The EU’s 19th Russian Sanctions Package

The EU recently released its 19^th package of financial, economic and trade sanctions in response to Russia’s military aggression against Ukraine. The sanctions include asset freezes and restrictions on trade with, and investments in, Russia and Belarus. Sanctions apply to all EU legal and natural persons, regardless of location, and to all activities carried out within the EU, even by non-EU parties. While not as sweeping or revolutionary as some previous packages, the 19^th package is still impactful. Read analysis from our Financial Services and Dispute Resolution teams to learn about what this all means for you.

What you need to know

• The EU has released its 19^th package of sanctions against Russia and Belarus, which includes new and amended financial and trade restrictions.

• Existing restrictions on providing certain business-relevant services to the Government of Russia or legal persons, entities or bodies established in Russia have expanded. In those circumstances, it will now also be prohibited to provide integrated engineering, urban planning, and artificial intelligence services, among others.

• There will be a ban on any transaction with certain non-Russian banks, or credit or financial institutions.

• EU sanctions apply to all EU natural or legal persons, wherever they are in the world, as well as all business done within the EU or which has an EU nexus. Penalties for violating EU sanctions are determined by Member State national laws, however, new proposals include plans for a penalty of up to 10 years in prison.

The European Union (EU) recently passed its 19^th sanction package in response to the February 2022 invasion of Ukraine. It amends existing financial (asset freeze) and trade (in goods and services) restrictions. Amendments will be effective and binding on all EU persons or entities. In this article, we highlight some key elements of the changes that we believe to be the most important or relevant. While our insight focuses on restrictions against Russia, generally, the restrictions against Belarus are closely related.

New financial restrictions

Financial (asset freeze) restrictions are established under Regulation (EU) No 269/2014. Under this regulation, it has been necessary to freeze the “funds” and “economic resources” of, and prohibited to provide “funds” or “economic resources” to or for the benefit of:

1. Parties specifically designated in the regulation
2. Parties which are “owned” or “controlled” by a specifically designated party
3. Parties “associated with” a designated party

The 19^th package has simplified these rules:

First, the restriction concerning parties “associated with” a designated party has been removed. The other two restrictions otherwise remain in effect.

Second, the operative part of one of the new EU laws giving rise to the new package, as it concerns Russia, now directly defines “owning” and “controlling.” Previously, under the regulation, these terms had been defined in supportive guidance, non-operative parts of legal acts, or EU court decisions.

Crucially, although “owning” and “controlling” are now directly defined under the regulation, the meaning of those terms has not changed from their existing interpretation under relevant EU Best Practices guidance. An equivalent legislative change was not made to EU sanctions concerning Belarus, namely Regulation (EU) No 765/2006.

Overall, these changes should provide more certainty for EU operators. While the restriction had been in effect, interpreting “associated with” was an onerous task. The term was not defined. Previous guidance from the European Commission only stated that some “associated” parties may “happen to be mentioned” in the narrative text that normally accompanies a legal instrument that designated a party. This guidance was less than conclusive and had resulted in EU operators having to make judgment calls as to what an “association” could be.

Likewise, the incorporation of the definitions of “owning” and “controlling” into EU law suggests that the EU is keen on formalising consistent and uniformly understood concepts that are broadly in line with relevant EU guidance. The amendments effecting this change specify that the change was intended to “harmonise terminology” and “ensure consistent application of [EU sanctions against Russia] and its alignment with other Union restrictive measures frameworks,” which “is essential to avoid ambiguity, enhance legal certainty and ensure the effectiveness of [sanctions].”

This amendment formalises the ownership threshold change from July 2024 changing the understanding of “own” from “more than 50%” to “50% or more”[1]. It now aligns with US sanctions, but not UK sanctions law, which remains "more than 50%". Business should be aware of these differing standards.

