Ukraine & Russia

Publications

Updated November 2017

US Expansion of Russia / Ukraine Sanctions Update November 2017

On 31st October 2017, in accordance with section 223(d) of Title II of the Countering America’s Adversaries Through Sanctions Act (CAATSA), OFAC issued amended Ukraine/Russia-Related Directive 4. Certain CAATSA-related prohibitions in amended Directive 4 have a delayed effective date of January 29, 2018. OFAC has also published new and updated FAQs relating to the amended Directive and CAATSA.

Pursuant to sections 1(a)(i), 1(b), and 8 of Executive Order 13662 of March 20 2014 (the Order) and 31 C.F.R. § 589.802, taking account of the Countering Russian Influence in Europe and Eurasia Act of 2017 (Title II of CAATSA), and following the Secretary of the Treasury’s determination under section 1(a)(i) of the Order with respect to the energy sector of the Russian Federation economy, OFAC has determined, in consultation with the Department of State, that the following activities by a US person or within the US are prohibited, except to the extent provided by law or unless licensed or otherwise authorized by OFAC:

The provision, exportation, or re-exportation, directly or indirectly, of goods, services (except for financial services), or technology in support of exploration or production for deep-water, Arctic offshore, or shale projects:

(1) that have the potential to produce oil in the Russian Federation, or in maritime area claimed by the Russian Federation and extending from its territory, and that involve any person determined to be subject to this Directive or any earlier version thereof, their property, or their interests in property; or

(2) that are initiated on or after January 29, 2018, that have the potential to produce oil in any location, and in which any person determined to be subject to this Directive or any earlier version thereof, their property, or their interests in property has (a) a 33 percent or greater ownership interest, or (b) ownership of a majority of the voting interests.

Except to the extent otherwise provided by law or unless licensed or otherwise authorized by OFAC, the following are also prohibited: (1) any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions contained in this Directive; and (2) any conspiracy formed to violate any of the prohibitions in this Directive.

These prohibitions apply to the persons named by the Directives, their property, and their interests in property, which includes entities owned 50 percent or more by one or more persons identified as subject to the Directives.

OFAC’s amended and reissued Directive 4 does not change the applicability of OFAC’s 50 percent rule in the Directive 4 context. The references to “33 percent or greater ownership” and “ownership of a majority of the voting interests” in subsection 2 of Directive 4 refer to a Directive 4 SSI entity’s ownership interest in a deep-water, Arctic offshore, or shale project.

The prohibitions on the exportation of services include, for example, drilling services, geophysical services, geological services, logistical services, management services, modelling capabilities, and mapping technologies. The prohibitions do not apply to the provision of financial services, e.g., clearing transactions or providing insurance related to such activities.

If a deep-water, Arctic offshore, or shale project has the potential to produce oil, and the other requirements for either of the Directive 4 prohibitions are fully satisfied, then the relevant Directive 4 prohibition applies, irrespective of whether the project also has the potential to produce gas. If the project has the potential to produce gas only, then the Directive 4 prohibitions do not apply.

https://www.treasury.gov/resource-center/sanctions/Programs/Documents/eo13662_directive4_20171031.pdf

https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#373

Countering America's Adversaries Through Sanctions Act, August 2017

On 2nd August 2017 US President Donald Trump signed into law new economic sanctions legislation furthering US sanctions against Iran, Russia and North Korea.

Many of the new sanctions develop upon existing measures, and have a significant impact on the shipping industry. Key points to note are as follows:

Russia

- Further State owned entities / individuals in the crude oil, mining, shipping and railway sectors may be designated for asset freeze and other restrictions by being listed as SDNs. Further entities are also likely to be added to the Sectoral Sanctioned Identifications (SSI) List, which target the financial services, energy and defence sectors, and Russian oil production projects.
- Provision of technology, services, investment or any support to Russian export pipeline projects could be targeted as sanctionable activity.
- There are likely to be new sanctions (including asset freezes and travel bans) on individuals and entities in respect of human rights abuses or cyber attacks against the US.
- Sanctions may be imposed against non-US persons who cause a violation of sanctions by a US person.

Iran

- Sanctions may be imposed against persons materially contributing to Iran's ballistic missile and weapons of mass destruction programmes, the sale or transfer to Iran of military equipment or provision of related technical or financial assistance to Iran, and Iran's Islamic Revolutionary Guard Corps and affiliated foreign persons.
- Sanctions may be imposed against persons responsible for human rights violations against individuals in Iran.
- It is intended that new sanctions be adopted in co-ordination with the EU and NATO.

North Korea

- There are wide ranging sanctions against North Korean cargo and shipping, targeting particularly:

provision of insurance and other services to vessels owned or controlled by the North Korean Government,
purchase of coal, iron or iron ore, and certain metals and minerals from North Korea,
supply of petroleum products including crude oil and natural gas to North Korea,
significant transactions in North Korea’s transportation, mining, energy or financial services industries,
goods produced by North Korean convict or forced labour, and foreign persons employing North Korean forced labourers.

For fuller details of the various changes, please see the following summaries which are reproduced with the kind permission of authors The Eren Law Firm, Economic Sanctions Lawyers based in Washington, DC.

OFAC SANCTIONS INDIVIDUALS AND ENTITIES FOR SANCTIONS EVASION AND OTHER ACTIVITIES RELATED TO RUSSIA AND UKRAINE – 22 DECEMBER 2015

The US Department of the Treasury has designated and identified a number of entities and individuals under four executive orders relating to Ukraine and Russia.

Designations Regarding Sanctions Evasion (E.O. 13661)

E.O. 13661 authorizes sanctions on, among others, officials of the Russian Government and any individual or entity that is owned or controlled by, that has acted for or on behalf of, or that has provided material or other support to, a senior Russian government official. The latest sanctions targets are three entities and eleven individuals allegedly linked to designated persons Gennady Timchenko, Arkady Rotenberg, Boris Rotenberg, Kalashnikov Concern, and Izhevsky Mekhanichesky Zavod JSC (also known as Baikal), all of whom are alleged to have engaged in "serious and sustained sanctions evasion".

Designations Regarding Separatists (E.O. 13660)
E.O. 13660 targets those responsible for or complicit in actions or policies that threaten the peace, security, stability, sovereignty, or territorial integrity of Ukraine, for acting for or on behalf of previously designated groups as leaders of such entities, or for asserting governmental authority over a part or region of Ukraine without the authorization of the Government of Ukraine.
The latest targets are eight individuals who are already subject to asset freeze measures imposed by the EU.

Designations Regarding Crimean Entities (E.O. 13685)
E.O. 13685 authorizes sanctions on, among others, any person determined to be operating in the Crimea region of Ukraine in violation of E.O. 13685.
Twelve entities have been identified as targets for asset freeze:
Joint Stock Company Genbank
Open Joint Stock Company Krasnodar Regional Investment Bank
Open Joint Stock Company Commercial Bank Verkhnevolzhsky
Sevastopolsky Morskoy Bank
State Enterprise Universal-Avia
Crimean Enterprise Azov Distillery Plant
State Concern National Production and Agricultural Association Massandra
State Enterprise Factory of Sparkling Wine Novy Svet
State Enterprise Magarach of the National Institute of Wine
Resort Nizhnyaya Oreanda
Technopromexport
Yalta Film Studio

Identifications Under the Sectoral Sanctions Identification List (E.O. 13662)
EO 13662 authorises the imposition of financing restrictions (prohibitions in respect of transacting in, financing, or dealing in new debt) against entities in Russia's financial, energy, and defence sectors.

OFAC has added 88 entities to its Sectoral Sanctions Identification List, identified as being subsidiaries of VTB Bank, Sberbank, and Rostec which are already subject to financing restrictions.

Reaction from Russia
The Russian Government has issued a statement indicating that it is considering its position and may impose counter measures.

Full details of the latest OFAC designations can be found at this link.

EXTENSION OF RUSSIAN RETALIATORY SANCTIONS - 24 JUNE 2015

Russia's President Putin has signed a decree extending to 6 August 2016 prohibitions against the import into the Russian Federation of certain food and agricultural products from the USA, Canada, the EU, Norway and Australia. These measures were first introduced on 7 August 2014 in response to trade and financial sanctions against Russia by those countries. The embargo, which President Putin states is with the aim of defending Russia's national interests, will now continue until 6 August 2016.

