Russia Ukraine Sanctions

Part 2[1] of the two-part blog discusses the Sanctions measures adopted globally against the Russian Government and its affiliates in response to its actions in Ukraine, with special emphasis on sanctions imposed by the US, UK and the EU, their impact on Indian businesses and key takeaways for businesses operating in sanctions regions.

2022 Ukraine/ Russia Sanctions

US imposed measures

Following the actions of the Russian Government in Ukraine in February, 2022, the US[2], along with the UK, the EU and several other nations across the globe have imposed further sanctions on the Government of the Russian Federation.[3] The new US sanctions target Russian financial institutions, impose harsher penalties against Russian financial institutions, ban the export of US technology to Russia, as well as hinder the ability of major Russian conglomerates from raising capital in Western markets. The sanctions program also targets large Russian state-owned banks, trading in five Russian oil tankers and container ships, and oligarchs with close affiliations to the Russian Government. It has also banned US banks and individuals from trading in Russian sovereign debt. Further to EO 14038, several  Belarusian individuals and entities and Belinvestbank, Bank Dabrabyt have been designated.[4]

As of March 2022, OFAC has imposed further sanctions targeting Russian oligarchs with close affiliations to the Russian Government, their family members and assets as well designated Russian Direct Investment Fund (RDIF), its affiliated entities and its CEOs for blocking sanctions[5]. EO 14024 further prohibits US persons from engaging in any transaction with or involving the Russian Central Bank, the Russian Ministry of Finance or the Russian National Wealth Fund, whether directly or indirectly, including transfer of assets and foreign exchange for or on behalf of these entities.[6] Similar measures have been implemented by both the EU and the UK. The US Department of Commerce has further enhanced export controls against Russia, by expanding licence requirement, amending the licence policy to that of Denial, as well as expansion on export restrictions, with the exceptions to food and medicine.

As of March 8, 2022, the US Government prohibited the import of Russian origin energy/ oil products including crude oil, petroleum, petroleum fuels, oils and products of their distillation, liquefied natural gas, coal and coal products) into the United States, as well as any investment by US persons in the Russian energy sector.[7] The US Federal Aviation Administration has issued a ban on all Russian air carriers, commercial aircrafts, Russian controlled or operated aircrafts from operating to, from, or within the US territorial airspace, with exceptions to humanitarian or diplomatic operations.[8] The EU has taken similar steps to prohibit its airspace to Russian aircrafts, however has not prohibited import of Russian energy and oil.

EU Sanctions

The UK and EU have also imposed additional measures, including freezing the assets and imposing a travel ban on businesses, including banks and several individuals. Individuals will be banned from all UK transactions. The EU has imposed further restrictions on access to Europe’s capital markets, in particular by prohibiting the financing of Russia, its government and its central bank.[9] It is prohibited to directly or indirectly purchase, sell, provide investment services for or assist in the issuance of transferable securities and money-market instruments by the Russian government or its central bank.

The EU has since amended the preexisting sanctions regulations targeting Russia, to prohibit transactions related to the management of reserves as well as assets of the Russian Central Bank, including any legal person, entity or body acting on behalf of or at the directions of the Russian Central Bank. The amendment exempts transactions strictly necessary, in the interest of the financial stability of the EU or a member state. The EU has further designated 26 individuals, including Russian businessmen, government and military officials, a Russian gas industry insurance company for asset freezes and, for the natural persons, travel bans. The EU has directed asset freezes against several Belarusian military and defense officials.[10]

As of March, 2022, the EU has amended the existing regulations to further impose measures restricting the supply of Euro to Russian persons or entities (including the Russian government and the Russian Central Bank), or for use in Russia. Exceptions include personal use of natural persons travelling to Russia and their families or diplomatic missions. It has further restricted investment, participation or contribution in other forms to projects co-financed by the RDIF. Furthermore, operators have been prohibited from broadcasting or facilitating in any manner content by designated Russian media entities as well as suspended their respective broadcasting licences.

The EU has issued additional export control restrictions regarding Belarus, encompassing the trade of goods used for the production or manufacturing of tobacco products, mineral fuels, bituminous substances and gaseous hydrocarbon products, potassium chloride (“potash”) products, wood products, cement products, iron and steel products and rubber products, dual-use goods and technology, and certain advanced goods and technology, which might contribute to Belarus’ military, technological, defence and security development, along with restrictions on the provision of related services.

