The existing sanctions have been expanded to encompass nearly 1,600 designated individuals and over 200 entities. These measures entail travel restrictions for individuals, asset freezes, and bans on providing funds or other economic resources.
However, it's noteworthy that three previously listed individual business leaders, namely Farkhad Akhmedov, Grigory Viktorovich Berezkin, and Alexander Alexandrovich Shulgin, have not had their sanctions renewed. Notably, Alexander Alexandrovich Shulgin successfully appealed his designation at the Court of Justice of the EU's General Court on September 6, 2023. Additionally, Georgy Ivanovich Shuvaev was removed from the sanctions list following his demise in 2022.
In a separate development, the European Commission (EC) has issued guidelines on implementing enhanced due-diligence procedures to prevent the circumvention of Russian sanctions. EC regulations 833/2014 and 269/2014 explicitly forbid EU operators from knowingly and intentionally engaging in activities that aim to bypass these restrictions.
The newly released EC guidance underscores that targets of Russian sanctions have employed increasingly sophisticated techniques to evade EU sanctions. These methods include the use of complex financial schemes, falsification of the nature or origin of traded goods, or concealing assets. The EC warns that EU operators could inadvertently facilitate prohibited activities involving Russia, potentially leading to violations of EU regulations. To address this evolving risk, the EC has developed an enhanced due-diligence model, especially tailored for high-risk sectors and intricate supply chains. National competent authorities may view inadequate due diligence as a breach of EU sanctions.
The guidance outlines a four-stage process for dealing with potential circumvention: risk identification, risk evaluation, the development of mitigation measures, and regular updates to address rapidly evolving circumvention tactics.
Furthermore, the guidance provides a list of "circumvention red flags" that should prompt enhanced due-diligence measures. These flags include indirect transactions involving intermediaries or shell companies with dubious economic purposes, transactions with entities located in countries known as "circumvention hubs" (e.g., Armenia, Kazakhstan, and Kyrgyzstan), and complex corporate or trust structures, particularly those involving offshore entities. Trust arrangements have been identified as a specific method employed by sanctioned individuals to evade sanctions.
Other red flags highlighted in the guidance encompass:
Recent establishment or merger of a business partner with a sanctioned entity or an entity linked to such an entity.
Sharing of an address by a business partner with multiple different companies.
Changes in ownership aimed at reducing ownership stakes below the 50 percent threshold.
Alterations in ultimate beneficial ownership shortly before or after the imposition of sanctions.
Transfer of assets formerly associated with a sanctioned person by family members or on their behalf.
Transfers of shares from sanctioned entities to non-sanctioned entities involving corporations established by the same individuals or entities.
Possible control of an entity by designated persons.
Unavailability of a chief executive or manager for discussions.
The guidance also underscores that transactions relying on correspondent banking accounts can pose a higher risk of sanctions circumvention. Financial institutions are urged to monitor transactions related to these accounts, depending on the level of risk of sanctions evasion posed by the foreign respondent.
Contacts
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