EXECUTIVE ORDER 13685 – 19 DECEMBER 2014

On 19 December 2014, President Obama issued Executive Order 13685 which with immediate effect prohibits the following activities:

new investments in Crimea by a US person wherever located;
the import into the US of goods, services or technology from Crimea
export of goods, services or technology to the Crimea from the US or by a US person wherever located; and
provision of any approval, financing, facilitation or a guarantee by a US person in connection with a transaction by a foreign person where the transaction by that foreign person would be prohibited under the Executive Order if performed by a US person or a person within the US.

It also authorizes the blocking of persons determined to “operate” in Crimea or to be “the leader of an entity” operating in Crimea.

A copy of the Executive Order can be downloaded from the link set out below.

EU REGULATION 1351/2014 – 18 DECEMBER 2014

On 18 December 2014 the European Union passed Regulation 1351/2014, which with effect from 20 December 2014, widens the restrictive measures set out in Regulation 692/2014 of 23 June 2014.

Regulation 692/2014 had introduced trade restrictions in respect of goods originating in Crimea or Sevastopol. Regulation 825/2014 of 30 June 2014 subsequently amended and widened those prohibitions. Regulation 1351 further widens those restrictions and introduces others, some of which impact the shipping industry.

The restrictions applicable under Regulation 692/2014, as amended, now in place fall largely under three areas:

Investments and related activities;
Sale, supply, transfer and export of certain goods and technologies including those related to transport, telecommunications, energy and the exploration of oil, gas and mineral resources in Crimea and Sevastopol;
Tourism, including the provision of cruise services to Crimea and Sevastopol;

Article 2a

The new measures prohibit a broad range of investment in Crimea or Sevastopol, whereas previously the restrictions applied only to certain economic sectors.

It is prohibited to:

(a) acquire any new or extend any existing participation in ownership of real estate or control an entity located in Crimea or Sevastopol, including the acquisition in full of such entity or the acquisition of shares, and other securities of a participating nature of such entity;

(b) grant or be part of any arrangement to grant any loan or credit or otherwise provide financing, including equity capital, to an entity in Crimea or Sevastopol, or for the documented purpose of financing such entity;

(d) provide investment services directly related to the activities referred to in points (a) to (d).

The above prohibitions do not apply to the conduct of legitimate business with entities outside Crimea or Sevastopol where the related investments are not destined to entities in Crimea or Sevastopol.

Article 2b

It is prohibited to sell, supply, transfer, or export certain goods and technology (as extensively listed in Annex II) used in the following specified sectors:

Transport;
Telecommunications;
Energy;
Prospection, exploration and production of oil, gas and mineral resources,

to persons in Crimea or Sevastopol or for use in Crimea or Sevastopol.

Restrictions have also been imposed in relation to the provision of technical assistance, brokering services, financing and financial assistance relating to such goods/technology to persons in Crimea or Sevastopol or for use in Crimea or Sevastopol.

Article 2c

There is now a general prohibition against the provision of technical assistance, or brokering, construction or engineering services directly relating to infrastructure in Crimea or Sevastopol in the sectors referred to under Article 2b, independently of the origin of the goods and technology.

Article 2d

It is prohibited for any ship providing cruise services, to enter into or call at any of the seven ports situated in the Crimean Peninsula as listed in Annex III, namely Sevastopol, Kerch, Yalta, Theodosia, Evpatoria, Chernomorsk, and Kamysh-Burun. This prohibition applies to ships flying the flag of a Member State or any ship owned and under the operational control of an EU ship owner or any ship over which an EU operator assumes overall responsibility as regards its operation. The prohibitions do not apply when a ship enters or calls at one of the listed ports for reasons of maritime safety in cases of emergency.

In each case, there is a carve out allowing for the execution of contractual obligations under a contract concluded before 20 December 2014, although in the case of Articles 2b and 2c, the grace period will expire on 21 March 2015.

Coupled with EU Regulation 692/2014 of 23 June 2014, which gave effect to trade restrictions on import into the EU of goods originating in Crimea or Sevastopol, and the impact of asset freeze measures against a number of individuals and entities in Ukraine and Russia, there is now a wide-ranging ban on trade involving Crimea and Sevastopol. Members are reminded of the need to exercise caution when considering trade involving these territories.

Copies of the above mentioned Regulations and guidance issued by the UK HMT can be downloaded from the links set out below.

UKRAINE FREEDOM SUPPORT ACT 2014 – 18 DECEMBER 2014

On 18 December 2014, President Obama signed into law the Ukraine Freedom Support Act 2014, hardening the US Government’s position towards Russian insurgency in Ukraine.

In essence, the Act authorises, but does not compel, the President to impose sanctions in a variety of circumstances, including:

On Rosoboronexport, a Russian state agency involved in military procurement, and other Russian state-controlled firms which sell or transfer military equipment to Syria, or to entities in Ukraine, Georgia or Moldova without the consent of the governments in those nations. Persons (individuals or entities) that knowingly sponsor or provide financial, material, or technological support for, or goods or services to or in support of, such an entity may also be subject to sanctions.
To penalise Gazprom if it is found to be withholding significant natural gas supplies from Nato states, or Ukraine, Georgia or Moldova.
It further authorises the President to impose sanctions against persons that knowingly make a significant investment in certain types of Russian crude oil projects and to impose additional licensing requirements or other restrictions on the export of items for Russia's energy.
On Gazprom if it is determined to be withholding significant natural gas supplies from North Atlantic Treaty Organization (NATO) member countries, or further withholds significant natural gas supplies from countries such as Ukraine, Georgia, or Moldova.
On the opening, and a prohibition or the imposition of strict conditions on the maintaining, in the United States of a correspondent account or a payable-through account by a foreign financial institution that knowingly:

engages in significant transactions involving sanctioned persons; or
with respect to the Ukrainian crisis, facilitates a significant financial transaction on behalf of any Russian person included on the list of specially designated nationals and blocked persons maintained by the Department of the Treasury's Office of Foreign Assets Control. Such sanctions could have the effect of disabling the foreign financial institution from being able to process US dollar transactions.

The Managers will monitor and report on the implementation of the provisions of the Act.

US WIDENS SANCTIONS CONCERNING RUSSIA - 12 SEPTEMBER 2014

The latest measures expand upon actions taken by OFAC on 16 July 2014, which imposed sanctions against entities in Russia's financial, energy, and defence sectors, implemented certain directives pursuant to Executive Order 13662 of 20 March 2014, and provided for the creation of a “Sectoral Sanctions Identification List” (“SSI List”). At that time, 2 Directives were issued pursuant to Executive Order 13662:

Directive 1 prohibiting U.S. persons from transacting in, financing, or dealing in new debt with greater than 90 days maturity, and new equity in relation to 2 Russian banks - Gazprombank OAO and VEB.
Directive 2 prohibiting U.S. persons from transacting in, financing, or dealing in new debt with greater than 90 days maturity, (but not prohibiting transactions or financing for new equity), in relation to specificed energy firms - Rosneft, the world’s largest oil and gas company, and OAO Novatek, Russia’s largest independent natural gas producer.

On 12 September 2014 OFAC amended Directive 1 to decrease the maturity length of prohibited new debt from 90 days to 30 days, and also added Sberbank to the list of Russian banks subject to the Directive. OFAC also issued two new directives under Executive Order 13662.

Directive 3 prohibits US persons from engaging in transactions involving debt of longer than 30 days' maturity of entities added to the SSI List as subject to Directive 3. Rostec, a company operating within Russia’s defence and related material sector, has been added to the SSI List as subject to Directive 3.

Directive 4 prohibits US persons from providing, exporting, or re-exporting goods, services (except for financial services), or technology in support of exploration or production for deep-water, Arctic offshore, or shale projects that:

have the potential to produce oil in or offshore of Russia; and
involve any of 5 major Russian energy companies: Gazprom, Gazprom Neft, Lukoil, Rosneft, or Surgutneftegas.

