Yermak-McFaul Working Group on Russian Sanctions. Progress Update #2, May 9 compared to Apr 19
Action Plan on Strengthening Sanctions against the Russian Federation, April 19, 2022
Prepared by KSE Institute
DETAILED ANALYSIS
1. Expand Oil and Gas Sanctions — no new sanctions; G7 (made an obligation to introduce a ban of import RF`s oil), EU (no consensus yet on oil embargo), Poland refused from RF gas in response to RF cut off
G7. Leaders of G7 countries made an obligation to introduce a ban of import RF`s oil, “First, we commit to phase out our dependency on Russian energy, including by phasing out or banning the import of Russian oil.”
EU. No final decision on 6th package (oil embargo was blocked by Hungary, EU continues to negotiate with Hungary).
RF. On Apr 27, Gazprom halted gas supplies to Bulgaria (Bulgargaz) and Poland (PGNiG), since both companies refused to pay for gas in rubles. Against this background, gas prices in the EU rose by 21%, to $1,350 per thousand m3.
Bulgaria. Bulgaria has threatened to block transit of Russian gas to Serbia and Hungary. Bulgarian GoV intends to review contracts with Gazprom, including those for the transit of gas through the Turkish Stream pipeline to Serbia and Hungary.
Poland. In response to the cutoff Polish PM said that Poland can already refuse Russian gas. Previously, Poland suggested taxing oil and gas from Russia in Europe. PGNiG called the cutoff of supplies a breach of contract.
Moldova. Moldova hasn’t yet received a response from Gazprom regarding the postponement of the obligation to conduct a debt audit — supply of Russian gas from May 1 is questionable. In case Gazprom stops supplying, the country plans to buy gas from international traders — 7 international companies, including Romania, Poland and the Netherlands.
Finland. Country cut RF oil imports by 70% in Mar, replacing it with a product from Norway.
2. Increase Transportation and Insurance-Related Sanctions — new sanction from USA (ban RF vessels from US ports + SDN for RF SOE shipping company + 6 private shipping companies + 1 maritime engineering company + 69 vessels), Norway (close its borders and ports to Russian trucks and ships), Canada (1 manufacturer of gas turbine engines)
USA. The White House issued a proclamation banning Russian-affiliated vessels from entering U.S. ports, effective Apr 28, 2022. Banned vessels include Russian-flagged vessels, vessels owned by Russian persons, and vessels that are Russian operated. The order authorizes the U.S. Department of Homeland Security to issue regulations to implement the ban.
The US Department of Commerce’s Bureau of Industry and Security (BIS) issued an order temporarily denying all export privileges for the Russian cargo aircraft carrier Aviastar due to “ongoing violations” of the United States’ export controls on Russia. Aviastar is headquartered in Moscow and provides various cargo services to Russia. The temporary denial order (TDO) states that Aviastar used US-origin aircraft subject to the Export Administration Regulations (EAR) on recent flights into Russia without authorization from BIS, in violation of US controls on the export of aviation-related items to Russia. The TDO prohibits Aviastar from participating in any transactions subject to the EAR, including exports from the United States and re-exports of items subject to the EAR from abroad, for 180 days. In particular, this means that the airlines cannot operate U.S.-manufactured aircraft nor obtain U.S.-manufactured parts for purposes of even routine repair or maintenance on their aircraft, whether manufactured in the United States or elsewhere.
On 8 May, the Department of State designated 8 Russian maritime-related companies. This includes the RF MinDefense’s shipping company, Oboronlogistika OOO, as well as private Russian maritime shipping companies that transport weapons and other military equipment for the RF GoV — SC South LLC, JSC Northern Shipping Company, Transmorflot LLC, M Leasing LLC, Marine Trans Shipping LLC, Nord Project LLC Transport Company. The Department of State also took action against vessels these maritime shipping companies have an interest in with the addition of 69 vessels to the Department of the Treasury’s SDN List.
The Department of State also designated one Russian maritime engineering company (OOO Fertoing) that works with the RG GoV and Russian SOEs (complex marine surveys, navigational, hydrographic and underwater technical support for the construction and operation of facilities for subsea production complexes, offshore, river, and pipeline transport).
Norway. Norway announced that it will Close its borders and ports to Russian trucks and ships from 7 May. Russian fishing vessels, which often land their catch at ports in northern Norway, will receive exemptions from sanctions.
