Following adoption of a series of trade and economic sanctions against Russia (see our earlier Beyond Sanctions publication), the European Commission (the Commission) continues to update dedicated industry guidance in a form of Frequently Asked Questions (FAQs).
The FAQs are divided into five thematic sections:
- Horizontal
- Individual financial measures
- Finance and banking
- Trade and customs
- Other fields
From a financial institutions’ perspective, arguably the most relevant guidance is included in sections A (Circumvention and due diligence), B (Asset freeze and prohibition to provide funds or economic resources) and C. In respect of the latter, the guidance covers the following sub-sections:
- Central banks : the Commission confirmed that EU sanctions do not apply in an extraterritorial manner and as such, Russian subsidiaries of EU parent companies are not obliged to comply with them. It is prohibited to use Russian subsidiaries to circumvent the obligations that apply to the EU parent.
- Crypto-assets : the Commission confirmed that definitions of “funds” and “economic resources”, as contained in Council Regulation (EU) No 269/2014 includes crypto-assets. As such crypto-assets can be subject to asset freezes and prohibition to make funds or economic resources available to listed persons.
- Deposits : among other issues, the Commission confirmed that the prohibition for EU credit institutions to accept deposits from Russian legal and natural persons exceeding EUR 100,000 refers to the total value of deposits that such persons can hold. Deposits that existed on 26 February 2022 which exceed that value can be grandfathered. The “total value” is to be calculated by taking into account customers’ positions with the bank in current accounts and deposits (when relevant, taking into account customers’ accounts in currencies different from euros) at the point in time when the restrictions entered into force. At the same time, it is left up to the credit institutions to assess whether an individual product falls within the definition of “deposit”.
- Euro-denominated banknotes : the Commission confirmed that the ban on supplying euro-denominated banknotes relates to physical banknotes and does not extend to transfers via bank accounts, as long as these do not fall under other restrictions. It also confirmed that this restriction does not apply to gold, currencies other than euro and traveller cheques. The Commission also provided some guidance on the interpretation of the personal use exception from the prohibition to export euro-denominated banknotes to Russia.
- Euro-denominated securities : the Commission confirmed that the prohibition concerning investment in euro-denominated securities does not apply to entities established in the EU that are owned by Russian citizens but registered in country other than Russia.
- Trading : in the guidance currently covering 23 FAQs, the Commission confirms, among other, the applicability of restrictions in the context of exchanging margins for derivative contracts existing between designated and non-designated entities. It also confirmed its earlier guidance that derivatives are subject to the restrictions if the underlying financial instrument falls within the scope of the same restriction.
