As of February 22nd, 2022, in response to Russia and Belarus’ illegal war against Ukraine, extensive sanctions have been applied to these aggressor states, including sanctions from the European Union and the United States, which are directly binding for Citadele Bank and all banks in Latvia.
While acknowledging that sanctions are necessary for contribution to international peace and security, and to stop Russia’s war against Ukraine, these sanctions are currently impacting and will continue to impact Latvian, Lithuanian and Estonian businesses which have partners in Belarus and Russia or have commercial operations in these countries, whether directly or indirectly.
It is important for businesses to recognise that European Union sanctions are directly binding to EU citizens and legal entities founded in the EU, even while in a third country. Therefore, business owners and others may face criminal charges for non-adherence to EU sanctions not only within EU, but also for not complying with EU sanctions within Russia and Belarus. This also applies to businesses belonging to EU citizens, and to the subsidiaries of EU-founded companies in third countries.
On March 2nd, 2022, we published our recommendations and advice for businesses working with Russian and Belarussian businesses on our website citadele.lv. Meanwhile, on March 4th, we published information about the barring of Russian banks from the international SWIFT payment system. In this article, we will give more details on the sanctions.
For now, the main sanctions impacting business are the European Union’s sanctions of February 25th against Russia (regulation no. 2022/328) and of March 2nd against Belarus (regulation no. 2022/355). More information on these is available on the Financial and Capital Market Commission’s website, as well as on the European Commission website (Russia, Belarus). Everyone must also adhere to additional sanctions against specific persons linked to Russia and Belarus, including several Russian oligarchs and businesses.
The bank emphasises that collaboration with legal entities and individuals whose financial assets have been frozen in accordance with the sanctions, as well as with companies owned or controlled by these entities and individuals, is no longer possible.
Bearing in mind the extensive limitations currently in force, as well as the impact of the sanctions on the international payment system, Citadele Bank recommends contacting the bank before making a payment if there are any doubts as to whether a business partner is on a sanctions list or whether a specific payment can be made. Bearing in mind current restrictions and sanctions, Citadele Bank is currently unable to guarantee the completion of all payments to business partners in Russia and Belarus.
Furthermore, the bank recommends to be mindful of national restrictions imposed by Russia and Belarus, which may impact the operation of EU businesses and their partners in these countries.
As the war develops, the scope of the sanctions against both goods and service categories and sanctioned persons will be constantly updated. These updates are made both by the EU and the U.S., as well as by other countries. We therefore suggest that all our customers keep updated on changes to the sanctions and act accordingly. Citadele Bank will certainly continue to inform its customers of these changes, however, considering the speed of changes to sanctions regulations, they may happen faster than Citadele Bank is able to inform their customers.
When working with businesses in Belarus, you should be aware that the European Union has expanded their existing sanctions and added new, very extensive restrictions on the import of timber and timber products, cement products, oil, gas, coal, bitumen, fertilizers, mechanical devices, pneumatic rubber tyres, iron and steel products, and other products into the EU.
These restrictions allow for contracts concluded before March 2nd, 2022 to be completed before June 4th, 2022. Therefore, you are able to complete contracts signed before March 2nd, but these contracts may not be extended or amended in substance.
The direct or indirect sell, supply, transfer or export of goods and technologies that could help increase the military or technical capabilities of Belarus or develop its defence and security sector (list of goods and technologies - Annex Va) to any private or legal entity, organisation or structure in Belarus or for use in Belarus is also forbidden. This extremely extensive list also names many goods and components linked with the IT sector.
When working with entities in Russia, please note that the direct or indirect sell, supply, transfer or export of goods and technologies that could help increase the military or technical capabilities of Russia or develop its defence and security sector (list of goods and technologies - Annex VII) to any private or legal entity, organisation or structure in Russia or for use in Russia is forbidden. Additionally, sanctions against Russia also include extensive restrictions on transactions with Russia-linked securities and other operations linked with the financial and capital market.
New restrictions have also been placed on Russian citizens and permanent residents, as well as on businesses founded in Russia, which forbid EU banks from accepting new deposits if the total value of their deposits at the credit institution exceed or will exceed €100,000.
These restrictions do not apply to citizens and non-citizens of EU member states and those with a residence permit in an EU member state, as well as to cross-border payments needed for the sale of non-restricted goods and services between the EU and Russia.
To support those in Ukraine suffering from the war, Citadele Bank is partnering with the Latvian Samaritan Association to donate €50,000, and invites its customers to exchange their X REWARDS points to help those in need. Citadele will double every 1000 X REWARDS points donated, and these will help pay for food, humanitarian help, medical supplies and other necessities to those living in Ukraine.
We have eased the process for Ukrainian citizens to open a Citadele account and receive a payment card. Ukrainian citizens are welcome at any Citadele branch in Latvia, Lithuania or Estonia to apply to open a bank account for free. More information here.
Any of our customers can also make transfers to Ukrainian banks with no commission fee. Although payments in any currency are now commission-free, we suggest making transfers and donations in Euro, as we can process these payments much faster. Please also bear in mind that adapting the bank system takes time, so we will take a commission at the moment of payment which will then be returned to you as soon as we can.