UK Sanctions

In February 2022, the UK, via a secondary legislation, had expanded the current sanctions regime (Russia (Sanctions) (EU Exit) Regulations 2019). The expansion allows the UK Government to sanction “any individual and business of economic or strategic significance”, including those who support Russia’s aggressive actions against Ukraine, which may include Russian financial institutions and energy companies with affiliations to the Russian government. The UK Government announced further sanctions on February 24, 2022; authorising[11]:

  • asset freezes targeting Russian financial institutions and Banks as well as excluded them from the UK financial system;
  • restrictions on Russian sovereign debt;
  • measures to prevent Russian companies from issuing transferable securities and money market instruments in the UK;
  • prohibition from accessing and clearing payments through the UK and its financial system;
  • prohibition of exports of dual-use items, i.e. high-end and critical technical equipment and components in electronics, telecommunications, and aerospace sectors; and
  • extension of territorial financial and trade measures to the eastern territories of Ukraine, so-called Donetsk People’s Republic and Luhansk People’s Republic.

As of March 2022, the UK has expanded the existing measures to prohibit any UK individual or entity from providing financial services for the purpose of foreign exchange reserve and asset management to: the Russian Central Bank, the Russian National Wealth Fund, Russian Ministry of Finance, any person owned or controlled directly or indirectly by any of these government entities; or any person acting on behalf of or at the direction of any of these government entities. UK has also sought to pass amendments to the UK Economic Crime (Transparency and Enforcement) Bill to enable the UK sanctions program to implement sanctions more speedily effectively target Russian oligarchs and the businesses associated with the Russian Government.

Existing financial restrictions have been broadened to prohibit extending loans, dealing with transferable securities and money market instruments issued on or after March 1, 2022, by any UK entities owned by designated Russian individuals and entities, or a person connected with Russia or the Russian Government.[12] The amended sanctions include restrictions on correspondent banking relationships and the processing of sterling payments to, from or via a designated person or a financial institution owned or controlled by such designated person[13] as well as enhanced export restrictions. The UK has also announced that it will phase out imports of Russian oil.

Across the Globe

As on date, countries including Australia, Canada, Germany, Japan, New Zealand, Norway, Singapore, South Korea, Switzerland, and Taiwan have announced economic sanctions against the Russian Government and its interests. As of March 2022, Switzerland has imposed measures including asset freezes for the EU designated individuals as well as restrictions involving financial messaging services.[14] New Zealand is also moving to introduce travel bans, in addition to restricting access to its airspace. Restrictions imposed by South Korea include prohibiting transactions with the Russian Central Bank and asset freezes, as well as trade bans on several dual use items such as electronics, semiconductors, and blocking Russian banks from the SWIFT System.

In addition to sanctions measures by countries across the globe, several multinational corporations such as Apple, Google, Microsoft, Netflix, TikTok, PayPal, IKEA, H&M, Starbucks, McDonalds, Coca-Cola, PepsiCo, General Motors, Mercedes, Ford, Nike, financial service providers such as VISA, MasterCard, American Express, as well as firms like the PwC, KPMG, EY and Deloitte have announced halting their services in Russia.

SWIFT Sanctions

As of March 2022, the EU has expanded the sanctions measures to prohibit entities based in the EU, as well as SWIFT, from providing financial messaging services to the seven designated Russian banks (Otkritie, Novikombank, PSB, Rossiya, Sovcombank, VEB and VTB Bank) and banks that are directly or indirectly owned (50% or more) by Russian entities, effectively ousting the Russian banks from accessing the SWIFT financial messaging service to facilitate banking transactions. It is expected that this may force Russia to rely on virtual assets to facilitate its financial needs.[15]

Russian Government Response

Russia has imposed retaliatory measures against the US and other Western nations in response to the sanctions imposed by them. The Bank of Russia has banned Russian brokers from selling securities held by foreigners, coupon payments for foreign investors holding rouble-denominated sovereign debt and dividends to overseas shareholders in Russian companies. The Decree also temporarily restricts foreign investors from selling Russian assets.

The Russian Government, vide a Presidential Decree, has ordered exporting companies, which include some of the world’s biggest energy producers, to sell 80% of their foreign currency revenues to buttress the rouble. The Russian Government has further announced support to technology companies, tax reliefs for businesses and households affected by sanctions and allocated additional funds to small and medium-sized businesses via a subsidised lending scheme.

In response to FAA and EU banning access to Russian aircrafts from their airspace, Russia has banned airlines from countries including Britain, Bulgaria, Poland and the Czech Republic from its airspace.

Key Observations for Indian Businesses

India does not implement an autonomous sanctions regime; however, the Indian Government imposes sanctions further to the UNSC Sanctions by notifying amendments to the applicable Foreign Trade Policy (FTP) of India. The Reserve Bank of India, in accordance with the Sanctions and prohibitions in force, as per the FTP as well as FATF guidelines; implements and monitors the transaction to and from sanctioned regions and entities.

