Sanctions in the RU-UA conflict

Numerous countries, amongst others the 27 EU member states, UK, the USA, Canada etc. have agreed to sanction Russia due to the ongoing conflict with Ukraine.

The sanctions have been introduced in the form of trade and investment restrictions against Russia. In doing so, the countries respond to the destabilisation of Ukraine by the actions of Russia. The sanctions imposed namely include:

• Financial transactions: Large parts of Russia are being cut off from the capital market. There are also state-owned companies and the "Russian elite". Additionally, the USA, France, Canada, Italy, Great Britain, the EU Commission and Germany want to exclude certain Russian financial institutions from the Swift banking communication network and thus isolate them from international financial flows;
• Individuals: Sanctions also targeted individuals in Russia and elsewhere. President Vladimir Putin and Foreign Minister Sergey Lavrov are now also on the sanctions list;
• Export: Strict export controls for Russia. Around 50 percent of all high-tech exports are said to be affected, as well as certain goods and technologies to the territories not controlled by the Ukrainian government;
• Military: The Russian military will no longer have access to military products or software made with US components.
• Import: Ban of all goods from territories not controlled by the Ukrainian government;
• Energy sector: Blocking of exports to the Russian energy sector;
• Aviation: Aircraft, spare parts and equipment are no longer sold to Russia;
• Technology: Important components for new technologies, such as semiconductors, should be limited;
• Visa: There should no longer be privileged entry for Russian diplomats or businesspeople;
• Media: The Russian state media RT and Sputnik will be banned in the EU;
• Oligarchs must expect that all assets in the EU will be frozen.

We have attached the newsletter of our PwC colleagues of the EU, Germany under this link specifying of the EU sanctions in more detail.

Situation in Switzerland

The Federal Council has also taken note of the other sanctions that the EU imposed against the Russian Federation on 23 February. On 25 February 2022, the Federal Department of Economic Affairs, Education and Research (EAER) modified Annex 3 of the ordinance (prohibition of new business relationships) by extending in accordance with several decisions taken by the EU on measures to prevent the circumvention of international sanctions via Swiss territory, in relation to the situation in Ukraine.

Financial intermediaries in Switzerland are now prohibited from entering new business relationships with the 363 newly added individuals and 4 corporate entities. At the same time, financial intermediaries are obliged to immediately report existing business relationships with these individuals, companies, and organisations to the State Secretariat for Economic Affairs (SECO) under https://www.seco.admin.ch. Further steps to tighten these measures are currently being prepared.

Therefore, the Federal Council decided on February 28, 2022 to fully adopt all EU sanctions against Russia that have been imposed on 23. and 25. February 2022. Furthermore, the financial sanctions are based on the harshest sanctions imposed internationally.

This is the first time that Switzerland has imposed sanctions on Russia itself. 

We are monitoring the current situation with great concern, as there is a risk of significant further escalations. Sanctions in the form of import restrictions as well as export control restrictions can have an impact on your company.

Action required and outlook

From a trade compliance perspective, the sanctions have a major impact on businesses transactions, as well as export control requirements.

As the current situation is very dynamic and unpredictable, we therefore ask you to be prepared for further measures that can be taken at short notice. In view of the sanctions already imposed, please always be alert on the “Fab Four” questions of export control to monitor your supply-chain to act still compliant:

Companies must now act and adopt these changes in their own daily businesses quickly to comply with the new regulations. PwC can support you in all trade compliance related topics.