A copy of an OFAC Announcement published on 12 September 2014 which sets out in details these new mesures can be downloaded from the links set out below.

Separately, OFAC also added 5 Russian defence-technology companies, to the SDN List of persons designated for asset freeze.

3 NEW EU REGULATIONS CONCERNING RUSSIA/UKRAINE SANCTIONS - 8 SEPTEMBER 2014

The EU has published 3 new regulations in respect of sanctions affecting Ukraine and Russia, which came into effect from 12 September 2014.

Regulation 959/2014

A new ground is introduced upon which the EU can designate individuals or entities for asset freeze under Regulation 269/2014 – "natural or legal persons, entities or bodies conducting transactions with the separatist groups in the Donbass region of Ukraine".

Regulation 960/2014

This regulation amends Regulation 833/2014, implementing:

further restrictions on the supply of dual use goods to Russia;
a new prohibition on the supply of certain services necessary for deep water oil exploration and production, arctic oil exploration and production and shale oil projects in Russia (drilling, well testing, logging and completion services, and supply of specialised floating vessels);
an extension of the restrictions on access to EU capital and financing markets, so that they now affect financial instruments with a shorter maturity (reduced from 90 days to 30 days) and apply to a wider range of Russian entities, including Rosneft, Transneft and Gazprom Neft, and to non-EU subsidiaries that are owned 50% or more by one of the listed entities.
a prohibition on providing or being part of any arrangement to make certain new loans or credit to the entities which are subject to the restrictions on access to capital markets.

Regulation 961/2014

24 individuals are designated for asset freeze, mainly politicians in Russia and disputed territories such as Luhansk and Donetsk, but also 2 businessmen closely associated with President Putin.

Copies of these new regulations can be downloaded from the links set out below.

EU DESIGNATION OF KERCH AND SEVASTOPOL SEA PORTS - 18 AUGUST 2014

Recent EU designations (EU Council Implementing Regulation 810/2014 dated 25 July 2014) include the Sevastopol and Kerch Commercial Sea Ports. Kerch Commercial Sea Port has control over the Kerch Strait and administers the Kerch Canal. Vessels entering or leaving the Sea of Azov must pass through the Kerch Strait and the Kerch Canal. A number of Russian and Ukrainian ports such as Mariupol and Rostov are located in the Sea of Azov. The port authority levies canal dues and therefore in order to pass the Kerch Canal dues must be paid to the authority which is designated by the EU in order to reach non-designated ports such as Mariupol. The International Group is raising this issue with the EU, but until further guidance is issued by the EU Members should beware that payment of dues to the Kerch port authority may involve a breach of sanctions.

18 AUGUST 2014 - COUNCIL REGULATION (EU) No 825/2014 of 30 July 2014 concerning restrictions on the import into the Union of goods originating in Crimea or Sevastopol, in response to the illegal annexation of Crimea and Sevastopol (“the Regulation”)

In response to the annexation of Crimea and Sevastopol by Russia, the European Union published Regulation 692/2014 of 23 June 2014, introducing trade sanctions in respect of goods originating in Crimea or Sevastopol and on the provision, directly or indirectly, of financing or financial assistance, as well as insurance and reinsurance, related to the import of such goods.

On 30 July the European Union published Regulation 825/2014 amending Regulation 692/2014. This notice therefore supplements the notice published below on 15 July 2014. The prohibitions in Article 2 are extended to include those noted below.

Prohibitions

Article 2 of the Regulation as amended provides that it is prohibited, amongst other things:

To import into the European Union “Goods”[1] originating in Crimea or Sevastopol;
To provide, directly or indirectly, financing or financial assistance as well as insurance and reinsurance related to the import of Goods originating in Crimea or Sevastopol;.
To sell, supply, transfer or export, directly or indirectly, key equipment and technology listed in Annex III of the amended Regulation to any natural or legal person, entity or body in Crimea or Sevastopol or for use in Crimea or Sevastopol.
To provide technical and financial assistance or brokering services related to the key equipment and technology listed in Annex III, including the provision, manufacture maintenance and use of such items. .

The prohibited key equipment and technology in Annex III includes that for

(a) the creation, acquisition or development of infrastructure in the transport, telecommunications and energy sectors in Crimea and Sevastopol; and
(b) the exploitation[2] of oil, gas and mineral resources[3] in Crimea or Sevastopol.

The list of prohibited items includes certain types of ships and associated equipment such as :

mobile drilling derricks;
floating or submersible drilling or production platforms;
sea-going light vessels, fire-floats, floating cranes and other vessels, the navigability of which is subsidiary to their main function (excl. dredgers, floating or submersible drilling or production platforms; fishing vessels and warships)

Exemptions

Article 3 of Regulation 692/2014 of 23 June 2014 provides a grace period until 26 September 2014 for the execution of trade contracts concluded before 25 June 2014 relating to the importation into the EU of goods originating in Crimea or Sevastopol, or of ancillary contracts necessary for their execution. . Article 3 also requires persons, entities or bodies seeking to perform the contract to provide a minimum of 10 days advance notice to their EU Member State Competent Authority. Furthermore goods made available to the Ukrainian authorities and entitled to “preferential origin” status in accordance with Regulation (EU) No 978/2012 and Regulation (EU) No 374/2014 or the EU-Ukraine Association Agreement may also be exempt.

Regulation 825/2014 provides for the same 10 day notification requirement and a grace period until 28 October 2014 for trade contracts, or contracts ancillary to their execution, concluded before 30 July 2014 concerning key equipment or technology as listed in Annex III.

Article 6 of Regulation 692/2014 of 23 June 2014, as amended prohibits the payment of claims in respect of contracts or transactions which are prohibited by the Regulation if they are made by designated persons, entities or bodies listed in Council Regulation 269/2014; persons, entities or bodies acting through or on behalf of such designated entities; persons, entities or bodies who have been found by a competent authority to have infringed the prohibitions in Regulation 692/2014; or if claims relate to the import of goods originating in Crimea or Sevastapol.

Scope of Application

Article 10 of Regulation 692/2014 of 23 June 2014, as amended provides that it shall apply:

Within the territory of the European Union.
On board any vessel under the jurisdiction of a European Member State.
To all nationals wherever located of any European Member State.
To any legal person, entity or body , which is incorporated or constituted under the law of a Member State.
To any legal person, entity or body in respect of any business in whole or in part within the European Union.

It is unlawful for European flagged or managed vessels to perform trade prohibited by EU Regulations and P&I clubs domiciled in the European Union cannot provide P&I insurance to any vessel of whatever nationality engaged in such trade. The prohibitions will also apply to non EU domiciled Members and Clubs to the extent that the prohibited activity and/or insurance provided constitutes business done in whole or in part of the EU. All International Group Club rules contain exclusions in relation to claims arising from trades for which it is unlawful to provide insurance by reason of sanctions.
Regulation 825/2014 entered into force on 31 July 2014.

All other clubs in the International Group have issued a similar notice.

[1] “Goods” are defined as originating in Crimea or Sevastapol which are wholly obtained in Crimea or in Sevastapol or which have undergone their last substantial transformation there.

[2] “exploitation” means exploration, prospection, extraction, refining and management of oil, gas, and mineral resources and provision of related geological services but does not include maintenance to ensure safety of existing infrastructure

[3] “Mineral Resources” are those listed in Annex II of the Regulation.

RUSSIAN PRESIDENTIAL DECREE NO. 560 DATED 6 AUGUST AND RESOLUTION OF THE GOVERNMENT OF THE RUSSIAN FEDERATION NO. 778 DATED 7 AUGUST 2014

In response to the imposition of trade and financial sanctions against Russia by the USA, member states of the European Union, Canada, Norway and Australia, Russia has introduced, with effect from 7 August 2014, a one-year ban on the import into Russia of certain agricultural and food products originating from those countries. There are no grace periods enabling performance of pre-existing contractual obligations.

The affected products are defined according to classification codes used in Russia for customs clearance purposes, and based on the internationally accepted “Harmonized Commodity Description and Coding System”, “HS”. The relevant products include a broad range of food and agricultural products, including meat, milk and dairy products, fish, fruit and vegetables.

