Due to the sanctions imposed on Russia and Belarus, business with these countries now and in the foreseeable future will be almost impossible. In specific cases when payments can still be made, both businesses and banks will have to perform additional sanctions checks.
Citadele’s sanctions experts have summarised the five rounds of sanctions to help business owners orient themselves in the new sanctions-filled geopolitical situation.
Effective European Union sanctions are crucial for restoring peace in Ukraine. Furthermore, bearing in mind that breaching sanctions is a serious crime for which both businesses and banks are responsible, Citadele has implemented additional sanctions checks to prevent the risk of breaches. This includes, as of April 4th, ceasing legal entity payments to and from Russia and Belarus, apart from specific cases when these payments have been pre-confirmed with the bank on an individual basis.
“More than two months have passed since Russia began its war against Ukraine, and in this time the Ukrainian people have experienced unthinkable suffering and loss due to the international crimes committed by Russia. The sanctions against Russia and its supporter Belarus have also dramatically impacted everyday business for those Baltic companies who have partners in these countries. They should bear in mind that restrictions on doing business with Russia and Belarus are currently comparable with working with North Korea. Therefore, processing payments to these countries are not possible, unless exemption is agreed with the bank in advance,” explains Uldis Upenieks, Chief Compliance Officer at Citadele Bank.
Restrictions as summarised by Citadele’s experts
To help business owners understand what partnership with Russia and Belarus is still technically possible, Citadele’s experts have summarised the main restrictions. If your business is linked with one of these industries, we recommend further research by reading the respective EU regulation. Some restrictions have a transition period in place.
- Having business relations with 1,093 private individuals and 80 legal entities, as well as the legal entities owned or controlled by them, is forbidden. The assets of these persons must be frozen. Persons who are subject to sanctions can be found in the www.sanctionsmap.eu search engine, while the legal entities owned or controlled by them are not listed.
- Trade with the occupied territories of Crimea, Sevastopol, Luhansk and Donetsk is forbidden.
- Direct or indirect export of specific technology to Russia is forbidden, as is providing technical, financial or other support linked with:
- Dual-use goods and technologies, as well as goods and technologies which may be of use in the Russian defence and security sectors, as well as in oil and Liquified Natural Gas refining;
- Goods and technologies for use in the aviation and space industries;
- Goods and technologies used for maritime navigation;
- Iron and steel products (import and export);
- Luxury goods whose value exceeds €300 per unit, including clothing, cosmetics and alcohol, as well as, for example, mobile phones whose value exceeds €750 per unit.
- The export of a wide range of goods named in appendix XXIII of EU Regulation No. 833/2014 to Russia is forbidden, including, for example, roses, rhododendrons, chalk, clay, various chemicals, paint, pigments, paper, clothing (including used clothing), textiles and various apparatuses.
- The import of coal products, as well a wide range of goods named in appendix XXI of EU Regulation No. 833/2014, from Russia is forbidden, including, for example, caviar, wood and wood products, cement and concrete products, fertiliser, fibreglass, furniture and furniture parts, among others.
- Investing in the Russian energy sector is forbidden, including increasing your share percentage in companies from this sector.
- Investing or taking part in projects co-financed by the Russian Direct Investment Fund is forbidden.
- All aeroplanes registered in Russia, or which belong to or are controlled by Russian legal entities or private individuals, are banned from EU airspace and airports.
- Several Russian propaganda media sources are banned from broadcasting in EU territory.
- Payments with businesses belonging to the Russian government named in appendix XIX of EU Regulation No. 2022/428, as well as the subsidiaries of these businesses (more than 50% ownership) are forbidden.
- Payments with several Russian banks are also forbidden, including VTB, Otkritie, Novikombank and Sovcombank. In line with US sanctions, payments with Sberbank are also forbidden.
- Providing credit rating services to any Russian legal entity or private individual without an EU residence permit is forbidden.
- Various bans are in place relating to the use of the Russian financial system, including relating to financial instruments.
- Russian ships, including yachts and other recreational watercraft sailing under the Russian flag are banned from mooring at EU ports. This also applies to Russian ships who have changed their flag since February 24th, 2022.
- Russian road freight is banned from carrying goods into the EU, including transit.
Business relationships with 183 private individuals and 26 legal entities, as well as the legal entities owned or controlled by them, is forbidden. Persons who are subject to sanctions can be found in the www.sanctionsmap.eu search engine, while the legal entities owned or controlled by them are not listed.
- Directly or indirectly exporting the following to Belarus is forbidden:
- Dual-use goods and technologies.
- Goods and technologies which may contribute to increasing Belarusian military and technological power or developing its defence and security sector.
- Equipment and technologies that could be used for internal repression.
- Goods that can be used to manufacture tobacco products.
- Various technical equipment and mechanisms.
- Directly or indirectly importing the following from Belarus is forbidden:
- Mineral products.
- Potassium chloride (potash).
- Wood and wood products.
- Cement products.
- Iron and steel products.
- Specific rubber products.
- All aeroplanes registered in Belarus, or which belong to or are controlled by Belarusian legal entities or private individuals, are banned from EU airspace and airports.
- Payments to several Belarusian banks are banned, including Belarusbank, Belinvestbank (Белинвестбанк), Belagroprombank (Белагропромбанк), and Bank Dabrabyt.
- Belarusian road freight is banned from importing goods into the EU, including transit.
Sanctions against Russian and Belarusian legal entities and private individuals with no links to the EU
As a separate sanctions bloc, you should also take into account sanctions against legal entities established in Russia and Belarus, as well as against Russian and Belarusian citizens and residents without a residence permit in an EU member state, European Economic Area state (Iceland, Liechtenstein or Norway) or Switzerland. With some exceptions, these persons are not permitted to hold more than €100,000 worth of deposits in one credit institution, and are also forbidden from purchasing securities issued after April 12th, 2022. In addition, these persons linked with Russia have restrictions on participating in public procurements, and are forbidden from registering or providing a legal address or administrative address, or management services, for a trust or similar legal establishment with a trust founder’s or beneficiary status, among others.
Five steps to adhering to sanctions for business owners
Taking into account these extensive restrictions and to prevent the risk of sanctions in your economic activities, Citadele invites businesses to take five steps towards sanctions compliance, check the products they import or export in EU sanctions regulations, and read the information published on the Citadele website on taking these steps: https://www.cblgroup.com/en/media/press-releases/2022/5-steps/.
Bear in mind that the import or export of banned products from Russia and Belarus via a third country is seen as sanctions evasion and can be subject to criminal prosecution.
We would also like to remind you that Russia has also set several restrictions that could also impact opportunities for EU businesses to operate in this country or receive payment for services, bearing in mind Russia’s restrictions on outgoing payments in overseas currencies.
If you have any questions about sanctions, we suggest contacting your bank.
Useful material on sanctions can be found on the Citadele website: https://www.citadele.lv/en/business/webinar-sanctions/.