Canada. On 6 May, amended the Special Economic Measures (Russia) Regulations added the UEC Klimov JSC (manufactures gas turbine engines, main gearboxes and accessory drive gearboxes for transport aircraft) company to the list.
3. Impose New Financial Sanctions — new sanction from USA (SDN on Transkapitalbank, Investtradebank; virtual currency mining company Bitriver AG + 10 RF subsidiaries + SDN on Moscow Industrial Bank (SOE) + 10 its subsidiaries), UK (10 defense companies asset freeze + asset freeze for Evraz plc) and Poland (+ 37 entities on top of EU lists), Switzerland (ban on trusts registering by Russians), New Zealand (assets freeze and dealing with securities ban) against the CBR, the Russian Direct Investment Fund (RDIF) plus against 8 largest and 8 other banks linked to oligarchs (8 SOEs), + 4 in defense (1 RF SOE and 1 RB SOE) and 2 in shipbuilding (1 RF SOE)), Canada (5 defense and machine building companies).
USA. The US OFAC designated Public JSC Transkapitalbank (“TKB”) and its subsidiary, Investtradebank, on its Specially Designated Nationals and Blocked Persons (“SDN”) List. U.S. persons are broadly prohibited from conducting business with the banksor with entities that are owned 50% or more by the newly designated SDNs without authorization from OFAC. U.S. persons must also formally “block” (freeze and report) any property or interests in property of the banks.
OFAC for the 1st time designated RF virtual currency mining company Bitriver AG and its 10 Russia-based subsidiaries as SDNs. This prohibits U.S. and U.S. citizens from operating on Bitriver or its property and interests, and requires US individuals to formally freeze any property or interests owned by Bitriver that they own or control.
On 8 May, OFAC designated a Russian state-owned bank JSC Moscow Industrial Bank (MIB) and 10 of its subsidiaries: Agropromyshlenny Kompleks Voronezhski OOO, Anninskii Elevator OOO, Auditkonsalt OOO, Belinveststroi OOO, Dve Stolitsy OOO, Kontrakt OOO, Ladoga OOO, Nekommercheskaya Organizatsiya Fond Khimicheskoe Razoruzhenie I Konversiya, Azovskaya Zernovaya Kompaniya OOO, Ekspluatiruyushchaya Kompaniya Tsentr OOO.
New Zealand. Sanctions (assets freeze and dealing with securities ban) against the CBR, the Russian Direct Investment Fund plus sanctions against 8 largest and 8 other banks linked to oligarchs (8 SOEs), Russia’s defence sector and annexation of Crimea. These major institutions make up approximately 80% of Russia’s total banking assets. The sanctioned entities are: Alfa-Bank, Bank Rossiya, Bank Otkritie (SOE), Black Sea Bank for Development and Reconstruction, Credit Bank of Moscow, Gazprombank (SOE, 50+1), GenBank, Industrial Savings Bank, Novikombank (SOE), Russia Agricultural Bank (SOE), Russian National Commercial Bank (SOE), Sberbank (SOE, 50+1), Sovcombank, SMP Bank, Vnesheconombank SOE, VTB (SOE, 60+1). Regulations designating companies and organizations in the defense sector (Kronshtadt Group, Makeyev Rocket Design Bureau (SOE), Minsk Wheel Tractor Plant (MZKT) (Belarus SOE), Wagner Group) and shipbuilding (United Shipbuilding Corporation (SOE), Zelenodolsk Shipyard Plant) which have contributed to the assault on Ukraine’s sovereignty and territorial integrity.
UK. Added 10 defense companies to the sanctions list of asset freeze targets.
On May 4, UK additionally sanctioned 32 entities (subject to an asset freeze) in media, defense, technology and electronics, shipbuilding, among sanctioned — VGTRK, Zvezda, KAMAZ, Mikron. 8 SOEs + 2 with shares in RF ownership.
On 5 May, Evraz plc (steel manufacturing and mining company) was designated under its Russia sanctions regime. The company is now subject to an asset freeze. However, the UK issued a license, which allows commercial activities of the North American subsidiaries of Evraz. Evraz North America includes 6 plants: in Portland (Oregon), Regina (Saskatchewan, Canada), Pueblo (Colorado), Calgary, CSamrose and Red Deer (Alberta). EVRAZ North America also owns 18 processing plants in Canada and the US.