Neither the Decree nor the Resolution spell out the potential penalties that may be applied by the Russian authorities for breach of these prohibitions.

These measures may lead to disputes over liability for non-performance and termination of contracts. Members involved in the carriage of the affected commodities should pay close attention to their contractual arrangements.

EU REGULATION 833 – 31 JULY 2014

With effect from 1 August 2014, the EU will apply additional restrictive measures in respect of Russia with a view to increasing the costs of Russia's actions to undermine Ukraine's territorial integrity, sovereignty and independence, and in order to promote a peaceful settlement of the crisis.

A brief summary of the new restrictions is set out below:

Article 2 - ban on the supply of dual use goods and technology (whether or not originating in the EU) to any natural or legal person, entity or body in Russia or for use in Russia, if those items are or may be intended, in their entirety or in part, for military end use or for a military end user.

Competent authorities may grant an authorisation where the export concerns the execution of an obligation arising from a contract or an agreement concluded before 1 August 2014.

The relevant products are those as listed in Annex 1 of EU Regulation 428/2009.

Article 3 - prior authorisation shall be required for the sale, supply, transfer or export, directly or indirectly, of technologies as listed in Annex II, whether or not originating in the EU, to any natural or legal person, entity or body in Russia or in any other country, if such equipment or technology is for use in Russia.

Annex II includes technologies suited to the oil industry for use in deep water oil exploration and production, Arctic oil exploration and production, or shale oil projects in Russia.

Competent authorities may grant an authorisation where the export concerns the execution of an obligation arising from a contract or an agreement concluded before 1 August 2014.

Article 4 – it is prohibited to provide, directly or indirectly:

technical assistance related to the goods and technology listed in the Common Military List, or related to the provision, manufacture, maintenance and use of goods included in that list, to any natural or legal person, entity or body in Russia or for use in Russia;
financing or financial assistance related to the goods and technology listed in the Common Military List, including in particular grants, loans and export credit insurance or guarantee, for any sale, supply, transfer or export of such items, or for any provision of related technical assistance to any natural or legal person, entity or body in Russia or for use in Russia;
technical assistance or brokering services related to dual-use goods and technology, or related to the provision, manufacture, maintenance and use of such goods or technology, to any natural or legal person, entity or body in Russia or for use in Russia, if the items are or may be intended, in their entirety or in part, for military use or for a military end-user;
financing or financial assistance related to the dual-use goods and technology, including in particular grants, loans and export credit insurance, for any sale, supply, transfer or export of such items, or for any provision of related technical assistance to any natural or legal person, entity or body in Russia or for use in Russia, if the items are or may be intended, in their entirety or in part, for military use or for a military end-user.

These prohibitions do not apply in respect of the execution of an obligation arising from a contract or an agreement concluded before 1 August 2014, and to the provision of assistance necessary to the maintenance and safety of existing capabilities within the EU.

Article 5 - a ban on directly or indirectly purchasing, selling, providing brokering or assistance in the issuance of, or otherwise dealing with certain transferable securities and money-market instruments with a maturity exceeding 90 days, issued after 1 August 2014.

The ban applies to relevant securities and money-market instruments issued by:

(a) a major credit institution or other major institution having an explicit mandate to promote competitiveness of the Russian economy, its diversification and encouragement of investment, established in Russia with over 50 % public ownership or control as of 1 August 2014, as listed in Annex III; or

(b) a legal person, entity or body established outside the Union whose proprietary rights are owned for more than 50 % by an entity listed in Annex III; or

(c)a legal person, entity or body acting on behalf or at the direction of an entity referred to in point (b) of this paragraph or listed in Annex III.

Annex III lists the following Russian banks:

SBERBANK

VTB BANK

GAZPROMBANK

VNESHECONOMBANK (VEB)

ROSSELKHOZBANK

A copy of the Regulation can be downloaded from the link set out below.

EU REGULATION 826 – 30 JULY 2014

Eight individuals and three entities have been added to the EU list of sanctions targets under EU Regulation 269/2014 (based on grounds of undermining or threatening the territorial integrity, sovereignty and independence of Ukraine).

A copy of the Regulation listing the names of the individuals and entities now designated can be downloaded from the link set out below.

EU REGULATION 825 30 JULY 2014

On 23 June 2014, in response to the annexation of Crimea and Sevastopol by Russia, the European Union published Regulation 692/2014, introducing trade sanctions (set out in Article 2 of the Regulation) in respect of goods originating in Crimea or Sevastopol and on the provision, directly or indirectly, of financing or financial assistance, as well as insurance and reinsurance, related to the import of such goods.

Pursuant to Regulation 825/2014, and with effect from 31 July 2014, the prohibitions as set out in Article 2 of regulation 692/2014 are widened.

New Article 2a prohibits:

the granting of any financial loan or credit and the creation of any joint venture relating to; and

the acquisition (including acquisition of shares), or extension of participation in, enterprises established in Crimea or Sevastopol engaged in

the creation, acquisition or development of infrastructure in the transport, telecommunications or energy sectors in Crimea or Sevastopol;
the exploitation of oil gas or mineral resources in Crimea or Sevastopol.

“Mineral Resources” are listed in Annex II of Regulation 825/2014.

“Exploitation” and “Refining” are also defined terms.

New Article 2b prohibits the provision, directly or indirectly, of technical assistance and brokering services related to the investment activities referred to in Article 2a.

New Article 2c prohibits:

the sale, supply, transfer, or export, directly or indirectly, of key equipment and technology as listed in Annex III to any natural or legal person, entity or body in Crimea or Sevastopol or for use in Crimea or Sevastopol.
the provision, directly or indirectly, of technical assistance or brokering services related to the key equipment and technology listed in Annex III, or related to the provision, manufacture, maintenance and use of items listed in Annex III to any natural or legal person, entity or body in Crimea or Sevastopol or for use in Crimea or Sevastopol; and
provision, directly or indirectly, of financing or financial assistance related to the key equipment and technology listed in Annex III to any natural or legal person, entity or body in Crimea or Sevastopol or for use in Crimea or Sevastopol.

These prohibitions do not apply to the execution, until 28 October 2014, of transactions required by a trade contract concluded before 30 July 2014 concerning key equipment or technology as listed in Annex III or by ancillary contracts necessary for the execution of such contracts provided that the natural or legal person, entity or body seeking to engage in such transactions, or to provide assistance to such transactions, has notified, at least 10 working days in advance, the transaction or assistance to the competent authority of the Member State in which it is established.

Annex III includes key equipment and technology related to the creation, acquisition or development of infrastructure in the following sectors: (a) transport; (b) telecommunications; (c) energy; (d) the exploitation of oil, gas and mineral reserves in Crimea and Sevastopol. The listed products include certain types of ships and associated equipment including:

mobile drilling derricks;
floating or submersible drilling or production platforms;
sea-going light vessels, fire-floats, floating cranes and other vessels, the navigability of which is subsidiary to their main function (excl. dredgers, floating or submersible drilling or production platforms; fishing vessels and warships)

A copy of this Regulation can be downloaded from the link set out below.

OFAC UKRAINE-RELATED FAQ 28 JULY 2014

OFAC has published updated FAQ regarding US persons and their ability to transact in respect of the debt and equity restrictions applicable to various Russian banks/financial institutions and energy companies – Gazprombank OAO, VEB, OAO Novatek, Rosneft. A copy of the FAQ can be downloaded from the link set out below.

EU Regulations 810/2014 and 811/2014 - 25 July 2014

On 25 July 2014 Council Implementing Regulation (EU) No. 810/2014 was published in the Official Journal of the EU so that 15 individuals and 18 entities have been added to the list of EU sanctions targets that are subject to an asset freeze. They include Donetsk People's Republic and Lugansk People's Republic, (which were targeted for asset freeze by the US with effect from 16 July 2014), and the commercial sea ports of Kerch and Sevastopol. Under the asset freeze measures, all funds and economic resources belonging to, or controlled by, the listed parties that fall under EU jurisdiction are required to be frozen, and no funds or economic resources may be made available – directly or indirectly – to or for the benefit of the listed persons by parties falling under EU jurisdiction. Parties falling within EU jurisdiction include vessels under the jurisdiction of an EU Member State, nationals (wherever located) of an EU Member State, and any legal person, entity or body inside or outside the territory of the Union, which is incorporated or constituted under the law of an EU Member State. The EU has now designated a total of 109 individuals and 20 entities pursuant to Regulations 269/2014 and 208/2014.

