliance Management” was completely revised at the end of April 2022 to give you access to the latest regulations.
It also includes links to detailed instructions on the implementation in Trade Compliance Management.
After the European Union's sixth sanctions package came into force on June 4, 2022, check whether further adjustments in trade compliance management will be necessary for your business. All current links, e.g. to the Federal Office of Economics and Export Control (BAFA), the Council of the EU, or to the consolidated regulations are included in the article.
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