A - Consolidated FAQs on the implementation of Council Regulation No 833/2014 and Council Regulation No 269/2014

  • Updated on Jan 23, 2025
  • Published on Jan 22, 2025
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RELATED PROVISION: COUNCIL REGULATION 833/2014; COUNCIL REGULATION 269/2014

Last update: 15 June 2022

In reaction to the invasion of Ukraine by Russia, the EU has agreed on a wide range of restrictive measures against Russian individuals and entities in order to cripple Russia’s ability to finance the war and to impose painful costs on Russia’s political elite responsible or otherwise instrumental for the realisation of this unprovoked military attack on its neighbouring nation. Beyond individual asset freezes, travel bans and visa restrictions, these restrictive measures comprise far-reaching trade restrictions in a number of economic sectors, as well as restrictions for activities in the financial sector.

In order to facilitate economic operators’ compliance with the restrictive measures, the Commission keeps updating its FAQs and other developed tools such as the EU sanctions map.

Last update: 8 April 2022

Yes it is.

3. Does the European Commission provides for a consolidated text with all sanctioned individuals and entities, as well as with all the TARIC codes of the targeted goods? Last update: 15 June 2022

As regards the list of all individuals and legal persons subject to an asset freeze, please note that the Commission manages a Consolidated List of all designations, which is up to date and available on the EU Sanctions map.

As regards the TARIC codes, the TARIC database is regularly updated in order to include all targeted goods.

Last update: 8 April 2022

Sanctions adopted pursuant to Article 215 TFEU are to pursue the objectives of the Common Foreign and Security Policy. In line with these objectives, it is for the Council to decide on the scope of sanctions, including on which persons - irrespective their nationality – are subject to these measures.

Last update: 8 April 2022

Since the beginning of Putin’s aggression against Ukraine, many European citizens have shared their concerns about peace in Europe, shown solidarity with Ukrainian refugees and supported the need for Ukraine to receive political, financial and humanitarian assistance. By aiming to undermine the Kremlin’s ability to pursue the invasion, sanctions are contributing to restoring peace in Ukraine and the region. Together with other EU policies, sanctions are a concrete means to uphold the EU values of human dignity, freedom, democracy, the rule of law and human rights.

Last update: 8 April 2022

Sanctions are targeted at the Kremlin and its accomplices. They aim at weakening the Russian government’s ability to finance its war of aggression against Ukraine and are calibrated in order to minimise the negative consequences on the Russian population. In addition, sanctions are designed to maximise the negative impact for the Russian economy while limiting as much as possible the consequences for EU businesses and citizens.

Ensuring an effective and diligent implementation of sanctions is key to preventing circumvention. This is primarily the responsibility of Member States. In this process, the European Commission is fully committed to assisting them and ensuring a consistent implementation across the EU.

Last update: 8 April 2022

There is no general prohibition for EU citizens to make payments towards Russian nationals holding a bank account in a Russian bank. It is however important to make sure that a payment does not breach other prohibitions, for instance that it is not in favour of a natural person or entity designated under Council Regulation No 269/2014, or does not serve to settle a transaction prohibited under Council Regulation No 833/2014.

Receiving money for a deposit with an EU credit institution is only prohibited under the specific case laid down in Article 5(b)(1) of Council Regulation No 833/2014, whereby: “It shall be prohibited to accept any deposits from Russian nationals or natural persons residing in Russia, or legal persons, entities or bodies established in Russia, if the total value of deposits of the natural or legal person, entity or body per credit institution exceeds 100 000 EUR.” This prohibition to accept deposits does not apply when the person making the deposit is a national of

a Member State, a country member of the European Economic Area or Switzerland, or a person having a temporary or permanent resident permit in one of these countries (Article 5b(2)). Deposits with EU credit institutions which are necessary for non-prohibited cross border trade in goods and services between the Union and Russia are allowed, even if they come from Russian nationals or natural persons residing in Russia, or legal persons, entities or bodies established in Russia are also allowed (Article 5b(3)).

8. I am a small entrepreneur based in the EU and I have a contract concluded with a legal entity registered in Russia. The contract dates from before the entry into force of the current sanctions. Can I still perform payments to the Russian entity under the current contract? Can I still receive payments ordered by the Russian legal entity?

