EU de-SWIFTs seven Russian banks; prohibits investments with RDIF; restricts Euro banknotes to Russia and imposes media ban

Authored by our Global Sanctions, Export Controls and Customs Teams

On 2 March 2022, the European Union (EU) adopted its fourth package of sanctions against Russia. It excluded seven Russian banks from SWIFT, in consultation with the UK, US and Canada. It also banned co-investments with the Russian Direct Investment Fund (RDIF) and the supply of euro denominated banknotes to Russia, and imposed a media ban on RT and Sputnik.

SWIFT measures

As of 12 March 2022, it will be prohibited to provide specialist financial messaging services to seven Russian banks¹, effectively banning these banks from the SWIFT messaging system, the Belgian-based Society for Worldwide Interbank Financial Telecommunication. The restrictions will affect the banks listed below and any entities established in Russia directly or indirectly owned for more than 50% by them:

• Bank Otkritie
• Novikombank
• Promsvyazbank
• Bank Rossiya
• Sovcombank
• VNESHECONOMBANK (VEB)
• VTB BANK

SWIFT cut-off measures will apply in addition to other sanctions imposed against these banks, such as capital markets restrictions² and asset freeze³. These banks are also sanctioned under the US and the UK jurisdictions.  The combined effect of these sanctions is to prohibit any entity in the US, EU or UK from transacting with any of the sanctioned banks, as well as prohibiting those banks from transacting with any entity worldwide through SWIFT.

The table below provides a summary overview of the sanctions applicable to each of the seven banks under EU, US and UK sanctions, in addition to the EU SWIFT ban:

Russian Direct Investment Fund

After being added to the SDN List in the United States, the RDIF is now facing restrictions under EU Sanctions. The new EU measures prohibit investment, participation, or contribution to projects co-financed by the RDIF. This also applies to projects in which RDIF holds minority stakes.

A grandfathering provision allows a derogation, upon Members States authorization, in relation to commitments made under contracts concluded before 2 March 2022 or their ancillary contracts.⁷

Banknote restrictions

The EU has imposed a broad prohibition on the sale, supply, transfer, or export of euro-denominated banknotes (i) to Russia or (ii) to any natural or legal person, entity or body in Russia, including specifically the government and Central Bank of Russia, or (iii) for use in Russia. Only very limited exceptions apply (i.e., personal use of natural persons travelling to Russia and for official purposes of diplomatic missions and posts which enjoy international immunities).

Media Ban

Another measure adopted today was the much discussed media ban, entailing a prohibition to broadcast the content of Sputnik and Russia Today (RT). More specifically, the ban covers the following entities:⁸

• RT – Russia Today English
• RT – Russia Today UK
• RT – Russia Today Germany
• RT – Russia Today France
• RT – Russia Today Spanish
• Sputnik'

It translates into a prohibition for operators to broadcast, facilitate, or otherwise contribute to broadcast any content of RT (as listed above) and Sputnik. The provision is likely to have a significant impact, as it is broadly drafted to cover all media platforms, including transmission or distribution by any means such as cable, satellite, IP-TV, internet service providers, internet video-sharing platforms or applications, whether new or pre-installed. The ban also suspends any broadcasting license or authorization the operators could have with RT and Sputnik.

_{1 See Council Regulation (EU) 2022/345
2 VTB, VEB, Bank Otkritie, Bank Rossiya and Promsvyazbank are also subject to EU capital markets restrictions.
3 VEB, Bank Rossiya and Promsvyazbank are listed under the EU Asset Freeze.
4 See Directive 3 under Executive Order 13662
5 See Directive 1 under Executive Order 13662
6 See Directive 1 under Executive Order 13662
7 See Council Regulation (EU) 2022/345
8 See Council Decision (CFSP) 2022/351}

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_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

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