The Russia-Ukraine conflict has triggered a flurry of new sanctions and export controls from around the world, aimed at de-escalating hostilities and tensions in eastern Europe.
The United States and United Kingdom have been at the forefront of implementing new restrictions (see our recent article on the topic), with many other nations following suit including the European Union, Switzerland, Canada, Australia, New Zealand, and Japan.
The common denominator was the targeting of the Russian elite, dual use and military exports, and banking sector, including the Central Bank. Select Russian banks were additionally barred from being able to use SWIFT (Society for Worldwide Interbank Financial Telecommunications), significantly curtailing the flow of money into and out of the country.
This article lists out global sanctions against Russia, as of the end of February 2022, to give businesses a broad understanding of new curbs, which come on top of measures that have been imposed over the past eight years of the Russia-Ukraine conflict.
1. New U.S. (OFAC and BIS) Sanctions on Russia
Following this Executive Order by President Biden, the U.S. Office of Foreign Assets Control (OFAC) implemented new financial sanctions on Russian banks and individuals. In addition, the Bureau of Industry and Security (BIS) released new rules expanding on export restrictions to Russia – especially aerospace, maritime and defense goods and technology – while adding more companies to the Entity List.
The following is a timeline of recent sanctions imposed by the U.S. Treasury and Commerce departments:
- Feb 21: President Biden Signs Executive Order announcing sanctions on Russia. [1]
- Feb 22: OFAC adds new Russian sanctions to SDN and Menu Based Sanctions Lists. [2]
- Feb 23: OFAC adds Nord Stream 2 AG to SDN List [3]
- Feb 24: OFAC designates additional Russian and Belarussian parties to the SDN list [4]
- Feb 24: BIS transfers over 40 names from the Military End User (MEU) list to the Entity List, adds two more companies [5]
BIS’ new controls will reduce Russia’s ability to source materials critical to their aerospace, maritime and defense industries. The following are major highpoints:
- Region Controls: Imports, exports and investments in the regions of Donetsk and Luhansk are prohibited. [1]
- Russia (Non-Military End User): New license requirements for items subject to the Export Administration Regulations (EAR) and classified under Commerce Control List (CCL) categories 3-9. BIS also issued a new Foreign Direct Product rule, mandating that items subject to the EAR that are produced overseas will also require export licenses. [5][6]
- Russia (Military End User): All items subject to the EAR require an Export License. BIS issued a Foreign Direct Product rule which expands the license requirements to any items produced overseas but subject to the EAR. Food and Medicine products that fall under ECCN codes EAR99, 5A992.C or 5D992.C may be exported unless it is intended for a government end user or Russian state owned entity. [5][6]
2. Russia-Ukraine Sanctions imposed by the UK and European Union
The 26-member European Union agreed on new sanctions that affect Russia’s financial, energy and transport sectors, along with shipments of dual use products (mainly sensitive technology and aircraft components and equipment) and export financing.
Across the English Channel, the UK government froze the assets of major Russian banks. It also banned the sale of military and dual use products and technology plus energy and infrastructure-related goods. And it prohibited the provision of military technical assistance.
3. Sanctions from the Rest of the World
Similar restrictions were put in place by Canada, Switzerland, Japan, Australia and New Zealand. Ottawa added hundreds more entities to their Ukraine-Russia sanctions, while Bern adopted a similar approach. Canberra added to measures on the transport, telecommunications, energy and minerals sector, and Wellington clamped a ban on exports to the Russian military and security forces.
Tokyo, meanwhile, froze the assets of Russian banks and restricted exports of military and military-related items, semiconductors, and sensitive hi-tech goods. Taiwan announced that it would also impose sanctions, but did not specify the actions it would take.
4. Evolving Challenges for Businesses
The volume and speed of implementation of these new regulations pose significant challenges to businesses trying to understand the impact to their operations, especially on the expectation that yet more measures are likely as the Ukraine crisis continues to unfold. If your company is involved in business transactions in Russia and/or Ukraine, or with Russian based companies worldwide, it is important to utilize the most effective tools available to mitigate emerging risks that could adversely affect your supply chain. Appropriate steps include:
- Screen and rescreen customers and suppliers against up-to-date denied, restricted, debarred and blocked entities lists;
- Screen IP addresses to help confirm that the person and company you are doing business with is actually where they say they are (read our recent article on IP address geolocation screening);
- Classify items against up-to-date export codes, country restrictions and trade embargoes, and ensure that your export licenses and other documentations are in order;
- Request end-use certification, an often-missed risk mitigation step.
It’s tough to stay on top of all of the countries announcing sanctions and other restrictions that could impact your business. To help you, Descartes has created the Russia-Ukraine Sanctions Resource Center to keep abreast of the trade changes as they occur. The resource center is based our expertise in global trade intelligence and available to you and your organization.
How Descartes Visual Compliance and MK Denied Party Screening Can Help
As these sanctions continue to evolve and change, Descartes denied party screening solutions keep pace with the changes by continuously updating sanction party lists within the applications, as governments and other official organizations update theirs, to assist customers to screen simultaneously against multiple lists.
To help manage compliance risks more effectively, we provide a range of robust denied party screening and 3rd party risk management solutions as well as comprehensive and trusted trade content for leading business systems such as SAP, Oracle, Salesforce and Net Suite to name a few.
Descartes compliance solutions are flexible and modular, allowing organizations to pick the specific and exact functionality and content they need and scale up later as and when necessary. By utilizing these solutions, organizations can strengthen their compliance processes, enhance their competitive edge and increase sales velocity.
To learn more about how Descartes Visual Compliance and Descartes MK Denied Party Screening can help you stay on top of the latest sanctions, please click here and here.
Reference:
[1]. https://home.treasury.gov/system/files/126/20220221_eo_ukraine.pdf
[2]. https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220222
[3]. https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220223_33
[4]. https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220224
[6]. https://public-inspection.federalregister.gov/2022-04300.pdf