Last update: 8 April 2022


There is no general prohibition for EU entrepreneurs to make payments towards legal entities registered in Russia. It is however important to make sure that the payment does not breach other prohibitions, for instance that it is not in favour of a natural person or entity designated under Council Regulation No 269/2014, or does not serve to settle a transaction prohibited under Council Regulation No 833/2014. Your national competent authority will assist you in determining whether any of the above is the case. To help you determine whether the counterparty to your contract is designated under Council Regulation No 269/2014, you may also check the EU Sanctions Map and use the “Search” function. Your national competent authority can further support in determining whether the goods or services that you deliver under the contract are subject to an export ban under Council Regulation No 833/2014.

There is also no general prohibition on receiving payment made by Russian legal entities.

Deposits on EU credit institutions ordered by a Russian legal entity are only prohibited under the specific case laid down in Article 5(b)(1) of Council Regulation No 833/2014, whereby: “It shall be prohibited to accept any deposits from Russian nationals or natural persons residing in Russia, or legal persons, entities or bodies established in Russia, if the total value of deposits of the natural or legal person, entity or body per credit institution exceeds 100 000 EUR.” Importantly, this prohibition does not apply when the deposit is necessary for non-prohibited cross-border trade between the Union and Russia (Article 5b(3)). In other terms, if the goods or services that your provide your Russian client(s) with are non-prohibited trade under Council Regulation No 833/2014, you are not subject to any restriction for receiving payments from your client(s).

Should the object of your contract be the provision or acquisition of goods or services which are subject to respectively an export or an import ban under Council Regulation No 833/2014, please note that, depending on the goods or services in question, you might still be able to perform the contract and receive or make payments until a certain date, subject to the relevant provision in Council Regulation No 833/2014. Your national competent authority will then assist you in determining, if at all, until which date you might be able to perform the contract, based on the goods or services that you trade.

Last update: 8 April 2022

If neither you nor your client are a designated person under Council Regulation No 269/2014 and are not providing services whose trade is prohibited under Council Regulation No 833/2014, we see no reason why your bank should be restricting your account. The sanctions do not provide a legal basis to refuse payments to your account based on your Russian nationality. Further, as you have a permanent residence permit in an EU Member State, you are also exempted from the prohibition to receive deposits from Russian nationals or natural persons residing in Russia, or legal persons, entities or bodies established in Russia in case your account balance would exceed EUR 100 000, pursuant to Article 5 (b) (2) of Council Regulation No 833/2014.

You may want to contact your national competent authority in relation to the situation.

Last update: 8 April 2022

It is the role of your national competent authority to help you assess your options. The details provided here do not allow for an assessment of whether there might be a legal basis justifying that your transfer be rejected. With more details, your national competent authority will be able to assess the existence of such a legal basis, or absence thereof.

Last update: 8 April 2022

If you not are a designated person under Council Regulation No 269/2014 and the money you seek to receive or transfer does not serve to settle the provision of goods or services whose trade is prohibited under Council Regulation No 833/2014, we see no reason why your bank should be restricting your account. The sanctions do not provide a legal basis to refuse payments to your account based on your Russian nationality. Further, if you have a permanent or temporary residence permit in an EU Member State, you are also exempted from the prohibition to receive deposits from Russian nationals or natural persons residing in Russia, or legal persons, entities or bodies established in Russia in case your account balance would exceed EUR 100 000, pursuant to Article 5 (b) (2) of Council Regulation No 833/2014. Should you not have a permanent or temporary residence permit in an EU Member State, the bank should indeed not allow the credit of any incoming transfer that you as a Russian citizen would make towards it, if and only if your account balance would be in excess of EUR 100 000. In any event, the possibility of holding an account balance of up to EUR 100 000 would still leave you headroom for paying monthly utilities and taxes for your apartment.

You may want to contact your national competent authority in relation to the situation.

Last update: 8 April 2022

Council Regulation (EU) No 269/2014 of 17 March 2014 prohibits EU operators from making any funds or economic resources available to persons designated under its Annex I, directly or indirectly, whether by gift, sale, barter or any other means, including the return of the listed person’s own resources (Article 2(2)). In principle, and by way of example, an EU business is not allowed to sell or deliver products or services to those persons, even if in exchange for adequate payment. There are a number of exceptions (derogations) from this prohibition, including for prior contracts where a payment by a listed person is due under a contract or agreement concluded or an obligation that arose before the date on which that person was included in Annex I, and provided that the funds or economic resources will be used for a payment by the listed person and that the payment is not made to or for the benefit of a listed person (Article 6 of the Regulation). However, this is subject to a prior authorisation from the relevant national competent authority.