On 9 May, the UK amended the listings of 6 entities under its Russia sanctions regime. All relate to entities designated under the urgent procedure on 15, 24 or 31 March 2022. Statements of reasons for 6 entities were amended to remove them as urgent procedure listings.
Poland. Introduced Poland-specific list of designated parties subject to measures not covered by EU Regulations 765/2014 and 269/2014, covering 37 entities. In addition to the measures under EU legislation related to freezing assets and suspension of transactions, the Act also foresees the possibility of exclusion from public procurement proceedings.
Switzerland. With the decision of 27 Apr, Switzerland implemented new measures adopted by the EU on 8 Apr. In particular, support within the framework of a Swiss national programme of Russian organizations which are publicly owned or controlled will be prohibited. With immediate effect, trusts may no longer be registered in Switzerland for Russian nationals or natural or legal persons resident in Russia. Various services for such trusts will also be prohibited.
Canada. On 6 May, amended the Special Economic Measures (Russia) Regulations to list 5 additional companies: Zelenodolsk Shipyard JSC (partly), Military Industrial Company LLC (private), Rosgvardia (SO), UEC Klimov JSC (private but connected with Rostekh), KAMAZ PTC (SOE).
4. Designate the Russian Federation as a Sponsor of State Terrorism — new sanctions from Lithuania (Lithuanian Seimas officially recognize RF as a state sponsor and perpetrator of terrorism) + USA (registered a resolution recognizing RF as a sponsor of terrorism)
USA. Biden administration is considering naming Russia a state sponsor of terrorism but officials haven’t determined the Kremlin’s actions meet the legal standard for the designation — Blinken told lawmakers on Apr 27 (Source: WSJ) On May 10, the US Senate has registered a resolution recognizing Russia as a sponsor of terrorism (Source: Resolution).
Lithuania. The Seimas states in the Resolution that RF, whose military forces deliberately and systematically select civilian targets for bombing, is a state sponsor and perpetrator of terrorism (Source: Seimas of the Republic of Lithuania).
5. Strengthen Individual Sanctions against these Categories of Individuals — new sanction from USA (+35), Canada (+40), Australia, EU (2 + considers adding Alina Kabayeva and Patriarch Kirill), UK (+31) and Poland (Putin’s, Lavrov’s daughters, Nabiullina in lists), + New Zealand (+170 + 5 in media and propaganda) + Australia (+76 + 34), Switzerland (+2) + Japan (+141) + Liechtenstein (2).
Data from NAZK. As of May 4, 1,486 persons under Western sanctions, 6,997 persons are still not covered.
New personal sanctions — Apr 19, 2022 — Apr 28, 2022
USA. On 20 April, OFAC designated 29 individuals involved in attempts to evade sanctions imposed by the United States and its international partners on Russia. Among the designated individuals are Deputy Governors of the CBR Mikhail Alekseev and Ksenia Yudaeva, Board members of Bank Otkritie, Konstantin Malofeyev, and military personnel, individuals linked to Bank Otkritie, a network of individuals that support Malofeyev’s activities, including those related to sanctions evasion and misinformation campaigns. Alina Kabaeva, the woman believed to be Putin’s girlfriend and the mother of at least three of his children, avoided sanctions due to a last-minute decision of the National Security Council.
On 8 May, OFAC designated 8 current and recent members of the Executive Board of Sberbank and 27 members of Gazprombank Board of Directors.
Canada. On 19 April, Canada listed an additional 14 oligarchs, close associates of the Russian regime, and members of their families. This includes President Putin’s two adult daughters and CBR Chief Elvira Nabiullina. On April 26, Canada amended its sanctions measures by designating an additional 203 individuals determined by the Government of Canada to be current senior officials or current or former members of the People’s Councils of the so-called DPR and LPR. On 2 May, Canada further amended the Special Economic Measures (Russia) Regulations to list an additional 21 oligarchs, close associates of the Russian regime, and members of their families. On 6 May, Canada added to list an additional 19 individuals who are senior defense officials.
EU. On 21 April, added Serhiy Vitaliyovich KURCHENKO and Yevgeniy Viktorovich PRIGOZHIN to its Russia sanctions list. The EU considers adding Alina Kabayeva and Patriarch Kirill.
UK. On 21 April, added 16 individuals to the sanctions list of asset freeze targets.