On the same date the EU published Council Regulation (EU) No 811/2014, broadening the grounds on which persons may be designated under Regulation 269/2014. The EU may now apply sanctions under Regulation 269/2014 to natural or legal persons who actively provide material or financial support to, or are benefiting from, the Russian decision-makers responsible for the annexation of Crimea or the de-stabilisation of Eastern-Ukraine.

Copies of the new regulations and an HMT Financial Sanctions Notice concerning EU Regulation 810/2014 can be downloaded from the links set out below.

New U.S. Sanctions Against Certain Russian Entities - 16 July 2014

On 16 July 2014, the U.S. announced a further round of sanctions measures against Russia including measures targeting entities in Russia's finance, energy and defence technology sectors.

Some of the measures include designation for asset freeze, while others prohibit specific transactions.

From 16 July 2014 U.S. persons are prohibited from providing new financing for, or otherwise dealing in new debt of longer than 90 days maturity or new equity for two Russian financial institutions - Gazprombank OAO and VEB - and two Russian energy firms - OAO Novatek and Rosneft. Novatek is reported to be Russia's largest independent natural gas producer, and Rosneft Russia's largest petroleum company and third largest gas producer. The names and aliases of these companies are published in a “Sectoral Sanctions Identification List”. This restriction also applies to entities in which the named entities own more than 50% of the shares. The US Treasury Secretary has stated in a Press Release that other persons operating within Russia’s energy sector may also be subjected to targeted sanctions;

8 Russian arms firms are designated pursuant to Executive Order 13661 for involvement in the production of a range of material including small arms, mortar shells, and tanks;
Luhansk People’s Republic, Donetsk People’s Republic, and Aleksandr Borodai (self-declared prime minister of the Donetsk People’s Republic) are designated pursuant to Executive Order 13660 for threatening the peace, security, stability, sovereignty, or territorial integrity of Ukraine;
Feodosiya Enterprises, an oil terminal in the Crimean peninsula, is designated for asset freeze pursuant to Executive Order 13660. This facility had been controlled by the Ukrainian state-controlled gas company Naftogaz but was taken over and nationalised by the separatist Crimean parliament which the U.S. does not recognise;
4 Russian government officials are designated pursuant to Executive Order 13661 - Sergey Beseda - a Russian Federal Security Service official, Oleg Savelyev - Russia’s Minister for Crimean Affairs, Sergei Neverov - Deputy Chairman of the State Duma of the Russian Federation, and Igor Shchegolev - an aide to President Vladimir Putin.

Any assets of those entities and individuals designated pursuant to Executive Orders 13660 and 13661 that are or come within U.S. jurisdiction must be frozen, and transactions by U.S. persons or within the United States involving these entities are generally prohibited. These Executive Orders also provide that any person, including a non-U.S. person, that has provided financial, material, or technological support for, or goods or services to or in support of a person designated pursuant to these Orders, may also be subject to U.S. sanctions. It is not clear whether payment for or use of the shipping facilities operated by Feodosiya Enterprises would amount to material assistance, but in the absence of clear official guidance Members should exercise extreme caution if considering using these facilities.

Copies of a related US Treasury Press Release and FAQ document, and the "Sectoral Sanctions Identification List" can be downloaded from the links set out below.

15 JULY 2014 - COUNCIL REGULATION (EU) No 692/2014 of 23 June 2014 concerning restrictions on the import into the Union of goods originating in Crimea or Sevastopol (“the Regulation”)

In response to the annexation of Crimea and Sevastopol by Russia, the European Union has published Regulation 692/2014 of 23 June 2014, introducing trade sanctions in respect of goods originating in Crimea or Sevastopol and on the provision, directly or indirectly, of financing or financial assistance, as well as insurance and reinsurance, related to the import of such goods.

Prohibitions

1) Article 2 of Regulation 692/2014 provides that it is now prohibited:

To import into the European Union goods originating in Crimea or Sevastopol.
To provide, directly or indirectly, financing or financial assistance as well as insurance and reinsurance related to the import of goods originating in Crimea or Sevastopol.

2) For the purpose of the Regulation “goods originating in Crimea or Sevastopol” are defined as goods which are wholly obtained in Crimea or in Sevastopol or which have undergone their last substantial transformation there in accordance with Articles 23 and 24 of Regulation EEC 2913/92 dated 12 October 1992. Article 23 of Regulation 2913/92 provides that “goods originating in a country” shall be those wholly obtained or produced in that country and the expression “goods wholly obtained in a country” means:

(a) mineral products extracted within that country;

(b) vegetable products harvested therein;

(d) products derived from live animals raised therein;

(e) products of hunting or fishing carried on therein;

(f) products of sea-fishing and other products taken from the sea outside a country's territorial sea by vessels registered or recorded in the country concerned and flying the flag of that country;

(g) goods obtained or produced on board factory ships from - the products referred to in subparagraph (f) originating in that country, provided that such factory ships are registered or recorded in that country and fly its flag;

(h) products taken from the seabed or subsoil beneath the seabed outside the territorial sea provided that that country has exclusive rights to exploit that seabed or subsoil;

(i) waste and scrap products derived from manufacturing operations and used articles, if they were collected therein and are fit only for the recovery of raw materials;

(j) goods which are produced therein exclusively from goods referred to in subparagraphs (a) to (i) or from their derivatives, at any stage of production.

3) Article 24 of Regulation EEC 2913/92 provides that goods whose production involved more than one country shall be deemed to originate in the country where they underwent their last, substantial, economically justified processing or working in an undertaking equipped for that purpose and resulting in the manufacture of a new product or representing an important stage of manufacture.

4) On the face of it the new Regulation comprehensively limits trade activities from Crimea and Sevastopol to the European Union and Members who are subject to the scope of application (see paragraphs 7, 8 and 9 below) are advised to seek advice before fixing contracts for voyages from Crimea and Sevastopol. In light of the prohibition on the provision of insurance and reinsurance, and in order to protect their mutual membership, the Clubs in the International Group must continue to rely on existing cessation of cover / exclusion provisions in their Rules and terms of entry to ensure that such Clubs do not provide insurance or reinsurance for sanctioned activities, and that the Clubs do not participate knowingly and intentionally in activities the effect of which would or could circumvent the sanctions prohibitions.

5) Article 6 of the Regulation prohibits the payment of claims in respect of contracts or transactions (including claims under guarantees or involving indemnities) which are prohibited by the Regulation if they are made by designated persons, entities or bodies listed in Council Regulation 269/2014 dated 17^th March 2014; persons, entities or bodies acting through or on behalf of designated entities; persons, entities or bodies who have been found by a European Union Member State competent authority to have infringed the prohibitions in Regulation 692/2014; or if claims relate to the import of goods originating in Crimea or Sevastopol.

Exemptions

6) Article 3 of the Regulation stipulates that the prohibitions will not apply to:

a) trade contracts concluded before 25 June 2014 or to ancillary contracts necessary for their execution, so long as these contracts are executed by 26 September 2014, and provided that persons, entities or bodies seeking to perform such contracts have given a minimum of 10 days’ advance notice of the relevant activity or transaction to their EU Member State Competent Authority.

b) goods originating in Crimea or Sevastopol which have been made available to the Ukrainian authorities for examination, for which compliance with the conditions conferring entitlement to preferential origin has been verified and for which a certificate of origin has been issued in accordance with Regulation (EU) No 978/2012 and Regulation (EU) No 374/2014 or in accordance with the EU-Ukraine Association Agreement.

Scope of Application

7) Article 10 of the Regulation provides that it shall apply within the territory of the European Union; on board any vessel under the jurisdiction of a European Union Member State; to all nationals (wherever located) of a European Union Member State; to any legal person, entity or body inside or outside the territory of the Union, which is incorporated or constituted under the law of a European Union Member State.

8) The Regulation applies also to any legal person, entity or body in respect of any business done in whole or in part in the European Union.

