Update FAQ Sanctions Russia

The European Union has published an update on frequently asked questions (FAQ) regarding the sanctions against Russia.The FAQ is a document that is regularly updated to provide guidance to companies and authorities involved in the interpretation and implementation of Regulations 833/2014, 269/2014, 692/2014 and 2022/263. This document helps all parties comply with Russian sanctions.

The FAQ, now 385 pages long, has been providing support since June 2022. Recent updates (last 2 months) include software, the “no re-export to Russia” clause, restrictions on diamonds, and now, therefore, Article 5n of 833/2014 on service restrictions.

Updates

There are a total of 37 FAQs regarding Article 5n, some of which have been updated with the latest update. This article covers only these updated FAQs.

• FAQ03 offers explanations of the terms “strict” and “exclusive.”
• FAQ06 explains that the service restrictions also apply to subsidiaries of Russian companies based in the European Union. In other words, these subsidiaries may not provide services to their parent company in the direct and indirect prohibitions such as accounting, administration, engineering, IT, and so on.
• FAQ07 indicates that the sanctions do not prohibit working as an employee of a Russian company if you are based in the European Union, but they do prohibit exporting the prohibited services.
• FAQ11 explains what is meant by legal advisory services, a topic of much debate.
• FAQ12 offers an explanation of the restrictions that apply to “entities and institutions based in Russia.”
• FAQ13 indicates that the service prohibitions in Article 5n apply specifically to delivery to the government, legal persons, entities and institutions in Russia, so it does not apply if you deliver this to a natural person.
• However, FAQ14 does indicate that the prohibitions from the EU also apply if you supply this as an individual.
• FAQ15 indicates that the restrictions do not apply if this is supplied to a Russian taxpayer established in the EU. However, the full FAQ is very relevant because restrictions and concerns do apply.
• FAQ16 – 18 offer an explanation of the exemption mentioned in Section 5n(7) with a deadline of June 20, 2024.
• FAQ19 indicates that the restrictions apply to Russian entities controlled by entities in the EU, EEA, Switzerland and the listed partner countries (Annex VIII), but a license will be required after the deadline (June 20, 2024).
• FAQ28 explains what exactly is meant by “IT consulting services” and whether it includes the provision of software. It explains that this includes software development and implementation, with the exception of (see FAQ for full details) standard software.
• FAQ29 explains which parts of software updates and upgrades are also prohibited under IT consulting services.
• FAQ31 explains that, in principle, cloud services do not fall under the prohibitions of IT consulting services, but they must be assessed from the 5n(2b) prohibitions.
• FAQ34 clarifies what exactly is meant by “ancillary services.”
• FAQ35 is a follow-up to the other FAQs (16 – 18) on the June 20, 2024 deadline and how to obtain a permit from that date.
• FAQ36 again explains the scope of the prohibitions, including a reference to Article 12, which prohibits EU entities where circumvention can take place.
• FAQ37 explains that the prohibitions also apply to an EU person who wants to provide the services from an EU parent company to a subsidiary in Russia.

Furthermore, the FAQ includes an appendix that provides an overview of the bans on services and software, divided into 4 groups:

• Group 1 – accounting, auditing, etc.
• Group 2 – technical & IT services
• Group 3 – market research, technical testing and analysis services
• Group 4 – ERM software, design software

Impact

The update shows once again how far-reaching the restrictions in Article 5n are and that this is a major concern for many companies. If you still have any activity in Russia from the European Union, you should study this article thoroughly and take timely action as the remaining deadlines approach.

If you are seeking assistance in conducting your business in Russia in compliance with Russian sanctions, contact us today. Trade Controls Compliance can support you in setting up a robust compliance program.

Update:https://finance.ec.europa.eu/document/download/4617456e-7d33-4732-96ef-b01bd10e948e_en?filename=faqs-sanctions-russia-services-provision_en.pdf

Consolidated version: https://finance.ec.europa.eu/publications/consolidated-version_en

Support

Do you need support in the field of export, sanctions policy and are you looking for a compliance project manager or would you like to have a compliance baseline measurement, contact us for the toolbox of support Trade Controls Compliance offers you.

Trade Controls Compliance – Your Sanctions & Export Controls Toolbox!!!