A year after Russia started its war of aggression against Ukraine, the European Union (EU) further increases the pressure on Russia and Russian business with the tenth sanctions package. The package entered into force on 25 respectively 26 February 2023 and supplements the previous sanctions.

New sanctions on individuals, companies and organizations 

The EU's 10th sanctions package against Russia entered into force on 25 February 2023 and targets exports of industrial goods worth about EUR 11 billion and blacklists propagandists and, for the first time, entities linked to Iran’s Revolutionary Guard Corps for providing the Kremlin with drones and other military equipment. It also seeks to close loopholes that could have allowed sanctions circumventions. 

With this in mind, the EU further expands the list of sanctioned individuals in Annex I of Regulation (EU) No. 269/2014 and adds a total of 87 persons and 34 entities to the list. As in previous packages, the sanctions focus on key players in Russia’s military campaign, including the armed forces, individual officers and various members of political institutions. Furthermore, the EU has listed numerous companies in the defense industry that supply the Russian armed forced with weapons, ammunition and other items. This prohibits the direct or indirect provision of economic resources to these individuals and entities. In addition, their assets are frozen.

Three banks added to the sanctions list 

EU representatives aim to exclude Russia’s most prominent private banks from the international financial market. Subsequently, Alfa-Bank, Rosbank and Tinkoff Bank will not only be covered by the previous financial market sanctions. Additionally, there is now a general ban for EU-based entities on doing business with them. 

New additional focus: Iran

The EU has also imposed sanctions on Iranian entities, in particular those linked to Iran’s Revolutionary Guard Corps (IRGC). Due to the EU’s increasing awareness of their supply of drones and transfer of know-how to build production sites for military equipment in Russia, seven Iranian companies are now subject to restrictions. Besides IRGC itself, sanctions also target Oje Parvaz Mado Nafar Company (Mado), Paravar Pars Company, Qods Avation Industries, Shahed Aviation Industries, Concern Morinformsystem-Agat and AO Papilon.

New trade restrictions

New export restrictions have been introduced on sensitive dual-use and advanced technologies that contribute to Russia's military capabilities and technological enhancement.

Export restrictions include electronics, machine parts, spare parts for vehicles and airplanes or cranes and antennas as well as a number of dual-use goods that can be used militarily for drones, missiles or helicopters. The EU also extends their export ban on rare earths, specialized chemicals and biological equipment (e.g. “4-anilino-N-phenethylpiperidine”).  

Besides goods with specific military applications, the EU is increasingly targeting items for everyday use as well as luxury goods. The updated list includes amongst others LEDs, hemp yarn, forklift-trucks and mail sorting machines as well as sanitary ware (e.g. bidets, lavatory plans). The withdrawal of those items is destined to affect industry, oligarchs and the Russian population alike. 

In addition to export restrictions, the EU imposes import bans on Russian high-revenue goods. Those are mainly bitumen, asphalt, carbon blacks and synthetic rubber.

A new regime on frozen assets 

The 10th package introduces a new approach to frozen assets. Current EU estimates suggest that frozen assets of the Russian Central Bank abroad could amount to up to $300 billion, of which up to €33.8 billion could be in EU-based deposits.

In an effort to close loopholes, the EU has further tightened the obligations of individuals and (credit) institutions to report on frozen assets linked to sanctioned Russian companies and individuals. Banks are now forced to notify the authorities, if they have knowledge or can access funds that are or should be frozen under EU regulations. This includes dealings before listings. Failure to comply with these obligations can incur administrative fines and/or criminal proceedings. 

Although previously discussed, the new amendments do not include the possibility for state authorities to seize and repurpose frozen funds for rebuilding the infrastructure in Ukraine. Despite growing pressure from individual member states; however, respective negotiations are ongoing.

Further measures

In an effort to counteract Russia’s anti-Ukraine propaganda, European authorities have withdrawn the broadcasting license of yet another Russian state medium: RT Arabic. 

Russian nationals and residents in Russia are prohibited from assuming positions in governing bodies of critical infrastructure facilities in the EU. 

Russian nationals and residents are not allowed to provide gas storage capacity in the EU. 

To prevent Russian aircrafts from circumventing the airspace closure in the EU, private or charter flights between Russia and the EU must be notified at least 48 before the flight.

At first glance: What should companies do now?

• Perform an up-to-date sanctions list check for all business partners.
• Companies with business in Russia must immediately verify whether and to what extend the export of goods, the provision of services or the making of investments are affected by the new sanctions.
• Companies must take into account that sanctions will be extended to Iranian entities.
• Credit institutions must assess their new obligations to notify the authorities about frozen or freezable assets within their reach.

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