9) The broad scope of application now makes it unlawful for European Union nationals, EU domiciled Members, and EU Member State flagged or managed vessels to perform prohibited trade activities. Furthermore the prohibitions on the provision of insurance and reinsurance will prevent P&I clubs domiciled in the European Union from providing P&I insurance to any vessel or Member of whatever nationality engaged in prohibited trade activities. The sanctions for prohibited activities will also apply to non-EU domiciled Members and Clubs, to the extent that the prohibited activity and any insurance provided constitutes business done in whole or in part in the EU. All International Group Club rules contain exclusions from cover in relation to trades or activities for which it is unlawful to provide insurance by reason of sanctions.

10) The Regulation entered force on 25 June 2014.

All other clubs in the International Group have issued a similar notice.

Copies of the Regulation, and an associated European Council press release, can be downloaded from the links set out below.

UNITED KINGDOM - The Ukraine (European Union Financial Sanctions) Regulations 2014 (effective 6 March 2014) and The Ukraine (European Union Financial Sanctions) (No.2) Regulations 2014 ( effective 18 March 2014)

EU Regulations 208/2014 of 5 March 2014 and 269/2014 of 17 March 2014 implemented restrictive measures in respect of the on-going political instability in Ukraine, including:

• freezing of funds and economic resources belonging to, or owned, held or controlled by, a designated person;
• making funds or economic resources available to or for the benefit of a designated person

if a person subject to the Regulation(s) knows, or has reasonable cause to suspect, that he is dealing with such funds or economic resources.

Both EU Regulations include anti-avoidance provisions, such that it is also prohibited to participate, knowingly and intentionally, in activities the object or effect of which is to circumvent the restrictive measures.

Both also provide that Member States are required to lay down rules on penalties applicable to infringements of the provisions of the Regulations, and to take all measures necessary to ensure that they are implemented. Such penalties must be effective, proportionate and dissuasive.

The penalties applicable to persons subject to UK law are set out in The Ukraine (European Union Financial Sanctions) Regulations 2014 (applicable to offences under EU Regulation 208/2014) and The Ukraine (European Union Financial Sanctions) (No.2) Regulations 2014 (applicable to offences under EU Regulation 269/2014). The UK regulations came into effect in the United Kingdom on 6 March and 18 March 2014 respectively. UK law will apply in respect of offences committed by conduct wholly or partially outside the UK committed by

(a) a UK national; or
(b) a body incorporated or constituted under the law of any part of the UK.

Pursuant to the UK Regulations, a person guilty of an offence is liable:

• on conviction on indictment to imprisonment for a term not exceeding two years or to a fine or both.

• on summary conviction, to imprisonment for a term not exceeding three months or to a fine not exceeding the statutory maximum or to both.

If an offence is committed by a body corporate with the consent or connivance of any director, manager, secretary or other similar officer of the body corporate, or any person purporting to act in any such capacity, or if such offence is attributable to the neglect of any such person, then that person, as well as the company, shall also be guilty of the offence.

Copies of the relevant EU and UK regulations can be downloaded from the links set out below.

EU COUNCIL DECISION 2014/265/CFSP of 12 May 2014 AND COUNCIL REGULATION 476/2014 of 12 May 2014

Pursuant to the Decision, the EU Council has broadened the legal basis for EU restrictive measures to be implemented under EU Regulation 269/2014 in response to the on-going situation in Ukraine. It has added the possibility of targeting persons associated with actions and policies undermining stability or security in Ukraine (previously, EU Regulation 269/2014 required a designated person to be himself / herself "responsible" for such actions) as well as with obstructing the work of international organisations in Ukraine, and entities linked to such persons. The Decision also introduces a legal basis for asset freezes against legal persons, entities or bodies in Crimea or Sevastopol whose ownership has been transferred contrary to Ukrainian law, or legal persons, entities or bodies which have benefited from such a transfer.

Pursuant to Regulation 476/2014, 13 individuals and 2 entities have been added to the list of asset freeze targets designated on the basis of the broader designation criteria set out above. The 2 entities are gas and oil companies whose assets are said to have been appropriated by the new Crimean government. Copies of the Decision, Regulation, and an explanatory notice published by HMT, can be downloaded from the links set out below.

List of additional entities:

1. PJSC CHERNOMORNEFTEGAZ On 17.03.2014 the ‘Parliament of Crimea’ adopted a resolution declaring the appropriation of assets belonging to Chernomorneftegaz enterprise on behalf of the ‘Republic of Crimea’. The enterprise is thus effectively confiscated by the Crimean ‘authorities’.

2. FEODOSIA On 17.03.2014 the ‘Parliament of Crimea’ adopted a resolution declaring the appropriation of assets belonging to Feodosia enterprise on behalf of the ‘Republic of Crimea’. The enterprise is thus effectively confiscated by the Crimean ‘authorities’.

List of additional persons:

1. Vyacheslav Viktorovich VOLODIN Born 4 February 1964 in Alekseevka, Saratov region. First Deputy Chief of Staff of the Presidential Administration of Russia. Responsible for overseeing the political integration of the annexed Ukrainian region of Crimea into the Russian Federation.

2. Vladimir SHAMANOV Born 15.02.1954 in Barnaul. Commander of the Russian Airborne Troops, Colonel-General. In his senior position holds responsibility for the deployment of Russian airborne forces in Crimea.

3. Vladimir Nikolaevich PLIGIN Born 19.05.1960 in Ignatovo, Vologodsk Oblast, USSR. Chair of the Duma Constitutional Law Committee. Responsible for facilitating the adoption of legislation on the annexation of Crimea and Sevastopol into the Russian Federation.

4. Petr Grigorievich JAROSH Acting Head of the Federal Migration Service office for Crimea. Responsible for the systematic and expedited issuance of Russian passports for the residents of Crimea.

5. Oleg Grigorievich KOZYURA Born 19.12.1962 in Zaporozhye Acting Head of the Federal Migration Service office for Sevastopol. Responsible for the systematic and expedited issuance of Russian passports for the residents of Crimea.

6. Viacheslav PONOMARIOV Self-declared mayor of Slaviansk. Ponomarev called on Vladimir Putin to send in Russian troops to protect the city and later asked him to supply weapons. Ponomarev's men are involved in kidnappings (they captured Ukrainian reporter Irma Krat and Simon Ostrovsky, a reporter for Vice News, both were later released, they detained military observers under OSCE Vienna Document).

7. Igor Mykolaiovych BEZLER Born in 1965 One of the leaders of self-proclaimed militia of Horlivka. He took control of the Security Service of Ukraine's Office in Donetsk region building and afterwards seized the Ministry of Internal Affairs' district station in the town of Horlivka. He has links to Ihor Strielkov under which command he was involved in the murder of Peoples' Deputy of the Horlivka's Municipal Council Volodymyr Rybak according to the SBU.

8. Igor KAKIDZYANOV One of the leaders of armed forces of the self- proclaimed ‘Donetsk People's Republic’. The aim of the forces is to ‘protect the people of Donetsk People's Republic and territorial integrity of the republic’ according to Pushylin, one of the leaders of the ‘Donetsk People's Republic’.

9. Oleg TSARIOV Member of the Rada. Publicly called for the creation of the Federal Republic of Novorossia, composed of South Eastern Ukrainian regions.

10. Roman LYAGIN Head of the ‘Donetsk People's Republic’ Central Electoral Commission. Actively organised the referendum on 11 May on the self-determination of the ‘Donetsk People's Republic’.

11. Aleksandr MALYKHIN Head of the ‘Lugansk People's Republic’ Central Electoral Commission. Actively organised the referendum on 11 May on the self-determination of the ‘Lugansk People's Republic’.

12. Natalia Vladimirovna POKLONSKAYA Born 18.03.1980 in Eupatoria. Prosecutor of Crimea. Actively implementing Russia's annexation of Crimea.

13. Igor Sergeievich SHEVCHENKO Acting Prosecutor of Sevastopol. Actively implementing Russia's annexation of Sevastopol.