Separately, the EU designated several dozen new parties. These include various Russian officials, particularly those in targeted industries and government, and certain Chinese, Russian, and UAE entities involved in the energy industry. These include significant players such as PJSC Energiya and Litasco Middle East DMCC. With these new designations, the EU will have sanctioned over 2,500 persons and/or entities in response to the invasion of Ukraine. The designation of additional parties in these jurisdictions further underscores the growing reach of EU sanctions.

New trade restrictions

Trade restrictions concerning Russia are established under Regulation (EU) No 833/2014. The 19^th package has introduced new restrictions and sharpened existing restrictions. These are summarised as follows:

• Existing restrictions on providing certain professional services to the Government of Russia or Russian entities have expanded. EU parties will now also be restricted from providing integrated engineering, urban planning, engineering-related scientific and technical consulting, and artificial intelligence services, among others, to the Government of Russia or Russian entities.
• It will now be prohibited to engage in “any transaction” with certain non-Russian entities, most of which are credit or financial institutions including:
  • CJSC Alfa-Bank (Belarus)
  • OJSC Sber Bank (Belarus)
  • VTB Bank (Belarus)
  • VTB Bank (Kazakhstan)
  • Payeer
  • CJSC Spitamen Bank (Tajikistan)
  • OJSC Commerce Bank of Tajikistan
• Existing restrictions to providing crypto-asset wallet or custody services to Russian nationals or entities will now include restrictions on issuing payment instruments or electronic money. This restriction will not apply to nationals of a Member State or Russian persons that hold a temporary or permanent residency permit in an EEA country.
  • In practice, this will likely result in a new compliance burden for industry. We note there are attempts to soften this requirement by stating that this new restriction should not “impose obligations on payment initiation service providers” to “determine the nationality, residence or place of establishment of payment service users on a transaction-by-transaction basis” and that “primary responsibility for sanctions compliance in relation to the execution of payment transactions rests with the account-servicing payment service provider.”[2] However, it is unclear how far this could be relied upon to exempt industry from liability for sanctions violations and it remains to be seen how else a payment initiation service provider could otherwise comply with this new restriction.
• From 25 April 2026, EU parties may not purchase, import, or transfer certain liquified natural gas that originates from Russia. If there is a pre-existing contract that was concluded before 17 June 2025, then this restriction will not become effective until 1 January 2027.
• EU operators are now restricted from connecting to the System for Transfer of Financial Messages (SPFS) or “any systems” of the Central Bank of Russia or other Russian entity “that include a financial messaging functionality,” such as the Fast Payment System and/or Mir.
• The winddown period for certain joint ventures or similar legal arrangements involving entities controlled by the Government of Russia or the Central Bank of Russia has been extended until 31 December 2026.
• New restrictions concerning various Russian special economic zones, including on acquiring a new or extending an existing participation in ownership or control of entities that are registered in the special economic zones or providing loans, credit, or investment services to these entities.

EU operators should be mindful of relevant derogations and delayed commencement dates, which provide opportunities to winddown existing arrangements.

Conclusion

With 19 sanctions packages since February 2022, and reports that a 20^th is already being drafted, the EU is continuing to tighten its sanctions program and further limit the types of economic activity allowed with Russia.

Since it entered into force last year, Directive 2024/1226 requires all Member States to amend their laws to criminalise certain sanctions violations or otherwise set certain punitive standards like fines and periods of imprisonment. Currently, the consequences for violation of these sanctions can vary. In some Member States, a violation of EU sanctions may result in only an administrative fine, while in others, including Ireland, it may be deemed a criminal offence. Under pending Irish legislation to transpose this Directive, the possible penalties would in some circumstances increase imprisonment to up to 10 years and/or otherwise impose a fine as high as 5% of a company’s worldwide turnover. Given what is at stake, compliance has never been more important.

If you are interested in discussing how your policies and procedures can comply with EU sanctions against Russia or Belarus, or wish to discuss any of the above information, please a member of our Financial Services or Dispute Resolution teams.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

[1] EU Best Practices for the Effective Implementation of Restrictive Measures

[2] Recital 19, Regulation (EU) No 2025/2023 amending Regulation (EU) No 833/2014