It is also likely that access to assets of Indian businesses in sanctioned regions as well as transactions will be affected, further to the ousting to several Russian banks from the SWIFT network as well as the USD/ Sterling/ Euro financial systems.

It is important to note that certain Indian Banks, who work alongside the US/ internationally based clearing banks, or have branches in the US, UK, etc., may not process transactions to or from the sanctioned regions and entities or handle documents in respect of exports or linkages with any country comprehensively sanctioned by the UNSC, OFAC, UK, etc. In such cases, the Indian government and the RBI may authorise certain banks to process payments to and from sanctioned regions and entities in line with the applicable Indian laws.

Presently, to assist Indian businesses in respect of existing business with Russia, the Department of Commerce and the DGFT have set up a help desk[16] to monitor the situation and provide appropriate guidance to concerned parties. The RBI has sought information from Indian banks in order to assess the exposure of Indian stakeholders to the current situation.[17] The RBI may also set up an alternative payment mechanism to clear payments to domestic firms, as previously done in the case of US Sanctions on Iran; to ensure that payments are not affected in an event all Russian banks are excluded from the SWIFT network.[18]

Important considerations

It is important that Indian businesses operating globally are aware of the potential ways in which sanctions violation may be triggered. Sanctions may apply to non-US persons and entities who have significant investments, interests or assets in Russia, especially in the energy sector. Furthermore, OFAC is authorised to block non-US persons and entities from the US financial system where such a person or entity is engaging in activities prohibited by the sanctions program.

Based on the regulatory and legislative developments across the world, it is imperative for entities and individuals involved in business in the sanctioned regions or with designated individuals to assess and address the extent of their exposure to the Russian market. In view of the complications, it may be prudent to explore exit option where necessary. It is also important to ensure compliance with the sanctions program, as may be applicable, based on territoriality or facilitation rule. Furthermore, it is important to carry out all necessary due diligence before pursuing any continuing or new transactions with persons or entities located in the sanctioned regions. Sanctions programs generally include exemptions to allow:

i. general licences that, among other things, permit humanitarian aid such as food, medicine, medical equipment, etc., and legal representation to defend against embargo, and

ii. specific licences that permit specific transactions post OFAC review and approval.

Additionally, it may be helpful to ensure that the end-user or beneficiary of any good supplied or services provided are not on the SDN List or the SSI List by enhancing the customer KYC and due diligence measures. In view of the developments, it may be helpful to screen further transactions in the regions to assess the beneficiaries and owners of counter-parties and customers. Furthermore, in the event of a red flag or potential trade with a designated entity, appropriate disclosures may be required under the law.

It is advisable to seek legal counsel in this regard, prior to proceeding with a transaction with parties located in sanctioned regions. It is also recommended that organisations conducting businesses outside India have an internal compliance program to develop, implement, and routinely update a robust Sanctions Compliance Program, highlighting senior management commitment, encouraging a compliance culture, and training employees to understand and abide by the compliance program. Companies also need to implement necessary measures, policies and procedures to reduce potential violations, by implementing risk assessment and identifying red flags to improve the system and internal controls by regular audits.

Authors’ Note:

As of March 11, 2022, the US has issued an Executive Order prohibiting the import of Russian origin-fish, seafood,; alcoholic beverages; and non-industrial diamonds into the United States as well as the exportation, reexportation, sale, or supply, directly or indirectly, of luxury goods from the United States or by a U.S. person, wherever located, to any person located in the Russian Federation. [available at:]

Furthermore, the G7 has announced that it will revoke Russia’s Most-Favored Nation Status and to deny Russia’s borrowing privileges at multilateral financial institutions. [Available at:]

[1] Part 2 of this Blog is updated as of March 12, 2022, 10 AM IST.




[5] Executive Order 14024.



[8] Federal Aviation Administration, Notice to Air Missions, “Prohibition on Russian Flight Operations in the Territorial Airspace of the United States” (Mar. 2, 2022), available at

[9] Note: In contrast to US sanctions which may also apply to foreign entities and individuals, even though EU sanctions do inherently affect non-EU countries, the measures apply only within the jurisdiction of the European Union. Therefore, the obligations imposed are binding on EU nationals or persons located in the EU or carrying out business in the EU.


[11] (expected to be considered on Tuesday, March 1, 2022).




[15] Russia Could Use Cryptocurrency to Blunt the Force of U.S. Sanctions

[16] Trade Notice No. 36/2021-22 dated February 25, 2022.