export controls - russia: first broad economic sanctions agreed – what is the impact to uk...
DESCRIPTION
On 29 July 2014, the EU imposed a set of broader economic sanctions against Russia. UK exporters need to be aware of how these affect their business dealings with Russia and what can be done to continue trading compliantly with Russia in the wake of an ever-changing landscape of rules and regulations. Background At the end of July, the EU imposed sanctions targeted at specific sectors of the Russian economy. Prior to this, the EU restricted measures to visa bans and asset freezes culminating in financial and export restrictions for specific Russian persons, companies and organisations. On 29 July, the EU expanded sanctions to include entire Russian business sectors. UK exporters operating in these may face export restrictions, delays and potentially greater financial cost. Which Russian business sectors are affected? Sanctions will now apply EU-wide and target predominantly the Russian military & defence, oil & energy and financial sectors. Specific sanctions imposed include: an export ban for goods which have both commercial and military applications, aimed at military end-users; a prohibition on arms trading (embargo); access restrictions to sensitive technologies used for oil production and exploration; limitations for state-owned Russian banks to the EU's capital markets. What is the impact for UK businesses? As a result of increasing sanctions and export control restrictions, UK companies (and existing subsidiaries/branches) wishing to export to the above mentioned sectors in Russia may experience: that the increased screening requirements to prevent accidental, prohibited exports to persons mentioned on sanctions lists leads to higher administration costs; that the refusal of granting export control authorisations or the suspension of existing licences severely affects planned shipments and sales to Russia; difficulties in receiving or sending funds to a Russian bank, refusal by a UK bank to clear funds to a certain Russian or Ukrainian destination or recipient; and enhanced scrutiny by UK and EU authorities to verify compliance with sanction and export control regulations. Keeping up-to-date UK businesses trading with Russia must ensure they keep up-to-date with the ever changing landscape of sanctions and export control regulations, especially as relates to changes to destination controls. A business that is pro-active in the way it receives updates and information can plan for changes and adjust its business model and supply chain to minimise the impact of sanctions and trade embargoes. Manage export controls and sanctions effectively UK exporters should develop or critically review their internal export control compliance programmes to ensure compliance with all rules and regulations. The provision of targeted training and conducting due diligence checks can not only identify compliance gaps when dealing with Russia but can enhance a business's financial performance.TRANSCRIPT
Russia: First broad economic sanctions agreed – What is the impact to UK business?
On 29 July 2014, the EU imposed a set of broader economic sanctions against Russia. UK exporters need to be aware of how these affect their business dealings with Russia and what can be done to continue trading compliantly with Russia in the wake of an ever-changing landscape of rules and regulations.
Background
At the end of July, the EU imposed sanctions targeted at specific sectors of the Russian economy. Prior to this, the EU restricted measures to visa bans and asset freezes culminating in financial and export restrictions for specific Russian persons, companies and organisations. On 29 July, the EU expanded sanctions to include entire Russian business sectors. UK exporters operating in these may face export restrictions, delays and potentially greater financial cost.
Which Russian business sectors are affected?
Sanctions will now apply EU-wide and target predominantly the Russian military & defence, oil & energy and financial sectors. Specific sanctions imposed include:
an export ban for goods which have both commercial and military applications, aimed at military end-users;
a prohibition on arms trading (embargo);
access restrictions to sensitive technologies used for oil production and exploration;
limitations for state-owned Russian banks to the EU's capital markets.
What is the impact for UK businesses?
As a result of increasing sanctions and export control restrictions, UK companies (and existing subsidiaries/branches) wishing to export to the above mentioned sectors in Russia may experience:
that the increased screening requirements to prevent accidental, prohibited exports to persons mentioned on sanctions lists leads to higher administration costs;
that the refusal of granting export control authorisations or the suspension of existing licences severely affects planned shipments and sales to Russia;
difficulties in receiving or sending funds to a Russian bank, refusal by a UK bank to clear funds to a certain Russian or Ukrainian destination or recipient; and
enhanced scrutiny by UK and EU authorities to verify compliance with sanction and export control regulations.
Keeping up-to-date
UK businesses trading with Russia must ensure they keep up-to-date with the ever changing landscape of sanctions and export control regulations, especially as relates to changes to destination controls. A business that is pro-active in the way it receives updates and information can plan for changes and adjust its business model and supply chain to minimise the impact of sanctions and trade embargoes.
Manage export controls and sanctions effectively
UK exporters should develop or critically review their internal export control compliance programmes to ensure compliance with all rules and regulations. The provision of targeted training and conducting due diligence checks can not only identify compliance gaps when dealing with Russia but can enhance a business's financial performance.
For further information in relation to any of the issues highlighted in this Duty Alert please contact;
Ian Worth Customs & Export Controls Associate Director [email protected] +44 (0)20 7728 2174
Arne Mielken Customs & Export Controls Manager [email protected] +44 (0)20 7728 3426 Ilektra Sarri Customs & Export Controls Associate [email protected]
+44 (0)20 7728 3437
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Export Control Alert