Acuant Compliance Sanctions Update 7.27.22: The Russia-Ukraine Crisis

Acuant Compliance Sanctions Update 7.27.22: The Russia-Ukraine Crisis

It’s been a little over four months since the start of the war, but Russia’s attack on Ukraine has persisted. As part of efforts to stop the aggression, the West continues to introduce and expand sanctions against Russia. To learn more about previously imposed sanctions, read our introductory sanctions blog and our 3.7.22, 3.21.22, 4.8.224.28.22, and 5.9.22 sanctions updates.

Continue reading to learn about some of the sanctions announced in recent months.

Snapshot of Sanctions: 6.2022

United States: At the end of June, and in response to Russia’s continued invasion of Ukraine, the US announced new sanctions and import bans. In partnership with the rest of the G7 members, the United States and the United Kingdom announced the banning of new imports on Russian gold. While energy is considered Russia’s most valuable export commodity, gold is up there in second place—Russia has the fifth-largest supply of gold in the world, with its central bank housing 2,000 metric tons worth approximately $140 billion. FinCEN also put out red alerts for banks and financial institutions that handle international services to be aware of for current export control measures.

As part of efforts to target Russia’s defense industrial sector, the US sanctioned Rostec, the Russian state-owned defense conglomerate, adding it, its board of directors members and their spouses, as well as subsidiaries and other affiliated groups and individuals to the blacklist. The State Department also sanctioned a number of different entities and individuals, while simultaneously imposing visa restrictions on 500+ Russian military officers for their role in the violation of Ukraine’s sovereignty. Certain Russian military units, as well as the FSB (Russia’s Federal Security Service), have also been sanctioned for their role in committing human rights abuses.

European Union: In June, the EU finalized its 6th sanctions package against Russia. This included the assets of more Russian and Belarusian individuals and entities being frozen, as well as banning the import and export of Russian petroleum products and crude oil—however some of these bans don’t take immediate effect as they are subject to designated transitional periods. Individuals and companies that offer professional services were banned from directly or indirectly working with the Russian government or Russian companies and individuals. These services include accounting, tax services, public relations and more.

The EU also extended its SWIFT ban for Russian banks and other entities and expanded its media ban to prohibit advertising with previously designated broadcasting and media entities. It was also signaled that the EU has clear plans for introducing another sanctions package.

Lithuania: As part of complying with sanctions, the EU member announced a rail transfer ban on Kaliningrad, a Russian province that houses the headquarters of Russia’s Baltic Fleet, one million residents and is bordered by Lithuania and Poland, with no direct border access to Russia. It is a ban on the transferring of specific goods through Lithuania as part of the import process into Kaliningrad and targets goods such as coal, metals, advanced technologies and more. This has infuriated Russian officials.

Other: As part of the toll of the West’s extensive sanctions, it was announced that Russia defaulted on its first debt of any kind in twenty years. The last time the country defaulted on foreign debt was over a century ago.

Snapshot of Sanctions: 7.2022

Lithuania: On July 11th, Lithuania expanded trade restrictions relating to Kaliningrad in response to EU sanctions going into effect. This includes bans on concrete, wood and alcohol, though goods considered to be humanitarian or essential—food, etc.—do not fall under the ban and the region can still be reached by air and by sea. Tensions are rising as Moscow claims that the restrictions are an illegal blockade, but Lithuania claims that it is required to comply with EU policies.

United States: On July 14th the Treasury Department clarified that its previous sanctions against Russia do not apply to agricultural commodities, agricultural products, medicine or medical devices; nor does it apply to fertilizer.

European Union: On July 21st, the EU adopted its 7th sanctions package. This includes a ban on the purchase, transfer or import of gold and jewelry that has originated in or been exported from Russia; the ban went into effect on July 22nd. The package also included but wasn’t limited to expansions on previous export controls, bans on access to EU ports and the prohibition of accepting deposits from Russian entities or individuals. However, and similarly to the US, there are exemptions to the sanctions as part of the EU’s efforts to avoid acts that could result in global food insecurity.

Countries, especially the US, in the last months have seen significant spikes in oil and gas prices due to diminished relations with Russia. And tensions and concerns continue to increase. The price of gas is surging in Europe in response to Gazprom, the Russian state-owned gas company, diminishing its energy supply through the Nord Stream 1 pipeline—a key pipeline that connects Russia with Germany—to 20% capacity on July 26th; this is down from the previous decrease to 40% capacity back in June. There is rising fear over whether Europe will have enough energy reserves for the coming winter. If not, many industries and households in the region may face rationing or shortages, in addition to higher costs.

Other: On July 26th, Russia announced that it will be pulling out of the International Space Station after 2024 to build its own outpost. Unsurprisingly, many speculate that this decision is in response to the West’s sanctions on Russia and the subsequent high tensions.

 

Read about the recent sanctions against Russia in our eBook, The Current State of Sanctions: July 2022.

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