What are vaguely defined as “leading” businesspeople, along with their family and friends, could now be penalized
The European Council adopted an amendment on Wednesday that paves the way for significantly more Russian citizens to come under sanctions.
According to a document published in the Official Journal of the EU on June 7, any “leading” Russian businessperson can now be targeted with restrictions, a term analysts believe may be applied to virtually anyone. The measure has the potential to greatly expand the range of Russians who could find themselves sanctioned.
The amendment also notes that restrictions can now apply to the immediate family members of sanctioned individuals, as well as “other natural persons benefitting from them,” which may refer to friends or partners.
Prior to this amendment, the document only stated that Russian “businesspersons, legal persons, entities or bodies involved in economic sectors providing a substantial source of revenue to the Government of the Russian Federation” may face blocking sanctions from the EU.
EU sanctions had previously been imposed against the relatives of Russian officials who were deemed linked to the military operation in Ukraine. While in several cases restrictions were also introduced against relatives of Russian businessmen, there was no clear formal basis for this.
However, in comments to the amendment, the Council claimed that Russian businesspeople have systematically “distributed their funds and assets amongst their immediate family members and other persons, often in order to hide their assets [and] maintain control over the resources available to them.” Therefore, with this latest move the EU now has a legal basis to sanction these persons “to avoid the risk of circumvention of the restrictive measures.”
According to Denis Primakov, head of the sanctions law and compliance division at the law firm KIAP, the new amendment is the Council’s way to deal with legal claims from sanctioned persons and entities.
A number of Russian businessmen and companies have initiated legal action to challenge the restrictions against them in various European courts over the past year, including billionaires Gennady Timchenko, Roman Abramovich, Pyotr Aven, Mikhail Fridman, Alexei Mordashov, and others. However, with the new amendment, the chances of successfully challenging sanctions at court will become even lower.
Primakov does not expect a big surge in blocking sanctions to follow, since many “leading businessmen” are already on the sanctions lists.
“But it will make it easier to put legal entities that work with those already under EU sanctions on the sanctions lists,” he explained.
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