Important. In its analytics NAZK notes that the UK fast-tracked on 19 individuals and entities in alignment with G7 and the EU to target Russia’s military and defense capabilities. Notable individuals and entities that have been sanctioned: Sergei Korolyov (Federal Security Service of Russia); The CEO of Russian Railways Oleg Belozyorov was also sanctioned, Kalashnikov Concern; Arzamas Machine-Building Plant; Military Industrial Company; GTLK (transport). Family members — asset freeze was imposed on Anzhelika Khan, wife of UK-sanctioned oligarch German Khan. The latest UK sanctions also targeted Russian military officials (Generals) committing atrocities on the front-line in Ukraine, and individuals outside of Putin’s military who are actively supporting his illegal invasion of Ukraine.
On 26 April, the Office of Financial Sanctions Implementation announced the amendment of 195 entries on the UK asset freeze list. Those amendments were made to update the “statement of reasons” for the relevant listings which had originally been made under the new “urgent procedure”. The urgent procedure allows the UK to designate individuals and entities who have already been designated under sanctions imposed by certain other jurisdictions. However, listings made under the urgent procedure must be “recertified” after a set period, requiring the UK government to confirm that it has reasonable grounds to suspect that the person meets the criteria for designation under the relevant UK sanctions legislation.
On May 4, the UK additionally sanctioned +31 individuals with asset freezes and travel bans. Many of sanctioned individuals are actors from mainstream media organisations (Oleg Dobrodeev (Director General of VGTRK), Alexander Malkevich (General Director of the Saint Petersburg TV channel), Sergey Mikhailov (Director General of the Russian News Agency TASS), Vladimir Sungorkin (Director General and Editor-in-Chief of Komsomolskaya Pravda), Eugeny Poddubny (war correspondent at All-Russian State Television and Radio Broadcasting Company), Alexander Kots (war correspondent for Russian newspaper Komsomolskaya Pravda), Dmitry Steshin (journalist and special correspondent for Komsomolskaya Pravda), propagandist Nailya Asker-zade, mistress of banker Kostin, host Mikhail Leontiev), senior executive officers or member of the board of directors of designated banks — Dmitry Gusev (Chairman of Sovcombank), Irina Kashina, Mikhail Kuchment, Oleg Mashtalyar, Alexey Panferov (all Sovcombank), Mikhail Zadornov (Head of Otkritie Bank), Dmitry Levin, Tatyana Nesterenko, Viktor Nikolaev (all Otkritie Bank)) and political elite (members of the Federation Council of the Russian Federation — Yelena Avdeeva, Viktor Kress, Aleksandr Nekrasov, Valery Ponomaryov, Eduard Rossel, Iliyas Umakhanov, Putin’s aide Maxim Oreshkin).
On 9 May, the UK amended the listings of 82 people under its Russia sanctions regime. All relate to people designated under the urgent procedure on 15, 24 or 31 March 2022. Statements of reasons for 79 people were amended to remove them as urgent procedure listings. Only the personal details of entries for Maiya Nikolaevna Bolotova, Marat Shakirzyanovich Khusnullin and Viktor Feliksovich Vekselberg were amended, so they remain urgent listings.
Poland. Poland-specific list of designated parties subject to measures not covered by EU Regulations 765/2014 and 269/2014 covered 15 individuals. These individuals are added to the list of foreigners whose stay in Poland is undesirable. For 7 of them funds and economic resources are completely frozen, ban to provide, directly or indirectly, and funds or economic resources is imposed. In addition to the EU measures legislation related to freezing assets and suspension of transactions, the Act also foresees the entry on the list of foreigners whose residence in the territory of Poland is undesirable.
Switzerland. On 3 May, the Federal Department of Economic Affairs EAER added Serhiy Vitaliyovich KURCHENKO and Yevgeniy Viktorovich PRIGOZHIN to its sanctions list (financial sanctions + ban on entry and transit). The measures come into force at 6 p.m. on 4 May 2022.
Australia. The Australian GoV imposed sanctions on 147 more people, which include Russian senators, and daughters of Vladimir Putin and Russian Foreign Minister Sergei Lavrov.
On 3 May, the Australian government imposed sanctions on 76 members of the State Duma of the Federal Assembly of the Russian Federation, who voted in favor of the resolution recognizing the independence of “LPR” and “DPR”.
