As part of K2 Integrity's commitment to monitor and provide insights into the evolving global sanctions campaign against
Recent Developments Related to Sanctions Against Russia
Since the last update, various authorities have undertaken sanctions-related actions against
EU actions include:
-
On 3 June, the EU approved a sixth round of sanctions against
- Ban on the purchase, import, or transfer of crude oil and certain petroleum products from
Russia to the EU. The phasing out of Russian oil will occur over six months for crude oil to approximately eight months for other refined petroleum; - Removal of
Sberbank ,Credit Bank of Moscow ,Russian Agricultural Bank , andBelarusian Bank for Development and Reconstruction from the SWIFT international payment system; - Expansion of the list of persons and entities, identified by the EU, for export restrictions regarding dual-use goods and technology;
- Suspension of broadcasting activities on several Russian state-owned broadcasting companies; and
- Asset freezing sanctions on individuals responsible for war crimes in
Ukraine . - On 24 May, OFAC announced that General License ("GL") 9C would not be renewed, expiring at
12:01 a.m. EDT on 25 May. GL 9C — issued pursuant to the Russian Harmful Foreign Activities Sanctions Regulations — had authorized all transactions necessary to the receipt of interest, dividend, or maturity payments in connection with previously issued debt or equity of theCentral Bank , theNational Wealth Fund , or theMinistry of Finance of Russia . Under this authorization,U.S. banks had been permitted to process these payments for bothU.S. and non-U.S. investors. - On 19 May,
U.S. Treasury SecretaryJanet Yellen — in discussions with G7 leaders — announcedU.S. officials were considering imposing secondary sanctions on third parties who continue to purchase Russian oil.3 While there are no details regarding the scope of these potential prohibitions, Yellen's comments surrounding secondary sanctions againstRussia's energy sector suggestthe United States wants to deterRussia from re-routing oil to other major importers, such asChina andIndia . If imposed, secondary sanctions would target third parties for transacting with designated Russian persons, essentially cutting off third party persons who continue to supportRussia from the international financial system. - GL 9C had been utilized by the Russian government to make international bond payments in
U.S. dollars as bond payments were due and in accordance with the terms of the bonds. With the expiration of the GL,U.S. financial institutions will not be permitted to process such payments, forcingRussia into a technical default for all bonds that do not contain an alternative currency provision. The bondholders may either renegotiate the terms of the bonds or choose to trigger the default and pursue various ways of collecting the funds due. According to Reuters,Russia has a total of 15 international bonds outstanding with a face value of around$40 billion — half of which are estimated to be held by investors outside ofRussia .5
-
Through the KleptoCapture taskforce, the
Key Implications (Public, Private, and Non-Profit Sectors)
-
Top Russian government officials have stated their interest in finding non-EU importers of Russian oil.4 Those operating in the energy supply chain industry will need to carefully assess their customer base to understand what exposure, if any, there may be to
Footnotes
1.
2.
3. "Yellen Says Secondary Sanctions on Russia Oil Discussed at G-7." Bloomberg.
4. "EU leaders agree on 90% embargo on Russian oil by the end of the year" Le Monde,
5. "Explainer: What impact would a Russian debt default have?" Reuters.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Mr
K2 Integrity
NY 10022
Tel: 212694 7000
E-mail: abernardis@k2intelligence.com
URL: www.k2integrity.com
© Mondaq Ltd, 2022 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com, source