Last update: 8 April 2022

It depends on the goods and the export-ban measure they are targeted by. Unless otherwise specified in the relevant provisions of Council Regulation (EU) No 833/2014, export bans apply as of the day of entry into force of the amendment. It is the role of your national competent authority to assist you in determining whether the goods you sell are targeted by an export ban.

Last update: 8 April 2022

EU sanctions do not apply extra-territorially. In accordance with Article 13, the Regulation applies:

i. within the territory of the Union

ii. on board any aircraft or any vessel under the jurisdiction of a Member State

iii. to any person inside or outside the territory of the Union who is a national of a Member State

iv. to any legal person, entity or body, inside or outside the territory of the Union, which is incorporated or constituted under the law of a Member State

v. to any legal person, entity or body in respect of any business done in whole or in part within the Union.

Therefore, EU sanctions must be complied with by all EU persons – both natural and legal – and therefore by all EU incorporated companies, including subsidiaries of Russian companies in the EU. Russian branches of EU companies remain EU persons, and thus bound by the Regulation. By contrast, Russian subsidiaries of EU parent companies are incorporated under Russian law, not under the law of a Member State, hence they are not bound by the measures. However, it is prohibited for EU parent companies to use their Russian subsidiaries to circumvent the obligations that apply to the EU parent, for instance by delegating to them decisions which run counter the sanctions, or by approving such decisions by the Russian subsidiary.

Last update: 8 April 2022

It is the responsibility of your national competent authority to provide you with guidance on how to reflect this in your accounting system.

Last update: 17 April 2022

The trade-related prohibitions in Council Regulation 833/2014 concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine, are, as in most other sanctions regulations, drafted in a very broad way in order to ensure that a maximum array of operations around the actual export or import are prohibited. This means that, in addition to exports, EU sanctions also prohibit the sale and supply of the relevant products to specific categories of beneficiaries, or for use in specific territories; in addition to import, EU sanctions also prohibit the purchase of the relevant products to specific categories of beneficiaries, or for use in specific territories. In both cases, the transfer of the relevant products, as well as brokering services, technical and financial assistance in relation to their purchase or sale are also prohibited.

Specifically, transfer is a broad concept covering a wide range of operations: not only the movement of goods through customs controls, but also the transport of goods, including (but not exhaustively) their loading and trans-shipment. The transfer prohibition applies not only in relation to an actual import or export (e.g. with the goods entering or exiting the EU customs territory), but also when those products do not enter the EU, but are transferred between Russia and a third country (and vice-versa). In such a case, EU operators are prohibited from providing transfer services as described above.

Last update: 30 June 2022

A branch of a Russian parent company does not have legal personality on its own and is considered as an entity established in Russia. Therefore, the restrictive measures for Russian entities apply equally to a branch in the EU. Moreover, to the extent that the activity of the branch is carried out in the EU, it will be bound to respect EU sanctions itself.

Last update: 2 July 2024

The prohibitions in both Regulations apply independently and must be complied with. Their respective applicability must be checked in parallel.


Last update: 2 July 2024

The prohibitions in both Regulations apply independently and must be complied with. If a derogation or exemption in Council Regulation (EU) 833/2014 is not mirrored in Council Regulation (EU) 269/2014, the prohibition in Council Regulation (EU) 269/2014 applies fully and it is not possible to rely on a derogation or exemption in Council Regulation (EU) 833/2014.

RELATED ARTICLES: ARTICLE 12 OF COUNCIL REGULATION 833/2014; ARTICLE 9 OF COUNCIL REGULATION 269/2014; ARTICLES 2c AND 5 OF COUNCIL REGULATION 692/2014; and ARTICLES 5 AND 8 OF COUNCIL REGULATION 2022/263


Last update: 5 April 2022

The applicable EU Regulations lay down on EU operators (and operators conducting business in the EU) an obligation of result regarding the obligation to freeze assets and the prohibition to make funds and economic resources directly or indirectly available. The underlying means (due diligence) used by the operators to ensure compliance with the above-mentioned obligations and prohibitions are not further specified in EU legislation. EU operators have to perform appropriate due diligence calibrated according to the specificities of their business and the related risk exposure. It is for each operator to develop, implement, and routinely update an EU sanctions compliance programme that reflects their individual business models, geographic areas of operations and specificities and related risk-assessment regarding customers and staff.