The Australian Government has also imposed targeted financial sanctions and travel bans on 34 senior members of the Russian-led movements in Ukrainian regions Donetsk and Luhansk, the so-called “People’s Council of the People’s Republic of Donetsk” and “People’s Council of the People’s Republic of Luhansk”.
New Zealand. Regulations designating 170 members of the upper house of RF Federation Council, and extending further prohibitions on those already sanctioned.
On 11 May, New Zealand imposed new sanctions against Russia: for disinformation and cyber attacks on Ukraine. In particular, sanctions were imposed against 5 persons: Igor Konashenkov (Chief spokesperson of RF MinDefence), Igor Kostyukov (Head of Russia’s military intelligence agency GRU), Aleksei Pimanov (Head of Krasnaya Zvezda), Mikhail Sinelin (Co-founder of NewsFront) and Oleg Dobrodeev (Chief Executive of VGTRK).
Japan. On 10 May, 8 RF officials (Mikhail Mishustin, Rashid Nurgaliev, Aleksandr Dvornikov, Vladimir Bogdanov, Elena Timchenko, Nataljya Browning, Kseniya Frank, Gleb Frank) and 133 individuals from self-proclaimed “Donetsk People’s Republic” and “Luhansk People’s Republic” designated as targets for measures for asset freeze by the Ministry of Foreign Affairs Notification.
Liechtenstein. On 22 April, funds and economic resources owned or under the direct or indirect control of Serhiy Vitaliyovich KURCHENKO and Yevgeniy Viktorovich PRIGOZHIN were blocked. It is forbidden to transfer funds or to otherwise directly or indirectly make funds and economic resources available to the natural persons, companies and organizations affected by the blocking.
6. Intensify Sanctions on State-Owned Enterprises — USA (3 SOEs in media, 1 SOE bank + 10 its subsidiaries + 1 state-supported private weapons manufacturer), UK (sanctions against 5 defense SOEs), New Zealand (2 RF SOEs, 1 RB SOE in defense and shipbuilding + 3 in media), Canada (4 defense and machine building)
USA. On 8 May, OFAC designated: 3 major Russian state-owned media outlets as SDNs: JSC Channel One Russia, Television Station Russia-1, and JSC NTV Broadcasting Company; Russian state-owned bank Joint Stock Company Moscow Industrial Bank (MIB) and 10 of its subsidiaries; Russian state-supported private weapons manufacturer LLC Promtekhnologiya.
UK. Added 4 state owned defense companies plus one with controlling stake 25+1 shares owned by RF to the sanctions list of asset freeze targets.
On May 4, UK additionally sanctioned 32 entities, including 8 SOEs + 2 with shares in RF ownership (subject to an asset freeze) among sanctioned — VGTRK, Avangard JSC, Moscow institute of physics and technology, N.A. Dollezhal order of lenin research and design institute of power engineering JSC, The Dalzavod ship repair centre JSC, Zvezda, KAMAZ.
New Zealand. Regulations designating companies and organizations in the defense sector (Makeyev Rocket Design Bureau (SOE), Minsk Wheel Tractor Plant (MZKT) (Belarus SOE) and shipbuilding (United Shipbuilding Corporation (SOE).
On 11 May, New Zealand imposed new sanctions against Russia: for disinformation and cyber attacks on Ukraine. In particular, sanctions were imposed against 3 entities: 85th Main Special Service Centre (GTsSS) (SOE), Internet Research Agency, Main Centre for Special Technologies (GTsST).
Canada. On 6 May, amended the Special Economic Measures (Russia) Regulations to list 5 additional companies: Zelenodolsk Shipyard JSC (partly), Rosgvardia (SO), UEC Klimov JSC (private but connected with Rostekh), KAMAZ PTC (SOE).
7. Expand Export Controls and Ban Imports — new sanction from UK (import — silver, wood, high-end, export — trade sanctions measures relating to internet services and online media services + 35% duty for ~£1.4bn of imports + export bans to hit > £250 mln), USA (ban on exports of accounting and consulting services to RF, license requirement for common industrial and commercial items), Japan (bans on exports to 71 organizations), Taiwan (strategic high-tech products in 57 categories to RB)
UK. Expanded the list of products facing import bans — silver, wood products and high-end products from RF including caviar. A further package of goods are subject to additional 35% duties, when imported from RF and RF (~ £130 mln worth).
