On 19 June 2020, the European Commission issued its Opinion in relation to best practice measures on the implementation of the financial measures specified in Article 2 of Council Regulation (EU) No. 269/2014 (Regulation 269).
To recap, EU-Russia/Ukraine sanctions currently comprise four key measures following the events of 2014:
- Council Regulation (EU) 208/2014, placing restrictive measures on those responsible for the misappropriation of Ukrainian state funds
- Regulation 269, comprising restrictive measures on those perceived as responsible for threats to Ukrainian territorial integrity and sovereignty
- Council Regulation (EU) 692/2014, imposing an effective EU embargo on Crimea and Sevastopol
- Council Regulation (EU) 833/2014, imposing so-called “sectoral sanctions” on Russian state companies
While the new guidance deals solely with Regulation 269 it will no doubt be useful for practitioners and regulators alike when dealing with other provisions in the EU’s Russia sanctions toolbox as well as EU sanctions more broadly. The guidance also complements other more general interpretative guidance on EU restrictive measures which the Commission has released over the years (latest version can be found here: EU Best Practices Guidance.
The Opinion was issued in response to a set of pre-determined questions submitted by various national competent authorities (NCAs) to the Commission. The questions related to the situation where a designated person under Regulation 269 had a management role (the Manager) in non-designated, non-EU entities, and specifically:
- Whether the assets of the Manager should be frozen?
- Whether EU economic operators separately assess whether the Manager has control over each asset (eg bank account) of the non-EU entity in order to freeze them?
- Whether EU economic operators should block all financial transactions only to bank accounts of the non-EU entity, or both to and from said bank accounts?
- Does it mean that, before each financial transaction with the non-EU entity, EU economic operators must assess whether the transaction makes economic resources available to the Manager?
- Can providing services by EU economic operators to or working for the non-EU entity be considered as making economic resources available to the designated person?
Separately to the fact pattern above, the Opinion also considered whether NCA may authorise fees charged for the holding of funds on the current account of a client with whom a bank has terminated cooperation after clearing the account balance and closing the account. The context here being that NCAs may in certain circumstances authorise payments out of frozen funds for the payment of fees and service charges under Article 4(1)(c) of Regulation 269.
The Opinion is short, to the point and broadly reiterates the Commission’s more expansionist view of EU sanctions and restrictive measures. It also reiterates the usual disclaimer that best practice guidance constitutes non-binding recommendations reflecting the common understanding by the Member States and the Commission, of certain provisions of EU restrictive measures, which aim to promote uniform implementation.
The Commission’s Opinion can be found here.
The Commission’s press release can be found here.