UK imposes asset freezes, announces broad upcoming sanctions against Russia; details of EU’s first wave of sanctions

8 min read

Authored by our Global Sanctions, Export Controls and Customs Teams

On 24 February 2022, the United Kingdom announced that asset freezes had been imposed on VTB Bank, 5 state-owned defence enterprises and 5 individuals. Also, it was announced that asset freezes would shortly be applied to an additional 100 entities and individuals (as yet unspecified, but expected to include other Russian banks), along with other measures. 

And late on 23 February 2022, the European Union published the details of its first sanctions package in response to Russia's recognition of the non-government controlled areas of the Donetsk and Luhansk oblasts of Ukraine as independent. For now, the EU has imposed asset freeze restrictions on more than 300 members of Russia's State Duma as well as 22 other Russian individuals and 4 entities, including Bank Rossiya, Promsvyazbank and VEB. The EU also imposed broad trade and investment restrictions in relation to the relevant areas, similar to the existing sanctions on Crimea. Finally, the package consists of new debt and equity restrictions on the Russian State, its Government and the Central Bank of Russia. More EU sanctions are likely to follow soon.


New UK Sanctions

Designations of Entities and Individuals

Prime Minister Boris Johnson announced that the following Russian entities and individuals would be added to the UK's list of designated persons:

  • VTB Bank
  • Uralvagonzavod
  • United Aircraft Corporation
  • United Shipbuilding Corporation
  • Rostec
  • Tactical Missiles Corporation
  • Denis Alexandrovich Bortnikov, Deputy President and Chairman of VTB Bank's Management Board
  • Petr Mikhailovich Fradkov, Chairman/CEO of Promsvyazbank
  • Elena Alexandrovna Georgieva, Chairwoman of Novikombank (a Rostec subsidiary)
  • Kirill Nikolaevich Shamalov, Deputy Chairman and Shareholder of SIBUR Holding
  • Yury Borisovich Slyusar, Director General of United Aircraft Corporation

As a result of their designation, these persons are subject to a UK asset freeze (and for the individuals, a travel ban).

The asset freeze means that all funds and economic resources that are owned, held or controlled by these persons, and that are under UK jurisdiction, must be frozen, and that no funds or economic resources can be made available (directly or indirectly) to or for the benefit of these persons, unless permitted by a licence issued by HM Treasury. 'Economic resources' are broadly defined to include any assets that can be used to obtain funds, goods or services – for example, real estate assets.

Importantly, the asset freeze extends to entities that are owned or controlled (directly or indirectly) by these designated persons. The funds and economic resources of such entities must also be frozen, and funds and economic resources cannot be made available to such entities.

Further Financial Sanctions, Export Controls and Other Measures

In addition to these designations, the Prime Minister announced a raft of other measures to be introduced in the coming days and weeks. Details of these measures are expected to be set out in legislation to be put before Parliament early next week, but the broad measures announced include the following:

  • Asset freezes against approximately 100 other entities and individuals. The announcement states that these will include asset freezes "against all Russian financial institutions".
  • Measures to prevent Russian companies from issuing transferable securities and money market instruments in the UK, adding to the UK's existing capital market sanctions.
  • A power to prevent specified banks from accessing Sterling and clearing payments through the UK, cutting off their access to UK financial markets.
  • Imposing a £50,000 limit on UK bank accounts held by Russian nationals.
  • Enhanced export controls, including a prohibition on exporting high-end and critical technical equipment and components in the electronics, telecommunications, aerospace and other sectors.
  • Expanding sanctions against Belarus, potentially to include those set out above.
  • Extension of the current Crimea-related financial and trade sanctions to the Donetsk and Luhansk regions.
  • Banning the Russian national carrier Aeroflot from UK airspace. 
  • Bringing forward new measures to combat financial crime in the Economic Crime Bill (expected to be before Parliament ahead of the Easter recess).

The Prime Minister indicated that these measures would be taken in coordination with the US and EU, but the specifics of these measures will not be clear until the implementing legislation is put before Parliament. 

In particular, it is unclear how far the UK will follow the EU's lead by putting in place a wind-down mechanism for asset freezes against VTB and other Russian financial institutions. However, a statement1 by the Foreign Secretary Liz Truss, which summarises the proposed measures, notes that OFSI will publish any general licences related to sanctions against VTB. This suggests that at least some wind-down activity may be authorised, but the extent and timing of that are as yet unclear.


