In response to the impact of the crisis in Ukraine on global trade, the IOE&IT hosted a free webinar about how to comply with sanctions imposed against Russia in March.
Attended by 1,400 businesses, hundreds of questions were sent to us about the sanctions and considerations traders need to make if continuing to trade with Russia.
IOE&IT Academy customs and trade specialists Hamish Mackay and Raymond Burgin here answer some of the most frequently asked questions from the webinar.
Visit our 'Complying with sanctions on Russia' page for more information.
Q1: What are the current Russian sanctions?
We received several questions about what the sanctions are and how traders can find out if their goods are affected. Many of these questions came from firms in the technology and energy sectors.
Regarding the tech sector, the government says that sanctions apply to “critical industry” goods including “specified computers, electronics, lasers and sensors, telecommunications equipment and goods and technology related to aviation, aerospace, and information security”.
For energy firms, you will need to review the ‘Russia (Sanctions) (EU Exit) Regulations 2019’ on legislation.gov.uk. In particular, you need to look at ‘Schedule 3, Energy-related goods and infrastructure-related goods’ and ‘Part 1, General’ to find out which goods are impacted, as determined by their commodity codes.
The government has posted guidance about how you can determine if your goods are sanctioned here. You can also use the Real-Time Global Trade Sanctions Tracker developed by Coriolis Technologies and the IOE&IT to keep up with the changing global sanctions.
The tracker tool aggregates data directly from a range of global government sources – including, among others:
- UN, EU and UK dual-use goods lists
- UN, US and EU Consolidated Screening Lists
- and US Sanctions List (OFAC)
It then presents the information in a dynamic, searchable database.
Q2: Can I ship goods from a third country or via indirect sales to Russia?
The simple answer is yes, provided the goods being supplied are not listed under any sanctions lists and the end-user is not sanctioned.
Remember, as the exporter you are responsible for ensuring the goods you sell, and the customers you sell to, comply with UK legislation and the rules of the country from which the goods are being shipped. If you are exporting to Russia via the EU, for example, you will need to comply with both UK and EU rules.
You should also be aware that there may be extraterritorial measures depending on the origin of the content in your products. For example, if your goods are made using US-origin components, you may also need to comply with US regulation.
Q3: Am I still able to provide services in Russia?
As noted in the government guidance, sanctions have been imposed against services that “enable or facilitate certain military activities, insurance and reinsurance services, energy-related services, infrastructure services, and tourism-related services”.
Regarding services that enable military action, it lists the following activities as now sanctioned if done in connection with the Russian military or any other end-user who is connected with Russia:
- technical assistance
- armed personnel
- financial services or funds
- brokering services enabling any of the above (a-c)
Insurance and re-insurance services have been prohibited in relation to aviation and space items (including both goods and technology), as well as to persons ‘connected with Russia’ or for use in Russia. For the insuring of other goods or technologies, the government advises to check with the Export Control Joint Unit (ECJU) as to whether you can continue to provide these services or whether you may need a licence.
Energy services means any ‘specified services’ that are necessary for “relevant oil exploration or production” in Russia. Regarding tourism and infrastructure services, the prohibitions relate to the use of these services in non-government occupied territories of Ukraine.
Q4: How do I pay my Russian supplier or get paid by my Russian customer?
Financial sanctions imposed against several Russian banks are making it difficult to transact with Russian customers and suppliers. Many western banks have also stopped transacting with Russian businesses and individuals
However, not all banks have been sanctioned, and as long as your supplier or customer are not on the embargoed or sanctioned list you should still be able to pay them or get paid.
We have seen evidence of Russian companies having to change banks or use banks from EU subsidiaries to allow payment.
Please be aware though that even if the bank is not sanctioned, if your supplier or customer is listed on the sanctions list, you are not permitted to carry out any financial transaction with that entity or person.
Please review the government’s guidance on financial sanctions for more information on the rules and the penalties relating to financial sanctions. You may also want to take out legal advice if you are unsure on how you will make or receive payment with a Russian partner.
Q5: What is the impact of foreign ownership with respect to sanctions?
If your company has foreign ownership, then you need to be aware that not only must you comply with UK sanctions, but you must also comply with the sanctions set in the country of ownership.
If your parent company is from a sanctioned or embargoed country, or the parent company has sanctions placed against them, then there will be additional restrictions placed on your company. You will not be able to share any technical data with that entity and you may have to reconsider how you communicate and how you do business with that entity.
If your parent company is sanctioned, this does not automatically stop you from trading, but this does somewhat depend on the exact nature of the relationship between the firms.
You should carefully review the government guidance regarding sanctions and you may need to seek independent legal advice if you remain unclear.
Q6: Can I ship goods that have already been paid for to Russia or use goods already delivered from Russia?
Russian sanctions are specific to certain sectors and against certain individuals and entities. Provided the goods paid for are not controlled under the trade sanctions lists and the company that has paid for these goods is not sanctioned, then the goods can still be exported to Russia.
However, you should note that there are transport sanctions impacting the movement of goods to Russia.
You should also determine if your goods are dual use and if they would normally require an export licence, as all existing and new licences for dual use exports to Russia have been suspended. You should contact the ECJU if you are not sure about this.
Goods already delivered from Russia and in free circulation in the UK can still be used here. However, you should note any sanctions or controls that could apply if you were to re-export these goods.
Q7: Who is liable for ensuring compliance with the new sanctions – the UK exporter or the Russian buyer?
It is the responsibility of the supplier to ensure that the registered exporter of a product is provided with all the relevant documentation and export licences required to export that product.
This means that even if the goods are being collected under Ex Works (EXW) or Free Carrier (FCA) Incoterms, the supplier is responsible for ensuring the product is not being exported to a sanctioned country, and that all export licences, health certification and other documentation has been obtained prior to export.
If an exporter has any advance knowledge that the goods are liable to end up in a country with which trade is restricted, they are responsible for ensuring the correct procedures are followed and any licences are applied for.
If the end user is on an embargoed list, then the goods are not permitted to be exported and you could find yourself being prosecuted or fined.
If in doubt, refer to the government’s guidance or seek independent legal advice.
Q8: Are there special procedures for the movement of humanitarian aid goods to Ukraine?
Yes, the government has recently released an export notice advising of easements for the movement of humanitarian aid to Ukraine – as reported in the IOE&IT Daily Update here.
Although the government is advising firms to donate money to Ukrainians through trusted charities and aid organisations, it is allowing for customs declarations to be conducted orally (or ‘by conduct’) for goods headed to Ukraine, removing an administrative hurdle for traders.
Traders should note that there could still be issues with goods entering Ukraine via Poland and should review this information provided by the Polish government.