On 29 Apr, the UK introduced new trade sanctions measures relating to internet services and online media services. This instrument introduces requirements that: Social media services, including video sharing platforms, must take reasonable steps to prevent content that is generated, uploaded to or shared by a designated person being encountered by a UK-based user; Internet access services, including fixed and wireless broadband providers, must take reasonable steps to prevent UK-based users from accessing websites provided by a designated person. This will likely take the form of URL blocking; Application stores, including those on smartphones, must take reasonable steps to prevent UK-based users from downloading or otherwise accessing an application provided by a designated person.
The instrument confers powers on the Secretary of State to designate persons to whom these online restrictions will apply. The instrument also confers on the Office of Communications (OFCOM) the power to impose civil monetary penalties, of up to £1 mln on a person who fails to comply with the new trade sanctions. Failing to comply with the new sanctions is also a criminal offense.
On 4 May, the UK announced a ban on services exports to Russia, including management consulting, accounting and PR services.
On May 9, the UK announced new sanctions against RF and RB — 35% duty for ~£1.4bn of imports will be imposed, including on palladium, platinum and chemicals. In addition, planned export bans intend to hit more than £250 mln (representing almost 10% of UK exports to Russia in 2021), including chemical products, polymers, and equipment (manufacturing and heavy machinery sectors).
USA. The Director of OFAC, in consultation with the Department of State, has determined that E.O. 14071 now applies to the following categories of services: accounting, trust and corporate formation, and management consulting services. As a result, the prohibitions of E.O. 14071 include the exportation, reexportation, sale, or supply, directly or indirectly, from the US or by a U.S. person, wherever located, of accounting, trust and corporate formation, or management consulting services to any person located in Russia. This Determination takes effect on June 7, 2022.
The Department of Commerce Bureau of Industry and Security (BIS) issued a final rule to expand export controls on equipment and other items that are widely used by Russian industry. The final rule imposes a U.S. license requirement on exports, reexports, and transfers of hundreds of common industrial and commercial items, including “wood products, industrial engines, boilers, motors, fans, and ventilation equipment, bulldozers, and many other items with industrial and commercial applications.” In total, 205 HTS codes at the 6-digit level and 478 corresponding 10-digit Schedule B numbers were added to the list of items subject to Russian industry sector export controls.
The U.S. Nuclear Regulatory Commission will suspend general licenses that previously permitted export of source material, special nuclear material, byproduct material, and deuterium to Russia.
Switzerland. With the decision of 27 Apr, Switzerland implemented the new measures adopted by the EU on 8 Apr. The new measures include far-reaching sanctions on goods, including a ban on imports of lignite and coal as well as on goods that are important sources of revenue for Russia (e.g. timber, cement, seafood, caviar). In addition, there are export bans on goods that can help strengthen Russia’s industrial capacities (e.g. industrial robots or certain chemical products).
Japan. On 10 May, bans on exports to 71 organizations designated as specific organizations in RF by the Ministry of Foreign Affairs Notification. Also bans on the export of cutting-edge goods to the RF were announced.
Taiwan. On 6 May, Taiwan’s GoV imposed controls on exports of strategic high-tech products in 57 categories to RB. The restrictions bar Taiwanese companies from exporting a long list of tech products there without special permission. The move is largely symbolic given Taiwan’s minimal levels of direct trade with RB or RF. The export control list includes equipment for making semiconductors, electronic components, telecommunications equipment, software, as well as lasers and navigation systems. Taiwan’s government revised the “List of high-tech goods exported to Russia” to “List of high-tech goods exported to RF and RB”.
8. Impose Secondary Sanctions — no new sanctions, but companies start to fear imposition of secondary sanctions
China. The Chinese UnionPay payment system backs away from Russian banks on secondary sanctions fears. Under the pressure of US sanctions and suppliers, Chinese technology companies are closing down business in Russia without making official statements. According to the Chinese government, China’s exports to Russia in Mar fell by a total of 27% compared to Feb. Exports of technological products fell particularly sharply. Thus, the supply of laptops decreased by more than 40%, smartphones — by two thirds, base stations — by 98%. Chinese tech giants such as Lenovo and Xiaomi are publicly refusing to do business with Russia — WSJ.
UK. Revolut cannot obtain a banking license in the UK due to links with the RF: father of co-founder of Revolut Mykola Storonskiy is the top manager of Gazprom’s structure.