First wave of EU Sanctions2

Designations of Entities and Individuals

The EU has imposed an asset freeze on more than 300 members of the Russian State Duma, who voted in favour of Russia's recognition of the non-government controlled areas of the Donetsk and Luhansk oblasts of Ukraine ("Specified Territories"). A separate EU asset freeze has been imposed on 26 individuals and entities, which include: 

  • Bank Rossiya
  • Promsvyazbank
  • Vnesheconombank (VEB)
  • Sergei Shoigu, Russian Defence Minister
  • Dmitriy Grigorenko, Russian Deputy Prime Minister and Chairman of Supervisory Council of VTB
  • Maxim Reshetnikov, Russian Minister of Economic Development and Member of the Supervisory Council of VTB
  • Denis Aleksandrovich Bortnikov, Deputy President and Chairman of VTB Bank Management Board
  • Andrei Leonidovich Kostin, President-chairman of VTB
  • Igor Shuvalov, Chairman of State Development Corporation VEB
  • Anton Vaino, Chief of Staff of the Presidential Executive Office

Under the EU asset freeze, which took effect on 23 February 2022, all funds and economic resources in the EU belonging to or controlled by the listed persons must be frozen. Furthermore, no funds or economic resources may be made available – directly or indirectly – to or for their benefit, unless authorized or exempt. Listed individuals are further subject to a travel ban.

With respect to the newly targeted banks, i.e. Bank Rossiya, Promsvyazbank and VEB, EU Member State authorities may authorise the release and making available of funds and economic resources necessary for a termination by 24 August 2022 as long as it relates to operations, contracts, or other agreements, including correspondent banking relations, concluded with these banks before 23 February 2022.

Trade and Investment Restrictions for Parts of the Donetsk and Luhansk Regions

The EU has imposed broad trade and investment restrictions on the Specified Territories. Such restrictions, which apply from 24 February 2022 and are very similar to existing EU sanctions targeting Crimea, cover: 

  • an import ban (including related financing and financial assistance, as well as (re)-insurance) on goods originating in the Specified Territories;
  • an investment ban with respect to, for example, real estate located in or entities in the Specified Territories (including any acquisition or extension of participation), provision of any related loan or credit or other financing, as well as the provision of investment services related to these activities;
  • an export ban (including related technical assistance, brokering services, financing and financial assistance) with respect to listed goods and technology suited for use in specified key sectors (i.e. transport; telecommunications; energy; and prospection, exploration and production of oil, gas and mineral resources) to any person in or for use in the Specified Territories;
  • a ban on technical assistance or brokering, construction or engineering services directly relating to infrastructure in the Specified Territories in the specified key sectors (i.e. transport; telecommunications; energy; and prospection, exploration and production of oil, gas and mineral resources); and
  • a ban on the provision of services directly related to tourism activities in the Specified Territories.

These sanctions measures include various grandfathering and wind-down provisions. They allow for, for example, execution until 24 May 2022 of trade contracts (or ancillary contracts) concluded before 23 February 2022, or execution until 24 August 2022 of certain other contracts (or ancillary contracts) concluded before 23 February 2022. These are subject to prior notification to the relevant EU Member State authorities. 

Further, EU Member State authorities may authorise certain restricted transactions in certain specified cases (e.g. if involving consular missions or international organisations, hospitals, health and safety).

Capital Market Sanctions on the Russian Government

The EU has imposed new equity and debt restrictions on Russia, its government and the Central Bank of Russia, aiming to restrict their access to the EU's capital and financial markets. 

These sanctions are closely modelled on the existing EU capital market sanctions targeting major Russian state-owned banks (i.e. Sberbank, VTB Bank, Gazprombank, VEB, and Rosselkhozbank), energy companies (i.e. Rosneft, Transneft, and Gazprom Neft) and defence companies (i.e. OPK Oboronprom, United Aircraft Corporation, and Uralvagonzavod) and certain of their affiliates since 2014, but they differ to some extent. 

More specifically, the new EU sanctions prohibit the direct or indirect purchase, sale, provision of investment services for and assistance in the issuance of, or other dealings with respect to transferable securities and money-market instruments issued after 9 March 2022 by Russia, its government, the Central Bank of Russia or any legal entity acting on behalf or at the direction of the Central Bank of Russia. Notably, these new equity sanctions apply to transferable securities and money-market instruments of any maturity.

The EU also prohibits directly or indirectly making or being part of any arrangement to make any new loans or credit of any maturity to these entities after 23 February 2022. The new debt sanctions, however, do not apply if the loans or credit relate to non-prohibited EU-related trade of goods and non-financial services. Further, these sanctions do not apply to drawdowns or disbursements made under contracts concluded before 23 February 2022 if certain conditions are met (e.g. no contractual modification, fixed maturity date).

There is no exhaustive list of the exact entities covered by the new EU capital market sanctions. It is therefore important that operators consider carefully whether any Russia-related transactions may involve new equity or debt issued by or extended to Russia, its government and the Central Bank of Russia, be it directly or indirectly by an entity acting on their behalf or at their direction. 


The Foreign Secretary's statement is available here.
See all relevant legislative acts here.


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