Two years have passed since the Russian invasion began, and other countries realise that such aggression cannot go unanswered. That is why they have been putting pressure on Russia through sanctions from the very beginning. While Ukraine has gradually got used to the reality of war, Russia has had to adapt to the various constraints that sanctions bring. The impact of these measures is noticeable and Russia is therefore intensively looking for new ways to circumvent the sanctions and mitigate their negative impact on the economy and the daily functioning of the state.

Russia has quickly learned to circumvent sanctions with the help of third countries. The Russian government has taken specific steps to encourage procurement activities by issuing a decree empowering the Federal Agency for Public Property Management to seize and manage Russian assets owned or managed by legal entities or individuals from “hostile” countries. It also issued decrees restricting the transfer of dividends to foreign bank accounts of persons originating from these “hostile” countries.

The G7 has actively worked to restrict Russian access to key markets, which has hit the Russian economy and limited the ability of Moscow to generate revenue to purchase Western technology. In February 2023, the G7 announced the creation of a new Enforcement Coordination Mechanism (ECM), and in September of the same year a working group focusing on export control enforcement was established. This working group allows G7 countries to analyse and discuss the latest developments in these measures. In cooperation with the G7, the European Union has prepared a methodological document to help the private sector identify the risks of circumventing sanctions against Russia.

The document contains a list of key items that could help Russia achieve military success. This list was compiled based on data from analysed Russian military equipment and equipment found on the battlefields. At the top of the list are integrated circuits necessary for precision guidance of weapon systems, followed by machinery, electronic components and other mechanical components. At the date of publication, the list includes a total of 50 items.

There are also indicators, so-called “red flags”, which the industry should look out for. These indicators include sudden changes in business activity after 24 February 2022, false or incomplete documentation, end-user confidentiality, transaction irregularities, or suspicious customer information. Information may be suspicious if the goods ordered are not related to the customer’s industry, the customer does not disclose all information on its website, or the customer removed all links to Russia from its website after 24 February 2022, even though it previously exported to that country.

The guidance also includes steps on how to proceed with trade security verification. The first step is to verify the customer and check their details against publicly available sanctions lists to rule out possible cooperation with a sanctioned entity. It is also possible to request additional documentation or contract updates. The third step involves answering three key questions: Are the identified “red flags” explainable and justifiable? Can you prove the party’s bona fides? Can you confirm the legitimacy of the transaction? If doubts persist, it is recommended to withdraw from the transaction and inform the relevant authority.

The General Court of the European Union recently dealt with three actions concerning the ban on legal consulting to the Russian government and entities based in Russia, which was introduced by the Council of the European Union in 2022. This ban applies to all persons providing legal advice within the EU, except in a few specific cases. They cannot provide their services to the Russian government and to legal persons, entities or bodies established in Russia. The aim is to increase pressure on Russia.

The actions against the ban argued that the measure was not sufficiently justified and violated fundamental rights such as access to legal advice, the right to professional confidentiality of lawyers and their independence. It was further argued that the ban violated the rule of law and the principles of proportionality and legal certainty.

The General Court dismissed all three actions, but accentuated that under the EU Charter of Fundamental Rights, everyone has the right to effective legal protection, which includes the possibility of legal advice and representation by a lawyer in the event of litigation in progress or potential litigation. However, the general prohibition on legal advice to these Russian entities does not apply to services related to judicial, administrative or arbitration proceedings. Also, legal advice provided to individuals remains unaffected by this prohibition. The General Court disputed the other arguments, citing the EU Charter of Fundamental Rights.

The war in Ukraine continues. Not only the situation on the front will continue to evolve, but also the strategy of the aggressor looking for new ways to penetrate the Western market and maintain its war position. Not only Russia is becoming a guarded country, but also Belarus, which has very good friendly relations with Russia. The G7 and the EU aim to regularly update the list of sanctions items based on current developments, which they plan to monitor continuously.