The European Union had already imposed sanctions in the past, specifically directed against persons from Russia. The impact of these sanctions on companies involved in the Russian business has so far been minimal. However, the European Union adopted far-reaching sanctions against Russia on 31 July 2014. Companies operating in the Russian market now have to deal comprehensively with economic sanctions in order not to be liable to prosecution for breaches of the embargo.
Far-reaching sanctions against Russia
The effects of the embargo on Russia are extremely far-reaching for companies doing business in Russia. Not only does an arms embargo exist, but trade restrictions have also been imposed on goods with potential military use (dual-use goods). Energy equipment is also covered by the sanctions.
The restrictions on dual-use items are therefore likely to be particularly relevant. The European Union has issued a special embargo regulation in Regulation (EU) No. 833/2014. This came into force on 01.08.2014. It lists numerous goods which may also have a potential military use. Companies must now check whether the goods they export may fall under these items.
There are also restrictions on equipment in the energy sector. The oil exploration and shale oil production sectors are particularly affected.
Technical assistance or financial services related to dual-use goods are also largely banned.
Moreover, the purchase and sale of securities of Russian banks is also largely restricted.
Violations of Russia sanctions are punishable by law
Any company operating in Russia must carefully consider the consequences of the Russian sanctions.
Violations of the Russian sanctions may result in the responsible employees in companies committing a criminal offence. Attempting to circumvent the sanctions against Russia can also be punishable as a criminal offence.
Companies are therefore well advised to thoroughly review their business processes and to ensure organizationally that no violations of the Russian embargo can occur.