U.S. UKRAINE-RELATED SANCTIONS REGULATIONS - 8 MAY 2014

The on-going crisis in Ukraine has resulted in a rapid expansion of sanctions measures implemented by the US, having implications for US and non-US companies in respect of existing and prospective business involving Ukraine and/or Russia.

To date, the US has issued three Executive Orders: EO 13660 dated 10 March 2014, EO 13661 dated 17 March 2014, and EO 13662 dated 20 March 2014. In essence, these EOs authorise the imposition of asset freezes and visa bans against a broad range of individuals and entities including:

• officials of the Russian government;
• those operating in sectors of the Russian economy designated by the U.S. government, such as financial services, energy, metal and mining, engineering, and defence/arms or related materials;
• those involved in the destabilization of Ukraine, misappropriation of state assets of Ukraine, or asserting authority over regions of Ukraine without authority of the Ukrainian government;
• those contributing to corruption in the Russian Federation.

To date, the US has identified 45 individuals and 19 companies as sanctions targets (“Specially Designated Nationals” (“SDNs”)), including a number of banks and companies engaged in gas and oil transportation, and construction companies involved in oil, gas and petrochemical projects.

On 8 May 2014, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) published a set of regulations (“Ukraine-Related Sanctions Regulations”) to implement the 3 executive orders. These Regulations set out various definitions of terms included in the executive orders, and provide interpretive guidance. OFAC indicates that a more comprehensive set of regulations, which may include additional interpretive and definitional guidance and additional general licences and statements of licencing policy, will be published in due course to supplement these Regulations.

Although U.S. sanctions generally only bind persons subject to US jurisdiction, non-US persons that materially assist a sanctioned entity by providing financial, material, or technological support or goods or services may also potentially be subject to sanction by the U.S.. Given the ever-increasing risk attached to trade involving Ukraine and Russia, it is important that Members continue to exercise due diligence to ensure that they do not enter into commercial relationships with designated companies, or companies that are owned or controlled by a designated entity or individual.

We are grateful to Mr Jonathan Epstein of the Washington office of law firm Holland & Knight, for permitting us to publish on the Steamship Mutual website a copy of their Alert entitled “Coping with Rapidly Expanding U.S. Sanctions on Russia”, which provides a clear summary of US sanctions measures enacted to date in respect of Ukraine and Russia, and how they impact on US and non-US persons.

Copies of the Alert, and the Ukraine-Related Sanctions Regulations can be downloaded from the links set out below.

29 APRIL - FURTHER EU AND US SANCTIONS

The EU and US have extended their respective sanctions measures against Russia and Ukraine in response to continuing unrest in certain areas of Ukraine, citing a failure by Russia and Ukrainian separatists to abide by the terms of the Geneva Joint Statement (issued by Russia, Ukraine, the EU and US) following talks held in Geneva on 17 April 2014, aimed at de-escalating the situation in Ukraine.

US MEASURES

On 28 April 2014 the US announced the designation of 7 Russian government officials, including members of President Putin's inner circle, and 17 entities pursuant to Executive Order 13661. E.O. 13661 authorises sanctions on, amongst others, officials of the Russian Government and any individual or entity that is owned or controlled by, that has acted for or on behalf of, or that has provided material or other support to, a senior Russian government official.

Newly designated individuals include Dmitry Kozak, Deputy Prime Minister of the Russian Federation, and Igor Sechin, President and Chairman of the Management Board of Rosneft.

The entities newly designated by the US include companies engaged in gas and oil transportation, construction companies involved in oil, gas and petrochemical projects, and banks associated with Bank Rossiya which itself was designated on March 20, 2014 pursuant to E.O. 13661 for acting for or on behalf of or materially assisting, sponsoring, or providing financial, material, or technological support for, or goods and services to or in support of, a senior official of the Government of the Russian Federation.

The US Departments of Commerce and State have concurrently announced a tightened policy to deny licence applications for the export of high-technology items that could contribute to Russia’s military capabilities.

EU MEASURES

With effect from 29 April 2014, the EU has amended Regulation 269/2014 to include the names of 15 additional individuals targeted for asset freeze and visa bans by the EU by reason of their involvement in activities which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine.

The newly-designated individuals are:

BELAVENTSEV, Oleg, Yevgenyvich; BOLOTOV, Valeriy; GENNADEVICH, Tsyplakov, Sergey; GERASIMOV, Valery, Vasilevich; KOVATIDI, Oleg, Fedorovna; KOZAK, Dmitry, Nikolayevich; MENYAILO, Sergei, Ivanovich; NEVEROV, Sergei, Ivanovich; PROKOPIV, German; PURGIN, Andriy; PUSHYLIN, Denys; SAVELYEV, Oleg, Genrikhovich; SERGUN, Igor, Dmitrievich; SHVETSOVA, Ludmila, Ivanovna; STRELKOV, Igor.

A total of 48 individuals are now sanctioned by the EU pursuant to EU Regulation 269/2014.

22 individuals are targeted for asset freeze under EU Regulation 208/2014 for the misappropriation of Ukrainian State funds and human rights abuses.

Broader US and EU sanctions targeting specific sectors of the Russian economy remain a possibility.

Copies of an associated HMT Financial Sanctions Notice and a White House press release commenting on these developments can be downloaded from the links set out below.

21 MARCH 2014 - FURTHER EU DESIGNATIONS

The EU has announced the designation of 12 more individuals for asset freeze pursuant to EU Regulation 269/2014.

All funds or economic resources of these individuals must be frozen. The latest designations target Russian and Crimean politicians and military personnel. A copy of an associated HMT advisory notice can be downloaded from the link set out below.

20 MARCH 2014 - EXECUTIVE ORDER 13662 20 MARCH 2014

Further to Executive Orders 13660 and 13661 passed by President Obama on 10 and 17 March respectively, a further Executive Order has been issued in response to actions and policies of the Government of the Russian Federation, including its purported annexation of Crimea and its use of force in Ukraine, and other actions and policies which continue to undermine democratic processes and institutions in Ukraine, threaten its peace, security, stability, sovereignty, and territorial integrity, and contribute to the misappropriation of its assets.

Executive Order 13662 is specifically targeted at Russia. It is loosely worded, and would appear to open the door to broader measures against many sectors of the Russian economy, but specifically energy and raw materials exports. It enables the imposition of an asset freeze and a visa ban against any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:

(i) to operate in such sectors of the Russian Federation economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State, such as financial services, energy, metals and mining, engineering, and defence and related material;

(ii) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person whose property and interests in property are blocked pursuant to the EO; or

(iii) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to the EO.

20 MARCH 2014 - FURTHER DESIGNATIONS PURSUANT TO EXECUTIVE ORDER 13661

The US has designated 20 individuals (mainly Russian) and 1 entity - BANK ROSSIYA (f.k.a. AKTSIONERNY BANK RUSSIAN FEDERATION) pursuant to EO 13661 which was issued on 17 March 2014 as a response to the deployment of Russian Federation military forces in the Crimea region of Ukraine, and other action and policies which are said to undermine democratic processes and institutions in Ukraine, threaten its peace, security, stability, sovereignty, and territorial integrity, and contribute to the misappropriation of its assets.

Bank Rossiya is reported to be the 5^th largest bank in Russia. As an SDN, any US dollar transactions to or through this bank would now be blocked.

UKRAINE SANCTIONS UPDATE 17 MARCH 2014

In response to the growing crisis in Ukraine, the EU and US have taken steps to impose sanctions on various persons regarded as being responsible for human rights violations in Ukraine, undermining the democratic processes and institutions in Ukraine, threatening Ukraine’s peace, security, stability, sovereignty, and territorial integrity, and contributing to the misappropriation of Ukraine’s assets. The scope and impact of the measures are described in detail further below. At the present time, the measures are limited to the imposition of asset freezes and visa bans against various Ukrainian and Russian individuals.

The practical effect of designation under the two EU regulations and the two US executive orders is similar - persons subject to EU / US law are required to freeze the property of designated persons, and are prohibited from making funds or economic resources available, directly or indirectly, to or for the benefit of such designated persons.

