The Russia-Ukraine Crisis: The Current State of Sanctions

The Russia-Ukraine Crisis: The Current State of Sanctions

There has been global outcry over Russia’s military attack on Ukraine in response to the already deadly Russian invasion. In efforts to end the assault by imposing political and economic pressure, numerous sanctions have been introduced by the United States, the European Union and countries around the world.

Substantial sanctions have been issued by world leaders against Russian—and non-Russian—individuals, entities, products, services and more. Some of the targets of said sanctions include, but are not limited to, Russian financial institutions, the president and individuals known to be part of or close to the Kremlin. Further sanctions can be expected.

At Acuant, our extensive sanctions and PEP (Politically Exposed Persons) lists are updated daily. This includes OFAC, the EU Freeze List, HMT (UK) and many others from around the world, and we work closely with our partners to make certain that their lists are being updated in a timely manner.

 

Current Snapshot of Sanctions as of 3.1.2022

United States: In efforts to destabilize Russia’s economy and financial system as part of its condemnation of Russia’s actions, the Biden administration has announced a number of sanctions. The Department of the Treasury’s Office of Foreign Assets Control (OFAC) has placed restrictions on 80% of all of Russia’s banking assets and has sanctioned the country’s two largest banks and other financial institutions, including FI subsidiaries that operate internationally. Thus also impacting Russian state-owned and private entities’ ability to raise capital.

Additionally, the administration has announced sanctions against the president, the president’s family, high-level officials and their families, wealthy Russian elites and in collaboration with other countries, has placed significant blocks on Russia’s high-tech imports. As of February 25th, President Putin and Foreign Minister Sergey Lavrov are no longer allowed to enter the United States due to newly issued travel bans. On February 28th, the US announced new sanctions against Russia’s Central Bank, Ministry of Finance and National Wealth Fund. This essentially bans Americans from doing business with any of those entities.

European Union: The EU’s sanctions include banks, the president, high-ranking officials in the Kremlin, top military officials, wealthy Russian oligarchs and others in what is considered the president’s inner circle. The bloc froze both Putin and Lavrov’s assets as well as tightened visa rules for diplomats and limited the ability for Russians to deposit new funds above a certain value into European bank accounts. As part of the multiple packages of sanctions already introduced, bans were placed on EU exports, preventing the export of the aircraft and spare parts that are vital for Russia’s fleets. As of Sunday, February 27th, the EU has banned any aircraft owned, registered or controlled by Russia to enter European airspace.

In collaboration with the United States, United Kingdom and Canada, the EU has also announced the removal of certain Russian banks from the international secure messaging and payment orders service for FIs known as SWIFT or The Society for Worldwide Interbank Financial Telecommunication.

The United States and European Union are not the only ones seated at the table, other countries have also issued sanctions—the United Kingdom, Australia, Canada and Japan, to name a few.

  • United Kingdom: the prime minister imposed the UK’s largest sanctions package ever, targeting banks, elites, the president and members of the president’s relatives and close associates.
  • Canada: made a number of amendments to its Special Economic Measures (Russia) Regulations, including new prohibitions on Russian sovereign debt, new criteria for listing targets and broader prohibitions imposed on newly added individuals and entities under a broad dealings ban. Canadian FIs have also been prohibited from engaging in transactions with the Central Bank.
  • Japan: has suspended issuing visas for certain Russian individuals and entities, as well as for officials from the breakaway regions of Donetsk and Luhansk. Export controls have been placed on high-tech products and so has a freeze on assets held by Russian FIs.
  • Australia: has added several restrictions on imports and exports and has also imposed travel bans. On top of that, the country is adding sanction measures targeting exports (and prohibiting imports from) and commercial activity in Donetsk and Luhansk relating to the telecommunications, gas and mineral reserve sectors, to name a few.
  • Switzerland: though not a member of the EU, Switzerland announced that it would be adopting similar sanctions against Russia, breaking its historically neutral stance. The country also announced the freezing of the president and other high-ranking officials’ assets, as well as closing the Swiss airspace to Russian aircraft.

Governments around the world have announced that more sanctions are expected to be imposed, especially as/if the war continues.

3.2.22:

  • Joining the EU and Canada, the United States announces that American airspace is no longer open to Russia, blocking access for Russian aircraft and airlines from entering for the foreseeable future.
  • In a majority vote at a rare special emergency session on March 2nd, the United Nations General Assembly (UN) adopted a resolution denouncing the military invasion of Ukraine by Russia. The UN demanded both an immediate end to the attack and the withdrawal of Russian military forces from Ukraine.

The Importance of Sanctions & PEP Screening

One of the five Anti-Money Laundering (AML) pillars is Customer Due Diligence (CDD), commonly known as Know Your Customer (KYC). The KYC process enables companies to determine the amount of risk associated with doing business or transacting with a specific person or entity—this includes understanding the Ultimate Beneficial Owner (UBO) behind a transaction or entity.

Companies are required to ensure that the individuals and business entities they are doing business with have not been sanctioned (by their applicable jurisdictions). This may require additional Enhanced Due Diligence (EDD) screening prior to or throughout doing business with a specific individual or entity. Acuant provides global coverage for sanctions and PEP screenings, and our lists are updated continuously to help our clients stay compliant.

This past week has clearly illustrated the indispensability of adapting in real time to new sanctions and regulations. Additionally, businesses will not only need to screen new customers against new and evolving sanctions and watch lists, but will also need to re-screen their current customer base as not doing so can result in unknowingly transacting with sanctioned individuals and entities. The Acuant Platform can support both activities seamlessly.

Learn more about how Acuant Compliance helps your business stay prepared for evolving regulations to be AML compliant.

* For newly imposed sanctions, read our 3.7.223.21.22, 4.8.22, 4.28.225.9.22 and 7.27.22 sanctions updates.

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