Due to sanctions, business activity with Russia and Belarus may no longer be possible now and in the foreseeable future. Even in specific cases in which transactions are permitted, both enterprises and banks have to perform additional inspections.
Effective sanctions from the European Union are critical to restore peace in Ukraine. On top of that, considering that breach of sanctions is a serious crime, which is something both businesses and banks are responsible for, Citadele Bank has adopted additional measures for sanction breach risk prevention. Additionally, Citadele Bank has halted all transactions from legal persons to and from Russia and Belarus, except for specific cases when transactions are individually coordinated with the bank in advance, BNN was told by Citadele Bank.
«Two months have passed since the start of Russia’s war against Ukraine, and this whole time Ukrainian nation has suffered unimaginable suffering and loss from international crimes committed by Russia. The sanctions against Russia and Belarus, which supports the country, have had a dramatic impact on the everyday of Baltic entrepreneurs that work with those two countries. We have to keep in mind that trade with Russia and Belarus restriction-wise is similar to cooperation with North Korea. This is why processing transactions with these countries requires additional time. In some cases it takes more than a week,» says Citadele Bank’s Board member for compliance affairs Uldis Upenieks.
To help entrepreneurs find they way and remind them that cooperation with Russia and Belarus is technically still possible, the bank’s sanction experts list the main restrictions. If the business has ties to any prohibited sectors, entrepreneurs are invited to study restrictions in place by looking at EU regulations. Certain restrictions have transition periods.
Russia
Cooperation is prohibited with 1 093 private and 80 legal persons, as well as legal persons owned or managed by those persons. Finances of those persons mus be frozen. Persons subjected to international sanction, but not legal persons owned or managed by them can be found here.
Commercial relations with Crimea, Sevastopol, Luhansk and Donetsk territories occupied by Russia are also prohibited.
It is also prohibited to directly or indirectly export technologies to Russia, as well as provide technical, financial or other kinds in relation to: dual-use goods and technology, as well as goods and technology that may be useful in the Russian defence and security sectors and oil refining and liquefied natural gas sectors. This also applies to goods and technologies used in aviation and space industries, goods and technologies used in navigation in the sea, as well as iron and steel products (import and export). The same applies to luxury goods worth more than EUR 300 per unit, including clothes, cosmetic products and alcohol, as well as mobile phones worth more than EUR 750 per unit.
It is prohibited to export to Russia a wide list of goods, as detailed in EU regulation Nr. 833/2014 XXIII annex, such as roses, rhododendrons, chalk, clay, various chemicals, paints, pigments, paper, clothes (used included), textiles, various equipment.
As for imports from Russia, countries are prohibited from importing stole coal, as well as a wide list of goods listed in EU regulation Nr. 833/2014 XXI annex, such as caviar, wood and wood products, cement and concrete products, fertilizers, glass fibres, furniture and furniture parts, etc.
EU member states are also not allowed to invest in Russia’s energy sector, as well as increase shares in such companies and invest or participate in projects co-financed by Russia’s direct investment fund.
All aircraft registered in Russia and owned or managed by Russian legal or private persons are prohibited from using EU air space and airfield.
Several Russian media outlets are not allowed to broadcast programmes within the EU.
Payments are also prohibited to be transferred to Russian state companies and their subsidiaries listed in EU regulation NR. 2022/428 XIX annex.
Transactions with multiple Russian banks, including VTB, Otkritie, Novikombank, Sovcombank, are also prohibited. In accordance with US sanctions, no transactions are allowed with Sberbank either.
It is also prohibited to provide lending services to any Russian legal or private persons who do not have residence permits in the EU. Multiple restrictions are also imposed on the use of Russia’s financial system and financial instruments.
Russian ships, including yachts and other leisure vessels sailing under Russia’s flag are not allowed to enter EU sea ports. This restriction also applies to ships that changed their flags after 24 February 2022.
Russian road transport operators are prohibited from importing goods to the EU, transit included.
Belarus
Cooperation with 183 private and 26 legal persons and their owned and managed legal persons is prohibited. Financial resources of these persons have to be frozen. Persons under sanctions, but not legal persons or property owned by them can be found here.
It is prohibited to directly or indirectly export to Belarus dual-use goods and technology, as well as goods and technology that could contribute to the expansion of Belarus’ military and technological capabilities or the development of its defence and security sector. This includes equipment and technologies that can be used for internal repressions, goods that can be used in the production of tobacco, as well as various equipment and mechanisms.
It is also prohibited to directly or indirectly import from Belarus the following products: minerals, potassium fertilizers, lumber and wooden productions, cement goods, iron and steel products and different rubber products.
All aircraft registered in Belarus or owned by legal or private persons in Belarus are prohibited from entering EU airspace and airfields.
Payment transactions with multiple Belarusian banks are also prohibited. This includes Belarusbank, Belinvestbank (Белинвестбанк), Belagroprombank (Белагропромбанк), Bank Dabrabyt.
Belarusian road transport operators prohibited from carrying goods to the EU, transit included.
The sanctions imposed on legal persons founded in Russia and Belarus, as well as Russian and Belarusian citizens and residents who do not have a residence permit to reside in EU member states or European economic zone (Iceland, Lichtenstein or Norway) and Switzerland are a separate block. These persons, with certain exceptions, are not allowed to have their deposits in a single credit institution exceed EUR 100 000. It is also prohibited for them to purchase securities released after 12 April 2022. In addition, persons with ties to Russia face restrictions in regards to participation in public procurements.
Five steps in following sanction restrictions for entrepreneurs
Considering the wide restrictions and to prevent sanction breach risks within their commercial activities, Citadele Bank invites businessmen to take five steps towards complying with sanctions, check EU regulations on imported and exported products, and study information available on the website of Finance Latvia Association (here).
Procurement of prohibited Russian and Belarusian goods using third countries is considered circumvention of sanctions, which is a criminal offence.
In response to sanctions, Russia has imposed multiple restrictions that affect the ability of EU entrepreneurs to do business in the country and receive payments for services rendered.