Members subject to EU and/or US jurisdiction and involved in trade with Ukraine or Russia are advised to check the names of their business counter parties against EU and US designation lists. Many of the individuals that are currently subject to EU and US asset freeze are likely to have business interests. If there is a risk that a business counter party could be connected to a designated person or under their direction or control, beneficial ownership may need to be investigated by asking for further details including:
• identity of all directors and shareholders, including percentage shareholding;
• ultimate beneficial owners;
• articles of incorporation;
• share register of the entity.

Members are advised to seek legal advice if they have concerns about any of the individuals, companies or other entities connected with their trades involving Ukraine or Russia.

Members not subject to either EU or US jurisdiction may nevertheless encounter problems related to receipt/payment of funds from/to designated parties. Members are reminded that P&I cover is unlikely to be available for liabilities arising out of trade / contracts involving designated parties, or where the employment of vessels contravenes sanctions regulations.

EU REGULATION 208/2014 – 5 MARCH 2014
Pursuant to EU Regulation 208/2014, and with effect from 6 March 2014, the EU has imposed a freeze on all funds and economic resources belonging to, owned, held or controlled by designated persons/entities/or bodies (as listed in Annex I). Former President of Ukraine Viktor Yanukovych and 17 other Ukrainian individuals, primarily ministers and other government officials, are currently listed in Annex I. Regulation 208/2014 is targeted at persons identified as being responsible for the misappropriation of Ukrainian State funds and persons responsible for human rights violations in Ukraine, and natural or legal persons, entities or bodies associated with them.

Pursuant to the Regulation, it is prohibited for any funds or economic resources to be made available, directly or indirectly to or for the benefit of the designated persons. This prohibition is subject to a limited exception that permits financial or credit institutions to credit frozen accounts with funds transferred by third parties to the account of a designated person, although any additions to those accounts must also be frozen. The financial or credit institution must inform the relevant competent authority about any such transaction.

Further exceptions apply in respect of payments into the frozen accounts of designated persons where those payments relate to:
(a) interest or other earnings on those accounts;
(b) payments due under contracts/agreements/obligations that were concluded or arose before the date on which the designation occurred; or
(c) payments due under legal decisions in a Member State or enforceable in the Member State.

All such funds must also be frozen.

It is also expressly prohibited to participate knowingly and intentionally in activities whose object or effect is to circumvent the prohibitions outlined above.

The Regulation provide for derogations from the prohibitions in certain circumstances, subject to prior authorisation from the relevant competent authority, such as where the funds are:
• necessary to satisfy the basic needs of a designated person (such as payments for food, housing, medical needs);
• used exclusively for the payment of reasonable professional fees/legal expenses;
• used exclusively for the payment of fees or service charges for the routine holding or maintenance of the frozen funds/economic resources;
• necessary to satisfy certain legal claims against a designated person/entity/body;
• payments due by designated persons under contracts/agreements which were concluded by, or under an obligation that arose, prior to the date on which the designation occurred.

EU REGULATION 269/2014 – 17 MARCH 2014

EU Regulation 269/2014, with effect from 17 March 2014, targets persons responsible for actions which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine, including actions on the future status of any part of the territory which are contrary to the Ukrainian constitution, and natural or legal persons, entities or bodies associated with them. The substance of Regulation 269/2014 is similar to Regulation 208/2014 – it (1) imposes a freeze on all funds and economic resources belonging to, owned, held or controlled by designated persons/entities/or bodies (as listed in Annex I to the Regulation) and (2) prohibit funds or economic resources being made available, directly or indirectly to or for the benefit of such designated persons. It provides for identical derogations as are set out in Regulation 208/2014.

Annex I of Regulation 269/2014 currently lists 21 individuals, including those elected to government and military positions in Crimea following the disputed independence referendum held on 16 March 2014, members of the Federation Council of the Russian Federation and the Duma of the Russian Federation, and members of the military forces of the Russian Federation.

EU Member States have separately suspended export licences on equipment which might be used for internal repression.

US DEVELOPMENTS – EXECURIVE ORDER 13660 10 MARCH 2014, & EXECUTIVE ORDER 13661 17 MARCH 2014

On 10 March 2014 the US President issued Executive Order 13660 as a response to the actions and policies of persons described as asserting governmental authority in the Crimean region without the authorization of the Government of Ukraine, and other actions and policies that undermine democratic processes and institutions in Ukraine, threaten its peace, security, stability, sovereignty, and territorial integrity, and contribute to the misappropriation of its assets.

EO 13660 empowers the blocking of property and imposition of visa bans on persons determined by the Secretary of the Treasury, in consultation with the Secretary of State:

(i) to be responsible for or complicit in, or to have engaged in, directly or indirectly, any of the following:
(A) actions or policies that undermine democratic processes or institutions in Ukraine;
(B) actions or policies that threaten the peace, security, stability, sovereignty, or territorial integrity of Ukraine; or
(C) misappropriation of state assets of Ukraine or of an economically significant entity in Ukraine;
(ii) to have asserted governmental authority over any part or region of Ukraine without the authorization of the Government of Ukraine;
(iii) to be a leader of an entity that has, or whose members have, engaged in any activity described in (i) or (ii) above or of an entity whose property and interests in property are blocked pursuant to the EO;
(iv) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any activity described in (i) or (ii) above or any person whose property and interests in property are blocked pursuant to the EO; or
(v) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to the EO.

On 17 March, the following designations were made pursuant to the powers vested under Executive Order 13660:

Sergey Aksyonov – described as a Crimea-based separatist leader, now claiming to be the Prime Minister of Crimea;
Vladimir Konstantinov – described as a Crimea-based separatist leader;
Viktor Medvedchuk - leader of Ukrainian Choice, described as a group which has been stirring conflict in Kherson, a province to the north of Crimea. Medvedchuk is described as a friend and adviser to Russian President Vladimir Putin;
Viktor Yanukovych - Former President of Ukraine.

On 17 March 2014 the US President issued Executive Order 13661 as a response to the deployment of Russian Federation military forces in the Crimea region of Ukraine, and other action and policies which are said to undermine democratic processes and institutions in Ukraine, threaten its peace, security, stability, sovereignty, and territorial integrity, and contribute to the misappropriation of its assets.

With immediate effect, EO 13661 imposes an asset freeze on the following persons:

(i) the persons listed in the Annex to the EO; and
(ii) persons determined by the Secretary of the Treasury, in consultation with the Secretary of State:
(A) to be an official of the Government of the Russian Federation;
(B) to operate in the arms or related material sector in the Russian Federation;
(C) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly:
(1) a senior official of the Government of the Russian Federation; or
(2) a person whose property and interests in property are blocked pursuant to the EO; or
(D) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of:
(1) a senior official of the Government of the Russian Federation; or
(2) a person whose property and interests in property are blocked pursuant to the EO.

Persons listed in the Annex are additionally subject to a visa ban prohibiting their entry into the United States.

In EO 13661, “person” is defined as “an individual or entity”, the term “entity” defined as “a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization”, and "Government of the Russian Federation" defined as “the Government of the Russian Federation, any political subdivision, agency, or instrumentality thereof, including the Central Bank of the Government of the Russian Federation, and any person owned or controlled by, or acting for or on behalf of, the Government of the Russian Federation”. The following seven individuals have been designated pursuant to EO 13661:

• Vladislav Surkov: Presidential aide to Russian President Vladimir Putin;
• Sergey Glazyev: Presidential adviser to Russian President Vladimir Putin;
• Leonid Slutsky: State Duma deputy, where he is Chairman of the Duma Committee on CIS Affairs, Eurasian Integration, and Relations with Compatriots;
• Andrei Klishas: Member of the Council of Federation of the Federal Assembly of the Russian Federation and Chairman of the Federation Council Committee of Constitutional Law, Judicial, and Legal Affairs, and the Development of Civil Society;
• Valentina Matviyenko: Head of the Federation Council;
• Dmitry Rogozin: Deputy Prime Minister of the Russian Federation;
• Yelena Mizulina: State Duma Deputy.

The situation in Ukraine remains unstable. There is a real possibility of further sanctions being imposed, although it is not clear at this time whether those would extend to trade prohibitions.

Copies of the relevant EU regulations and US executive orders, and various fact sheets and press releases issued by the EU, HMT and US can be downloaded from the links set out below.