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New sanction restrictions imposed by the EU come into force on 01.05.2024

DATE: April 11, 2024 | AUTHOR: AT

Important new sanction restrictions come into force on 01 May 2024 for payments by European Union Companies with Russian participation.

If the Companies established in the Union whose proprietary rights are directly or indirectly owned for more than 40 % by:

(a) a legal person, entity or body established in Russia;

(b) a Russian national; or

(c) an individual residing in Russia,

such companies will be required to report on a quarterly basis to the competent authority of the Member State where they are established, within two weeks of the end of each quarter, any transfer of funds exceeding 100 000  EUR out of the Union that they made during that quarter, directly or indirectly, in one or several operations (art. 5r of the Council Regulation (EU) No 833/2014).

For instance, in Germany, the Deutsche Bundesbank will be the competent authority, while in Cyprus the Financial Sanctions Advisory Committee (SEOK) and the Sanctions Enforcement Unit (MEC) are responsible for sanctions enforcement.

The above restrictions apply to companies established in the Union, even if their shareholders are (i) citizens with dual citizenship (of the Russian Federation and any other country) or (ii) any foreign citizens residing in the Russian Federation.

Article 5r also requires credit and financial EU institutions to report the above – mentioned transfers of companies with Russian participation to the competent authority of the Member State within two weeks after the end of each six-month period. This obligation on financial institutions arises from 1 July 2024.

The new responsibilities for companies and banks are focused on identifying transactions, organisations and business sectors that present a serious risk of breaching and evading sanctions.

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