New set of restrictive measures against the Russian Federation in relation to
events in Ukraine entered into force last Friday
In view of the increasing gravity of the situation in Eastern Ukraine, the European Council
decided to reinforce the set of restrictive measures adopted on 30 and 31 July 2014.
24 new persons have been added to the list of those subject to a travel ban and an asset
freeze 1.
Furthermore, a set of enhanced measures related to access to capital markets, defence or
dual-use goods and sensitive technologies has been adopted. The basic regulation
constituted by the Council Regulation (EU) N° 833/2014 and the Council Decision
2014/512/CFSP issued in July 2014 (hereafter the “Regulation”) was therefore completed by
a new Council Regulation 2 and a new Council Decision 3 (hereafter the “New Regulation”).
Restrictive measures in the financial sector have been strengthened and their scope
extended. In addition, certain services necessary for deep water oil exploration and
production, arctic oil exploration or production and shale oil projects in Russia may no longer
be supplied. This includes drilling, well testing and logging services. With respect to the ban
on exporting dual-use goods and technology for military use in Russia, a new provision has
been inserted so as to also include a list of nine mixed defence companies that must not
receive dual use goods from the EU.
This newsflash will focus on the restrictive measures affecting financial activities. In this area,
the new set of restrictive measures intends most notably to further limit access to the EU
capital market, by expanding the list of targeted entities and strengthening the rules
applicable to the financial instruments. The measures also clarify certain points.
1
Council Decision 2014/658/CFSP of 8 September 2014 amending Decision 2014/145/CFSP concerning
restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and
independence of Ukraine
2
Council Regulation (EU) N°960/2014 of 8 September 2014 amending Regulation (EU) No 833/2014 concerning
restrictive measures in view of Russia's actions destabilising the situation in Ukraine
3
Council Decision 2014/659/ CFSP of 8 September 2014 amending Decision 2014/512/CFSP concerning
restrictive measures in view of Russia's actions destabilising the situation in Ukraine.
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New entities listed
Alongside the five major Russian state-owned banks already listed, six new entities 4 have
been included in the scope of the restrictions on access to EU capital. These entities, which
are active in the defence sector and in the energy sector, are respectively included in the
Annex V and VI of the Regulation, as amended.
The scope of these restrictions is extended to (i) any legal person, entity or body established
outside the EU which is directly or indirectly owned for more than 50% by any of these listed
companies and (ii) any legal person, entity or body acting on behalf or at the discretion of any
company filling the above-mentioned criterion of any listed entity.
Furthermore, the New Regulation determines some conditions and criteria under which other
entities active in the energy sector and in the defence sector can be identified in the future.
Trade in new bonds, equity or similar financial instruments
A substantial change was introduced by the New Regulation in terms of maturity of the
transferable securities and the money-market instruments concerned by the restrictions.
Indeed, the prohibition to directly or indirectly purchase, sell, provide investment services for
or assistance in the issuance of, or otherwise deal with, now applies to transferable securities
and money-market instruments issued by the targeted entities, with a maturity exceeding 30
days, instead of 90 days as stated in the Regulation. However, this concerns only
transferable securities and money-market instruments issued after 12 September 2014.
Concerning the entities which were already subject to the Regulation, it should be noted that
the threshold remains 90 days for securities issued by them between 1 August 2014 and 12
September 2014.
In other words, the New Regulation does not have any retroactive effect on entities’
securities issued prior to 12 September 2014.
Granting of new loans
In addition, the New Regulation prohibits directly or indirectly making or being part of any
arrangement to make loans or credit to any of the targeted entities, with a maturity exceeding
30 days and drawn after 12 September 2014, whereas previously credit operations were not
targeted by the restrictive measures.
However, this prohibition does not apply to loans and credit that:
4

either have a specific and documented objective to provide financing for nonprohibited imports or exports of goods and non-financial services between the EU
and Russia, or;

that have a specific and documented objective to provide emergency funding to meet
solvency and liquidity criteria for legal persons established in the Union, whose
proprietary rights are owned for more than 50 % by any of the five banks listed in the
Annex III of the Council Regulation (EU) N°833/2014.
Annex II and Annex III of the Council Regulation (EU) N°960/2014.
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Moreover, it is to be noted that financial services such as deposit services, payment services,
insurance services, loans from the institutions (entities?) targeted and derivatives used for
hedging purposes in the energy market are not covered by these restrictions.
Clarification of the terminology used

“Transferable securities”
The New Regulation modified the definition of “transferable security” by deleting the “such
as” term, so that the list provided is now exhaustive and continues to include:
-
shares in companies and other securities equivalent to shares in companies,
partnerships or other entities, and depositary receipts in respect of shares,
-
bonds or other forms of securitised debt, including depositary receipts in respect
of such securities,
-
any other securities giving the right to acquire or sell any such transferable
securities.
In addition, this last category does not refer to “cash settlement” anymore.

“Brokering”
This term was replaced by the notion of “investment services” without any modification in the
list of services and activities concerned under this notion.
While there is no express reference in the restrictive measures to the directives MiFID and
the recent MiFID II on markets in financial instruments, a parallel can be made with their
scope. Thus, the restrictive measures target essentially financial services of the kind
regulated under MiFID II with respect to two specific categories of financial instruments,
namely transferable securities and money market instruments.
The restrictive measures are directly applicable and binding in the Member States but could
be modified depending on the evolution of the situation in Ukraine. The Commission, in this
meaning and following a press statement dated 11 September 2014 of the President of the
European Council, is invited to put forward proposals to amend, suspend or repeal the set of
sanctions into force.
As mentioned on our previous newsletter 5, persons and entities may submit a request to the
Council to ask that the decision to include them in the list of sanctions be reconsidered 6.
Persons and entities concerned may also challenge the Council Decisions and Regulations
before the General Court of the European Union.
To follow the developments, you may consult the websites of the competent authorities in
Luxembourg, including the Luxembourg prudential surveillance authority (CSSF), the
Luxembourg Ministry of Finance as well as the European Commission consolidated list of
persons subjected to sanctions.
5
6
http://www.arendt.com/publications/pages/restrictive-measures-against-the-russian-federation.aspx
See Council Notice 2014/C 249/02.
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For further information please contact:
Paul Mousel
Partner, Banking & Financial Services
Tel: +352 40 78 78 217
[email protected]
Philippe-Emmanuel Partsch
Partner, EU Financial & Competition Law
Professor of EU Banking & Financial Law,
University of Liège
Tel: +352 40 78 78 350
[email protected]
Max Kremer
Partner, Banking & Financial Services
Tel: +352 40 78 78 353
[email protected]
This publication is intended to provide information on recent legal developments and does not cover every aspect of the
topics with which it deals. It was not designed to provide legal or other advice and it does not substitute for the
consultation with legal counsel before any actual undertakings.
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