Last update: 5 April 2022

In our Q&A on due diligence for business with Iran, we have recommended a risk-based approach that consists of risk assessment, multi-level due diligence and ongoing monitoring.

Due diligence may in particular consist in screening of beneficiaries of funds or economic resources against sanctions lists & adverse media investigations. Adverse media investigations refer to searches on the internet and news (media investigations) to find evidence that a contractual counterpart, even if not designated (so it passes the screening against the sanctions list), is actually controlled by a designated persons (e.g. news on local press that a company is controlled by a Syrian businessperson) (adverse).

Last update: 5 April 2022

Article 12 of Council Regulation (EU) No 833/2014 provides that it is prohibited to participate, knowingly and intentionally, in activities the object or effect of which is to circumvent prohibitions in the Regulation. Enforcing such provisions is first and foremost a matter for the national enforcement authorities and any tips or information regarding possible circumvention should be actively reported to them.

In line with this national enforcement competence, the Commission will liaise with the National Competent Authorities of the Member States if it receives information regarding possible circumvention. Finally, the Commission has recently launched an EU whistle-blower tool enabling the anonymous reporting of possible sanctions violations, including circumvention.

Last update: 5 April 2022

Assessing the beneficial ownership of a business counterpart is a due diligence duty. There is no one-size-fits-all model of due diligence. It may depend – and be calibrated accordingly – on the business specificities and the related risk exposure. It is for each operator to develop, implement, and routinely update an EU sanctions compliance programme that reflects their individual business models, geographic and sectoral areas of operations and related risk assessment. Such sanctions compliance programmes can assist in detecting red flag transactions that can be indicative of a circumvention pattern.

Last update: 11 December 2024

Compliance with trade-related sanctions (e.g. dual-use exports, oil exploration equipment, high tech goods and technology) is not limited to the operators initiating such trade (e.g. exporters, brokers…), but is also a responsibility of the banks processing the related payments. Banks can tailor their compliance programmes to specific risks identified in relation to certain transactions or parties involved, such calibration being then more risk-based than systematic.

Last update: 11 December 2024

If a certain structure was created in order to assist a person to evade the effects of its possible future listing, then current, ongoing participation in that structure can amount to circumvention of the restrictive measures, if done knowingly and intentionally.

Circumvention is prohibited under Article 9 of Council Regulation (EU) No 269/2014. Article 9 can be breached even if the freezing of assets is not discontinued and no assets reach or benefit the now-listed person; mere participation in a structure created for that purpose can be considered as a breach.  For clarifications on the cumulative requirements of knowledge and intent, see question 9.

Last update: 11 December 2024

Articles 12 of Council Regulation (EU) No 833/2014 and  Article 1m of Council Regulation (EU) No 765/2006 prohibit to, knowingly and intentionally, participate in activities the object or effect of which is to circumvent prohibitions in the Regulations. Thus, the threshold is acting with knowledge and intent to circumvent a prohibition included in the Regulations. This provision applies on the territory of the EU and to all EU persons. For clarifications on the cumulative requirements of knowledge and intent, see question 9.

It falls within the competencies of the national competent authority of the EU Member State in question to decide on possible cases of circumventions within their jurisdiction. In addition, enforcing sanctions provisions is first and foremost a matter for the national enforcement authorities and any tips or information regarding possible circumvention should be actively reported to them.

For specific questions, we advise to contact the relevant national competent authority.  You find a list of national competent authorities for each EU Member State here: https://ec.europa.eu/info/sites/default/files/business_economy_euro/banking_and_finance/docum ents/national-competent-authorities-sanctions-implementation_en.pdf.

Last update: 30 June 2023

Yes, national competent authorities must take into account credible indications of circumvention when assessing and deciding on a request for authorization envisaged under the derogations in Council Regulations (EU) No 269/2014 or No 833/2014.