9. Increase Transparency to Discourage Trade with and Investment in Russia — no new sanctions; USA (prepares respective bill + published Sample Letter to Companies Regarding Disclosures Pertaining to Russia’s Invasion of Ukraine and Related Supply Chain Issues), Germany (intends to oblige Russians under sanctions to report property in Germany)
USA. A bill to oblige public companies to disclose their ties to Russia and other aggressor countries was registered.
The SEC has released an illustrative letter that contains sample comments that the Division of Corporation Finance may issue to companies based on their specific facts and circumstances related to Russia’s invasion of Ukraine and related supply chain issues.
The SEC notes companies may have disclosure obligations under the federal securities laws related to the direct or indirect impact that Russia’s invasion of Ukraine and the international response have had or may have on their business. To satisfy these obligations, the Division of Corporation Finance believes that companies should provide detailed disclosure, to the extent material or otherwise required, regarding:
direct or indirect exposure to Russia, Belarus, or Ukraine through their operations, employee base, investments in Russia, Belarus, or Ukraine, securities traded in Russia, sanctions against Russian or Belarusian individuals or entities, or legal or regulatory uncertainty associated with operating in or exiting Russia or Belarus,
direct or indirect reliance on goods or services sourced in Russia or Ukraine or, in some cases, in countries supportive of Russia, actual or potential disruptions in the company’s supply chain, or business relationships, connections to, or assets in, Russia, Belarus, or Ukraine.
The SEC also notes financial statements may also need to reflect and disclose the impairment of assets, changes in inventory valuation, deferred tax asset valuation allowance, disposal or exiting of a business, de-consolidation, changes in exchange rates, and changes in contracts with customers or the ability to collect contract considerations. In addition, since Russia’s invasion of Ukraine, many companies have experienced heightened cybersecurity risks, increased or ongoing supply chain challenges, and volatility related to the trading prices of commodities regardless of whether they have operations in Russia, Belarus, or Ukraine that warrant disclosure.
The SEC urges companies to consider how these matters affect management’s evaluation of disclosure controls and procedures, management’s assessment of the effectiveness of internal control over financial reporting, and the role of the board of directors in risk oversight of any action or inaction related to Russia’s invasion of Ukraine, including consideration of whether to continue or to halt operations or investments in Russia and/or Belarus.
Germany. Country wants to oblige Russians who fell under sanctions to report property in Germany.
10. Deepen Coordination of Sanctions and Link Sanctions Relief to Peace and Reconstruction — USA and Canada are preparing legislative acts to use sanctioned assets for compensation to Ukraine, EU (launched discussion on this issue)
USA. On Apr 29, the Biden Administration announced a legislative proposal aimed at empowering the U.S. GoV to seize and forfeit property linked to Russian elites. Specifically, the proposed system would enhance and streamline the seizure and forfeiture of Russian oligarch assets and provide for the liquidation and redistribution of proceeds to support Ukraine.
Canada. On 02.05, Canada proposed new power to seek forfeiture of sanctioned persons’ assets. Currently, the Special Economic Measures Act (“SEMA”) and the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) (“Magnitsky Law”) allow the Governor in Council to make orders under certain conditions, such as where a grave breach of international peace of security has occurred or gross and systematic human rights violations have been committed in a foreign state. Such orders may include causing certain property located in Canada to be “seized, frozen, or sequestrated”. The proposed amendments to SEMA would allow proceeds received from the disposition of forfeited property to be used for the following purposes: the reconstruction of a foreign state adversely affected by a grave breach of international peace and security; the restoration of international peace and security; and the compensation of victims of a grave breach of international peace and security, gross and systematic human rights violations or acts of significant corruption.
EU. EU countries should consider using frozen Russian foreign exchange reserves to pay for Ukraine’s recovery after the war, President of European Diplomacy Josep Borrell said.
MONITORING TABLE
Total cummulative progress: 33% (14 sanction-measures) out of 42 in the Action Plan(10 blocks).
13 sanction-measures (31%) with status No progress, 14 sanction-measures (33%) with status Yes, 15 sanction-measures (36%) with status Slow Progress. Compared to previous week only 1 sanction-measure changed status from No progress to Yes (2.2 Blocking sanctions on the state shipping companies) and 1 sanction-measure changed status from Slow progress to Yes (Designate the Russian Federation as a sponsor of terrorism).
UPD since 11.05
