A few weeks ago, the Russian Federation introduced special economic measures in respect of a number of Ukrainian nationals and legal entities.
In particular, sanctions included the blocking (freezing) of non-cash funds, non-documentary securities and property on the territory of the Russian Federation, as well as a ban on the transfer of funds (withdrawal of capital) outside the territory of the Russian Federation.
However, it is worth noting that the first type of said sanctions is "special" and is not explicitly provided for by the lists contained in Laws No. 127-FZ and No. 281-FZ. Moreover, the fact that restrictions were applied only in the form of asset blocking and a ban on capital withdrawal indicates that their introduction had no goal of completely halting business transactions between Ukrainian and Russian entities.
The real goal of imposing sanctions is to support individual sectors of the Russian economy
Thus, Law No. 127-FZ permits the use of such measures of influence (counteraction) as a prohibition or restriction on the imports to or exports from Russia of products and raw materials (with the subsequent approval of their list); prohibition or restriction on performing works and services for state, municipal needs, as well as the needs of certain types of legal entities; a ban or restriction on participation in privatization, performing works and services on the sale of Federal property, etc. At the same time, none of these restrictions was introduced, which only confirms the assumption that their adoption did not aim at a complete cessation of economic cooperation between the two countries. It may also indicate that the real goal of imposing sanctions is to support individual sectors of the Russian economy, whose effectiveness does not depend on supplies and cooperation with Ukrainian counterparties.
I should separately mention the list of persons to whom special economic measures have been applied. This is a list of 322 individuals and 68 companies, including those incorporated outside Ukraine (United Kingdom, Switzerland).
Russian personal sanctions are not as comprehensive as U.S. sanctions
Firstly, we should not lose sight of the fact that the sanctions imposed are not limited to this list and are extended, including to organizations controlled by sanctioned persons (businesses). However, personal sanctions imposed by Russia are not as comprehensive as U.S. sanctions, which generally apply to any person providing material assistance, sponsorship, financial, material or technological support to sanctioned individuals or businesses.
Secondly, we should keep in mind that today the mechanism remains unclear for searching for organizations under the control of sanctioned persons (businesses). Besides, there is no list of agencies tasked with dealing with the issue.
It is noteworthy that the legal acts, based on which Russia introduced personal sanctions, contain no clear indication of responsibility for violation of the existing sanctions regime. That is, in the absence of special types of liability, it will be the general provisions on administrative responsibility that will be applied, in particular, provided for in Article 16.3 of the Code of Administrative Offenses of the Russian Federation (non-compliance with prohibitions on imports of goods), which provides for a fine of RUB 2,500 for individuals and up to RUB 300,000 for legal entities.
Thus, at present, Russian sanctions are not comprehensive and should not in fact stand in the way of transactions carried out via intermediaries (or chains of the latter), including those located in the territory of a third country. However, such facts of circumvention of sanctions are fairly easily tracked and can serve as a basis for further expansion of the sanctions lists — amendments to those lists will indicate the actual objective of imposing special economic restrictions.
Ivan Bozhko is a lawyer with the "Ilyashev & Partners" Law Firm