Therefore, a national competent authority may decide to reject a request for authorization for a variety of reasons, including on the basis of reasonable grounds to suspect that the authorization will be used to circumvent sanctions.

This could be the case, for example, when the national competent authority holds information (acquired through confidential or public sources) suggesting that a party in a transaction subject to authorization is engaged in the circumvention of sanctions or that certain elements of the transactions are suspicious (e.g. the price is abnormally low or one or more of the parties cannot be identified).

Last update: 11 December 2024

Article 9 of Council Regulation (EU) No 269/2014 and Article 12 of Council Regulation (EU) No 833/2014, commonly known as 'anti-circumvention clauses’, prohibit EU operators from participating, knowingly and intentionally, in activities the object or effect of which is to circumvent the prohibitions set out in each Regulation.

In the judgment it rendered on 21 December 2011 in Case C-72/11 , the Court of Justice of the European Union clarified that, in the context of EU sanctions law, the requirements of knowledge and intent are met not only where a person deliberately seeks the object or effect of circumventing sanctions but also where a person participating in an activity having that object or effect is aware that such participation may have that object or that effect, and accepts that possibility.

The interpretations given by the Court of Justice to the standard anti-circumvention clause is to be applied in all sanctions regimes and from their adoption.

However, on 24 June 2024, as part of the 14th sanctions package on Russia, the Court’s interpretation was codified into the sanctions regimes concerning Ukraine’s territorial integrity, sovereignty and independence, thereby ensuring that the existing anti-circumvention clauses in Council Regulation (EU) No 269/2014 and Council Regulation (EU) No 833/2014 are textually aligned with it.

Last update: 11 December 2024

Paragraph 2 of Article 10 of Council Regulation (EU) No 269/2014 and Article 10 of Council Regulation (EU) No 833/2014, commonly known as ‘non-liability clauses’, indicate that actions by EU operators do not give rise to any liability of any kind on their part if they did not know, and had no reasonable cause to suspect, that their actions would infringe the measures set out in each Regulation.

On 24 June 2024, as part of the 14th sanctions package on Russia, recital 3 of Council Regulation (EU) 2024/1739 and recital 36 of Council Regulation (EU) 2024/1745 clarified that the protection against liability cannot be invoked where the EU operator has failed to carry out appropriate due diligence. The two provisions moreover add that publicly or readily available information should be duly taken into account when carrying out such due diligence. Therefore, for example, an EU operator should not be able to successfully invoke such protection when it is accused of breaching the relevant sanctions because it has failed to carry out simple checks or inspections.

Due diligence should be proportionate and include various controls at several levels of the transaction. At a minimum, it should include:

• Screening of all parties to the transaction: the beneficial owner (customer) and also indirect parties (suppliers, service providers, transporters, banks);

• Control of the goods and services, including whether the goods – finished product or components – are subject to other control regulations (dual-use, military);

• Risk analysis of the transaction: on the contractual documentation; rationale for the transaction; financial flows; shipment route; end-use of the goods; risk of diversion of the goods.

These checks and inspections are part of the ‘strategic risk assessment' that operators should implement. For more information, please see the Commission's guidance on due diligence:

Guidance for EU operators: Implementing enhanced due diligence to shield against Russia sanctions circumvention - guidance-eu-operators-russia-sanctions-circumvention_en.pdf

RELATED PROVISION: TRADE RELATED ARTICLES; ARTICLE 11 OF COUNCIL REGULATION 833/2014

Last update: 8 April 2022

The term ‘contract’ refers to a binding commitment between parties. Such an agreement should contain all the necessary elements for its validity and the execution of a transaction (such as indication of the parties, price, quantities, delivery dates, modalities of execution, etc.) Most framework contracts which do not specify the quantities or the price would therefore not be considered as a contract for the purpose of the exceptions foreseen for the execution of prior contracts.

Last update: 13 June 2022

Where framework contracts do not specify the exact quantities, precise price or delivery date, they cannot benefit from the exceptions. Usually, framework agreements do not contain all the necessary elements for the execution of a transaction (such as price, quantities, deliver dates, modalities of execution etc.). This means that their implementation requires subsequent signature of new and specific contracts.

