ECOVIS ProventusLaw welcomes you to its monthly newsletter on Sanctions, which is dedicated to everyone who wants to understand the latest trends and developments, get tips, and deepen their knowledge. Have a good read!
European Commission Updates FAQs on EU Sanctions Compliance
On July 2, 2024, the European Commission (EC) issued updated FAQs on EU sanctions, offering key clarifications on service provisions, business withdrawal from Russia, the “No Russia” clause, and enforcement guidelines.
Service Provision Restrictions and Exemptions:
The EC highlighted that until September 30, 2024, exemptions for service provisions are limited to subsidiaries of EU companies in the EEA, Switzerland, or partner countries. Beyond this date, companies must obtain national authority permission to continue these services.
Business Withdrawal from Russia:
EU entities exiting the Russian market face ongoing restrictions. All related transactions must be completed by December 31, 2024, under stringent conditions.
“No Russia” Clause:
New rules require a “No Russia” clause in contracts with third-country entities to prevent goods from being re-exported to Russia. Companies must update their contracts by the end of 2024.
Sanctions Enforcement:
The EC reminded that EU sanctions enforcement is the responsibility of member states. Sanctions apply independently, even if not explicitly mentioned in Regulations No. 269/2014 or 833/2014.
These updates aim to enhance compliance and prevent sanctions evasion, ensuring the effective implementation of EU sanctions.
Updated Best Practice Guide for EU Restrictive Measures
A new best practice guide for EU sanctions has been released, expanding the criteria for determining if a legal entity is controlled by another person or entity. It mandates freezing assets linked to listed individuals or entities, including those owned or controlled by them, even if not explicitly listed. The guide also provides examples to help identify control over unlisted entities, ensuring stronger enforcement of EU restrictive measures. https://data.consilium.europa.eu/doc/document/ST-11623-2024-INIT/en/pdf
Croatian Customs Authority Joins EU-Wide Agreement on Uniform Sanctions Control Measures
The Croatian customs authority has joined a regional EU agreement with Lithuania, Latvia, Estonia, Poland, and Finland to enforce uniform control measures on goods subject to export bans, particularly to prevent sanctions circumvention involving Russia. This agreement requires exporters to provide additional documentation, such as a manufacturer’s declaration, to ensure compliance. Croatia will now implement these measures, enhancing sanctions enforcement across six EU countries.
FCIS Imposes Record Fine on UAB “Payeer” for Sanctions Violations
The Financial Crimes Investigation Service (FCIS) has imposed a record €8.23 million fine on UAB “Payeer,” a Lithuania-registered virtual currency operator, for violating international sanctions. An additional €1.06 million fine was levied for breaches of anti-money laundering and counter-terrorism financing laws.
UAB “Payeer,” linked to the cryptocurrency platform “Payeer.com,” facilitated transactions for Russian clients through EU-sanctioned banks, ignoring required compliance measures. The company, which served over 213,000 clients with revenues exceeding €164 million, intentionally avoided proper customer verification and reporting obligations. These fines mark the largest penalties ever imposed by the FCIS for such violations.
Lithuania Freezes Millions in Funds Tied to Russia and Belarus Under EU Sanctions
Lithuania has frozen over €22.845 million and $675,595 USD in the accounts of 11 legal entities connected to Russia, as part of EU sanctions under Regulation (EU) No 269/2014 for actions undermining Ukraine’s sovereignty. Additionally, €23.355 million and $7.680 million USD linked to 6 Belarusian entities and 1 individual have been frozen under Regulation (EC) No 765/2006 due to Belarus’s involvement in Russia’s aggression. The total amount of frozen incoming funds from EU-sanctioned senders exceeds €1.266 million, $1.583 million USD, and 215,000 Russian rubles.
Lithuanian Supreme Court Expands Sanctions Compliance Standards for Businesses
The Lithuanian Supreme Court has ruled on a pivotal case involving Ž. P., a representative of UAB “D,” who was fined for transactions with IDS Borjomi Georgia, a company indirectly linked to sanctioned Russian entities. Although IDS Borjomi Georgia itself was not sanctioned, the court determined that businesses must conduct thorough due diligence not only on direct partners but also on connected entities that may be under sanctions. This ruling increases compliance obligations for companies engaged in international transactions, setting a new precedent that demands enhanced scrutiny of business networks to avoid indirect sanctions violations.
OFAC Targets Key Figures and Vessels in Sanctions Against Sa’id al-Jamal Network
On July 18, 2024, OFAC sanctioned a dozen individuals and vessels linked to the Sa’id al-Jamal network for their role in financing the Houthi movement’s destabilizing activities. The sanctions include Mohammad Roslan Bin Ahmad from Malaysia, Zhuang Liang from China, and various entities involved in illicit transfers, money laundering, and transporting Iranian goods to fund Houthi attacks on Red Sea shipping. The sanctions cover a broad range of operations within the network, including intermediaries, insurance providers, and ships. https://home.treasury.gov/news/press-releases/jy2469
EU Extends Sanctions on Iran and Imposes New Human Rights Measures
The Council has extended restrictive measures against Iran until July 27, 2025, due to its military support for Russia and armed groups in the Middle East. The sanctions, which affect 12 individuals and nine entities, will be reviewed annually. Additionally, as of May 14, 2024, the EU’s sanctions now cover unmanned aerial vehicles (UAVs) and missiles. On July 15, 2024, new sanctions were imposed under the EU Global Human Rights Sanctions Regime against five individuals and three entities for severe human rights abuses against Palestinians in the West Bank, including violations of property, privacy, religious freedom, and education rights. https://www.consilium.europa.eu/lt/press/press-releases/2024/07/15/iran-council-prolongs-eu-restrictive-measures-in-view-of-iran-s-military-support-for-russia-s-war-of-aggression-against-ukraine-and-for-armed-groups-and-entities-in-the-middle-east-and-the-red-sea-region/
FCIS Warns Against Transactions with JIVOSITE INC. Due to Sanctions
The Financial Crimes Investigation Service (FCIS) has issued a warning regarding JIVOSITE INC. (JIVO), a U.S.-based company with platforms including JIVOCHAT.COM and JIVOSITE.COM. The FCIS notes that JIVO is owned by Sberbank, a Russian bank sanctioned by the EU since 2021. Transactions involving JIVO’s products, such as installations and subscriptions, violate international sanctions. The FCIS emphasizes that all entities must comply with EU sanctions and Lithuanian law on international sanctions.
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