The publication of the 14th Sanctions Package (the “Package”) by the EU Council on 24 June 2024 highlights the need for constant vigilance by subject persons and non-subject persons alike, when it comes to the general ramifications of sanctions, but especially of those linked to the Russian war in Ukraine. It is crucial for all entities and individuals who might be conducting business with other entities or individuals who might be sanctioned, or in relation to activities which are sanctioned with respect to Russia, to be mindful of these changes and ensure compliance with the EU’s regulatory framework.
14th Sanctions Package – What’s New?
The 14th Sanctions Package introduces significant restrictions, including prohibiting the provision of goods, services, or technology to Russian LNG projects and banning the importation of Russian LNG to or from EU ports. Additionally, EU banks are now barred from using the Financial Messaging System of the Central Bank of Russia (“SPFS”) or conducting business with third-country banks using SPFS. The new measures also include sanctions on Russian banks and crypto asset providers involved in defence-related transactions, a ban on importing Russian helium, and reinforced bans in relation to industrial goods and advanced technology equipment.
In addition to these economic measures, the Package also introduces restrictions related to aviation and maritime transportation, intellectual property rights, and EU and Member State funding to Russian entities.
What does this mean for you?
Sanctions compliance is crucial for both subject persons and non-subject persons under Maltese legislation, particularly in light of these updates. For subject persons, adherence to sanctions is not merely a legal obligation but also a vital aspect of maintaining the integrity and transparency of their operations.
In terms of the National Interest (Enabling Powers) Act (Cap. 365 of the Laws of Malta), non-subject persons – particularly those engaging in business activities which could be affected by the Package, as well as its predecessors – are also expected to have adequate defence mechanisms in place to combat possible sanctions breaches in relation to the goods/services being provided by their organisation.
The Package, with its stringent measures against Russian entities and certain Russia-related activity, necessitates that these entities implement robust compliance mechanisms. This includes the following measures, amongst others:
Such measures are fast becoming imperative not only to manage legal and reputational risk, but also from more practical perspectives. In conducting business with banks and other regulated entities, organisations are increasingly being asked to evidence their efforts in managing sanctions-related risks.
How can we assist?
PwC’s Financial Crime Compliance Team can assist in the implementation and enhancement of these systems, by helping you with:
understanding the nature and extent of sanctions risk your operations present;
testing of your sanctions screening systems;
reviewing your organisation’s sanctions-related policies and procedures;
setting up risk assessment tools tailored to capture any factors rendering your organisation susceptible to sanctions breaches;
as well as providing training, and more.
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