Last update: 13 June 2022

An “ancillary contract” is a contract necessary for the execution of another (principal) contract, that is, a contract without which the main contract cannot be executed, such as insurance, financing etc.

However, the execution of ancillary contract must not lead to circumvention of the regulation. For example, a contract on transportation would not be covered by the ancillary contract exception since it would fall under the prohibition of “transfer” or “transport”.


Last update: 13 June 2022

No. The specification of quantity and price of goods is an essential element of a purchase contract and has to be determined before 2 March 2022. A separate annex is not an ancillary contract, but part of the main contract. If the separate annex that specifies essential contract elements was signed on or after 2 March 2022, it is considered a new contract.

Last update: 13 June 2022

No. The prolongation (whether tacit or explicit) of a contract is considered a new contract. Consequently, for example, an import based on a contract extended on or after 2 March 2022 (or executed after 4 June 2022) is prohibited.

Last update: 13 June 2022

No. The tacit prolongation of a contract is treated as a new contract and is therefore prohibited.

7. In Article 11 of Regulation (EU) 833/2014, do the “claims” in connection with any contract or transaction, the performance of which has been affected by the compliance of this Regulation, include the liquidation of financial instruments, such as mutual fund shares by any Russian citizen or natural person residing in Russia, or legal entity/ body established in Russia? If so, under which conditions?

Last update: 24 May 2022

Article 11 relates to claims in connection with any contract or transaction the performance of which has been affected, directly or indirectly by Regulation (EU) 833/2014, made by a counterpart referred to in Article 11(1) under (a), (b) or (c), who would have suffered an alleged damage due to the compliance with the Regulation by an EU operator - for example if a contract with this counterpart cannot be fulfilled or was terminated due to the restrictive measures. This Article seeks to protect EU operators from having to satisfy damage claims of any types in connection with such contract or transaction, including claims for indemnity or any other claim of this type, such as a claim for compensation or a claim under a guarantee, notably a claim for extension or payment of a bond, guarantee or indemnity, particularly a financial guarantee or financial indemnity, of whatever form.

Without prejudice to other restrictive measures that may affect certain financial instruments, the EU operator would not be required to satisfy a request for liquidation of a financial instrument, if such liquidation relates to payment of a bond, guarantee or indemnity referred to in Article 11.

Please note also that if the Russian person is targeted by measures freezing that person’s funds and economic resources (e.g. via Regulation (EU) 269/2014), the applicable Regulation will, in principle, prevent the liquidation of financial instruments of that Russian person.

8. Are the claims coming from non-Russians residents in Russia also covered by the protection offered in Article 11(1)b?

Last update: 13 June 2022

Article 11 protects EU operators against claims by “any other Russian person, entity or body”. Considering the objective of that provision which is to offer protection to those implementing EU sanctions, its wording and context, “Russian person” must be understood as including Russian nationals and Russian residents which are nationals of other States.

9. Article 5l of Council Regulation 833/2014 prohibits to keep executing certain contracts with Russian entities. How does it affect the due payments to these entities and will I have to pay interests for the damages caused?

Last update: 26 August 2022

According to Article 5l of the Regulation, it is prohibited to provide direct or indirect support, including financing and financial assistance or any other benefit under a Union, Euratom or Member State national programme and contracts to any legal person, entity or body established in Russia with over 50 % public ownership or public control. It must therefore be understood that payments prohibited by Article 5l must be withheld while the sanctions are in force. Interests claimed by Russian contractual counterparts for alleged damages originating by this prohibition qualify as a form of compensation. Hence, they cannot be satisfied if brought forward by the persons indicated in Article 11(1)(a)-(c). See also Question 6.

10. When an article of Council Regulation 833/2014 provides for an exception allowing for the execution of a prior contract until a specific date, does it allow for the payment on the basis of such contract by the EU operation to its Russian counterpart after this date?

Last update: 26 August 2022

It is the Commission’s view that an exception allowing for the execution of prior contracts until a specified date would not allow for a payment to be made to the Russian counterpart beyond that date. Since the payment is part of the execution of the contract, EU operators are prohibited from making such a payment thereafter, even if the goods originating in Russia have already been received. Questions on the concrete application of EU sanctions in specific cases should be addressed to the relevant national competent authority.

