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June 13, 2022 – On June 3, 2022, the European Union (“EU”) released a sixth package of restrictive measures (sanctions) against Russia and Belarus “in light of Russia’s continuing war of aggression against Ukraine and Belarus' support to it, as well as the reported atrocities committed by Russian armed forces in Ukraine.” The new sanctions are “intended to effectively thwart Russian abilities to continue the aggression” by fine-tuning existing restrictions and targeting new areas of the Russian economy, including the oil sector. At the same time, the EU adopted a new round of sanctions against Belarus in response to the continued internal repression going on in that country. The new measures were imposed through five EU Council Regulations and five Council Decisions.
The previous week, on May 25, 2022, the European Commission released proposals to add the violation of EU restrictive measures to the list of EU crimes, and to reinforce rules on asset recovery and confiscation, in order to enhance the enforcement and effectiveness of EU sanctions. These proposals come in the context of the ‘Freeze and Seize' Task Force set up by the Commission in March.
1. Restrictive measures targeting Russia and Belarus
Individual restrictive measures
On June 3, 2022, the EU added 65 Russian individuals and 18 entities to its restricted parties list through Council Implementing Regulation 2022/878. The new designations target those said to be responsible for the atrocities committed by Russian troops in Bucha and Mariupol, persons supporting the war, leading businesspersons and family members of listed oligarchs and Kremlin officials, as well as companies in the defense sector and a financial organization (National Settlement Depository). In total, as of today, 1158 individuals and 98 entities have been added to the EU restricted parties list under the Russian program.
The EU also designated 12 individuals and 8 entities pursuant to Council Implementing Regulation 2022/876 for their role in the ongoing internal repression and human rights abuses in Belarus. The EU targeted companies such as Belaruskali, Belarus’s main potash producer, and its export arm, Belarusian Potash Co., the state television and radio broadcasting company Belteleradio, as well as companies manufacturing tobacco and public transport vehicles. These individual measures aim at reinforcing the restrictions already in place against these sectors. In total, as of today, 195 individuals and 35 entities have been added to the EU restricted parties list under the Belarusian program.
Newly-designated individuals and entities are subject to an asset freeze and a prohibition from making funds and economic resources available to them as well as a travel ban in the EU as of June 3, 2022.
Finally, Council Regulation 2022/880 amended Council Regulation 269/2014 by creating a new exemption authorizing the release of funds and economic resources to listed parties where those funds and economic resources are strictly necessary for the provision of (i) electronic communication services by EU telecommunication operators, (ii) associated facilities and services necessary for the operation, maintenance and security of such electronic communication services, in Russia, in Ukraine, in the EU, between Russia and the EU, and between Ukraine and the EU, and (iii) for data center services in the EU.
Council Regulation 2022/879 introduces a comprehensive import ban on Russian crude oil and petroleum products. To allow the EU and its partners to secure alternative supplies and minimize the impact on global oil prices, the ban is subject to certain transition periods and temporary exemptions and derogations.
Export and import restrictions
On May 4, 2022, prior to the sixth package, the EU removed Russia from the list of countries benefiting from the Union general export authorizations, pursuant to Regulation 2022/699. These authorizations enabled the export of certain dual-use items to Russia, which now requires an export license when not strictly prohibited.
As of the date of this alert, the European Commission issued the following 34 FAQs:
Possible next steps
The European Commission and the High Representative have made it clear that the EU stands ready to put forward additional sanctions in response to the evolution of Russia's war against Ukraine. The EU is said to have begun work on a seventh package of sanctions against Russia. Future restrictions could affect gas supplies from Russia.
2. New Proposals from the EU Commission to enhance the implementation of EU sanctions
Making the violation of EU restrictive measures an EU crime
The sixth package of EU sanctions against Russia and Belarus added in the relevant regulations that the penalties Member States must adopt in case of infringement of EU sanctions should include “criminal penalties” if they have not yet done so.
Aside from these provisions in the sixth package, the Commission proposed on May 25 measures to ensure the effective implementation of the EU sanctions by way of supplementary criminal law measures. Adding the violation of restrictive measures to the list of EU crimes would allow the EU to set common basic standards on criminal offences and penalties across the EU, where currently enforcement is left to the competence of Member States without harmonization at the EU level. As such, the violation of EU sanctions is not considered a criminal offense in all Member States and penalties can significantly differ among those states.
As set out in the Commission’s Communication and its Annex, the potential criminal offences to be considered as EU crimes could include notably:
These offences would require “intent, or at least gross negligence based on knowledge that the conduct concerns persons, entities, activities or property subject to restrictive measures, or ignoring restrictive measures or related legal prohibitions (wilful blindness).”
In addition to the liability of natural persons, the proposed Directive would include a specific provision on the liability of legal persons broadly understood:
The penalties would range from criminal or non-criminal fines to temporary exclusion from access to public funding, including tender procedures, grants and concessions, temporary or permanent disqualification from the practice of business activities, withdrawal of permits and authorizations to pursue activities which have resulted in committing the offence, placing under judicial supervision, judicial winding-up, and temporary or permanent closure of establishments used for committing the offence.
Once the Council and the European Parliament agree on the Commission's initiative to extend the list of EU crimes, the Commission will present a directive based on principles set out in the Communication and Annex, to be adopted by the European Parliament and the Council in line with the ordinary legislative procedure.
Reinforced EU rules on asset recovery and confiscation arising from EU restrictive measures
The European Commission is also putting forward a proposal for a Directive on asset recovery and confiscation, including a draft Directive, that would also apply to the violation of EU restrictive measures. The aim is to ensure “the effective tracing, freezing, management and confiscation of proceeds derived from the violation of restrictive measures.”
The proposal would, among other things:
Interestingly, the sixth package of EU sanctions against Russia and Belarus added in the relevant regulations that Member States shall “provide for appropriate measures of confiscation of the proceeds” of EU sanctions infringements.