The European Union Council adopted a twelfth package of economic and individual restrictive measures on 18 December 2023 in view of the continued Russian war of aggression against Ukraine. This recent suite of measures, marking a significant escalation in the EU's response, encompasses a wide range of economic and trade restrictions. In this article, we delve into the EU’s new package of sanctions against Russia, a comprehensive and multifaceted approach aimed at intensifying pressure on Moscow amidst ongoing geopolitical tensions.

This article was written by Herman Annink ([email protected]) and Sefa Gecikli ([email protected]), who are focused on financial economic crime, sanctions and international trade compliance within RSM Netherlands Business Consulting.

 

Decoding the twelfth package

The European Union's 12th package of sanctions against Russia represents a significant intensification in the bloc's response to the ongoing geopolitical tensions. This broad and far-reaching set of measures encompasses various sectors, from trade in precious commodities like diamonds to stringent controls over technology and military equipment exports. This approach not only targets direct imports and exports but also extends to indirect and third-party transactions. The inclusion of specific clauses and extensions of existing measures indicates a nuanced and targeted response, designed to maximize impact.

Understanding new measures

Diamond Trade Restrictions

The EU is cracking down on the diamond trade with Russia, implementing a comprehensive prohibition on the import, purchase, or transfer of diamonds from Russia. This encompasses all diamonds originating in Russia, as well as those exported from or transiting through Russia, and even Russian diamonds processed in third countries.
Starting 1 January 2024, there will be a direct ban on non-industrial natural and synthetic diamonds and diamond jewellery. From 1 March 2024, a phased introduction of an indirect import ban will commence, targeting Russian diamonds processed in third countries. This phased approach, concluding by 1 September 2024, is essential for deploying an effective traceability mechanism.

'No Russia' Clause for Sensitive Goods

EU exporters are now required to contractually prohibit the re-exportation to Russia of particularly sensitive goods and technology, even when these are initially exported to third countries. This includes items used in Russian military systems, as well as specific technologies and aviation goods.

Broadening the Scope of the Sanctions

The EU has expanded its list by adding 29 entities linked to Russia's military and industrial complex. These entities will face stricter export restrictions, especially concerning dual-use goods and technologies that could enhance Russia's defence and security sector.

The list of restricted items is now broadened to include chemicals, lithium batteries, thermostats, and more, targeting items that can contribute to Russia's technological advancement in defence and security.

The EU has imposed further import restrictions on goods generating significant revenues for Russia, such as certain metals and liquefied propane (LPG). This is part of a strategic move to hinder Russia's war efforts against Ukraine.

A broader application of transit bans is now in place, extending to all battlefield goods. Russian nationals are prohibited from holding positions in entities providing crypto-asset services. Provisions on service restrictions are expanded to include enterprise management software and industrial design software.

Certain exemptions are provided for personal use items and vehicles under specific conditions, aimed at minimizing impact on individual EU citizens and facilitating their movement.
Finally, a significant number of additional individuals and entities have been listed under economic sanctions, broadening the scope of personal accountability and restriction.

Enforcement of Oil Price Cap

The EU has introduced tighter compliance rules to support the oil price cap, including a strengthened information sharing mechanism. This aims to prevent deceptive practices in the transport of Russian oil.

Iron and Steel Trade Adjustments

Switzerland has joined the list of partner countries applying restrictive measures on Russian iron and steel imports, aligning with the EU's standards. The wind-down periods for specific steel products have been extended.

How RSM can assist you

As the landscape of international trade and sanctions continually evolves, particularly with the recent EU's 12th Sanction Package against Russia, it becomes imperative for businesses to adapt and comply with these complex regulatory changes.

Our team at RSM, possessing profound expertise in international trade compliance and risk management, is well-equipped to steer businesses through these intricate challenges. We cater specifically to medium-sized enterprises and family businesses, recognizing the unique needs and regulatory landscapes of each client, both domestically and internationally.