RELATED PROVISION: ARTICLE 8a of COUNCIL REGULATION 833/2014

1. What does the concept of “best efforts” mean, in the context of Article 8a?

Last update: 22 November 2024

Article 8a should be read in light of recitals 27, 28, 29 and 30 of Regulation 2024/1745. In particular, the concept of “best efforts” is detailed in recital 30:

‘Best efforts should be understood as comprising all actions that are suitable and necessary to achieve the result of preventing the undermining of the restrictive measures in Regulation (EU) No 833/2014. Those actions can include, for example, the implementation of appropriate policies, controls and procedures to mitigate and manage risk effectively, considering factors such as the third country of establishment, the business sector and the type of activity of the legal person, entity or body that is owned or controlled by the Union operator. At the same time, best efforts should be understood as comprising only actions that are feasible for the Union operator in view of its nature, its size and the relevant factual circumstances, in particular the degree of effective control over the legal person, entity or body established outside the Union. Such circumstances include the situation where the Union operator, due to reasons that it did not cause itself, such as the legislation of a third country, is not able to exercise control over a legal person, entity or body that it owns.’

2. What does the concept of “undermining” mean, in the context of Article 8a? What is the difference between “circumventing” and “undermining”?

Last update: 22 November 2024

The concept of “undermining” is exemplified in recital 29 of Regulation 2024/1745. While “circumventing” involves activities that, under cover of a formal appearance which enables them to avoid the constituent elements of an infringement of a restrictive measure, have the aim or result of enabling their author to avoid the application of that measure , “undermining” involves activities “resulting in an effect that [the] restrictive measures seek to prevent, for example, that a recipient in Russia obtains goods, technology, financing or services of a type that is subject to prohibitions under Regulation (EU) No 833/2014”.

3. Does Article 8a also cover Russia-based entities that are owned or controlled by an EU operator?

Last update: 22 November 2024

Yes. The obligation in Article 8a, binding on EU operators, concerns entities that are owned or controlled by these EU operators and located anywhere outside the EU – including in Russia.

4. How is Article 8a to be applied when doing so is prevented by the laws of the third country where the owned or controlled entity is incorporated?

Last update: 22 November 2024

Recital 30 of Regulation 2024/1745 indicates that the best efforts required from the part of EU operators should be understood as comprising only actions that are feasible for each EU operator in view of (i) its nature, (ii) its size and (iii) the relevant factual circumstances. The precise scope of best efforts that can be expected from each EU operator will differ on a case-by-case basis.

The factual circumstances to be taken into account include, in particular, the degree of effective control over the non-EU entity in question. Recital 30 explicitly mentions the situation where, due to reasons that the EU operator did not cause itself, such as the legislation of a third country, an EU operator is not able to exercise control over an entity that it owns. In principle, where control is entirely absent, the EU operator cannot be expected to have any power to prevent that the non-EU entity that it owns participates in activities that undermine the sanctions.

Conversely, this mitigation of liability does not apply if control over the non-EU entity is lost for reasons that the EU operator caused itself. In this respect, operators should be aware that Russia is a country where the rule of law is virtually not applied anymore  , and that the Russian state has adopted several pieces of legislation unjustly targeting assets of companies from ‘unfriendly countries’, including EU Member States . In such circumstances, inadequate risk assessment and management, coupled with risk-prone decisions of the EU operator, can be considered as a factor that contributed to the loss of control .

The factual circumstances may also include, for instance, the risk incurred by executives and employees of the non-EU entity in question to be prosecuted under the laws of the third country of incorporation. This risk is to be assessed on a case-by-case basis.

5. How can EU operators sufficiently show they undertook their best efforts within the meaning of Article 8a?

Last update: 22 November 2024

As indicated above (see Questions 1 and 4), the depth and complexity of actions expected from each EU operator depend on the operator’s (i) nature, (ii) size and (iii) the relevant factual circumstances.

The operator’s nature and size reflect various elements such as its market sector, risk profile and turnover, and, for entities, the number of staff. Apart from the degree of effective control over the non-EU operator, the relevant factual circumstances include the compliance resources available to the operator. Such elements should be taken into consideration together. For example, even if an operator is relatively small in size, the fact that it operates in a highly regulated sector with abundant compliance resources means that substantial actions are to be expected.

In practice, EU operators should seek to ensure their awareness of the activities conducted by the non-EU entity that they own or control, and the entity’s understanding of the types of activities that risk undermining EU sanctions and thus exposing the EU operator to a breach of Article 8a. Depending on the specific characteristics of the EU operator, this could be achieved, for instance, through internal compliance programs, systematic sharing of corporate compliance standards, sending newsletters and sanctions advisories, setting up mandatory reporting or organising mandatory sanctions trainings for staff, as well as setting up procedures to rapidly react to sanctions violations, including by reporting them to the EU operator that has ownership or control. In addition, the non-EU entity may consider publicly stating its intent not to engage in any activities that risk undermining EU sanctions or the compliance and governance policies of the EU operator that has ownership or control.

The Commission will engage with Member States towards preparing a clear set of expectations for EU operators, thus enabling the latter to comply with their obligations and ensuring a level playing field across the EU.

6. Coupled with other provisions in Regulation 833/2014, such as Article 10 or Article 12, should Article 8a be understood as creating liability for an EU operator that is merely aware of the activities of the non-EU entity that it owns or controls, and accepts them?

Last update: 22 November 2024

If an EU operator is aware that the activities of a non-EU entity that it owns or controls undermine EU sanctions and accepts these activities, that amounts to a breach of Article 8a, as the EU operator cannot be considered to have performed all actions necessary and feasible to prevent the undermining of EU sanctions by the non-EU entity. Moreover, it may also amount to a breach of Article 12 of Regulation 833/2014, as amended by Regulation 2024/1745. In this context, it should be noted that recital 36 of Regulation 2024/1745 clarifies that the protection against liability set out in Article 10 of Regulation 833/2014 cannot be invoked where EU operators have failed to carry out appropriate due diligence. In the context of Article 8a, such due diligence includes ensuring their awareness about the activities of non-EU entities that they own or control.

7. If an EU operator owns or controls an entity in Russia or in another third country, which produces and/or exports goods covered by an EU export ban, would the EU operator run afoul of Article 8a if these goods ended up in Russia?

Last update: 22 November 2024

EU sanctions do not impose obligations on such an entity in Russia or another third country. Obligations are imposed only on EU operators owning or controlling such entity. Thus, if the goods in question are produced on the basis of, for example, intellectual property rights or trade secrets that the EU operator transferred to the non-EU entity, and the EU operator owns or controls that entity at the time of the supply to Russian clients and does not act to prevent such supply, including by blocking the use of intellectual property rights or trade secrets, then the EU operator cannot be considered to have performed all actions necessary and feasible to prevent the undermining of EU sanctions by the entity, as required by Article 8a.

The timing of the transfer of such intellectual property rights or trade secrets is not relevant towards the application of Article 8a, as long as the EU operator retains the power to block further use thereof. Concretely, even if the transfer of the intellectual property rights or trade secrets related to sanctioned goods and technology was made before those sanctions came into effect (e.g. before the relevant item became subject to an export prohibition), the undermining of sanctions by a non-EU entity on the basis of that prior transfer would render the EU operator owning or controlling the entity in violation of Article 8a.

For the situation where the EU operator is no longer able to exercise control over a non-EU entity that it owns, see Question 4.

8. If an EU operator owns or controls an entity in Russia, which produces, and/or exports goods covered by an EU export ban, would the EU operator run afoul of Article 8a if these goods ended up in Belarus?

Last update: 22 November 2024

If the final destination of the goods is truly Belarus, this activity could constitute a breach of the “best efforts” obligation on the EU operator as set out in Article 8i of Council Regulation (EC) No 765/2006.

9. If an EU operator owns or controls an entity in Russia, which produces and/or exports goods covered by an EU import ban, would the EU operator run afoul of Article 8a if this entity supplied such goods to non-EU entities? Does it make a difference if these non-EU entities are owned or controlled by the same EU operator (i.e. intra-group transfers)?

Last update: 22 November 2024

The aim of import bans is to weaken Russia’s economic base and curtail its ability to wage war, by depriving it of critical markets for its products. If non-EU entities owned or controlled by an EU operator continue trading in restricted goods produced in Russia, thus creating additional revenue for the Russian economy, then, in principle, the EU operator cannot be considered to have performed all actions necessary and feasible to prevent the undermining of EU sanctions by these entities, as required by Article 8a.