War in Ukraine: Funds of the owner of Uralchem must remain frozen
The EU General Court has confirmed that the funds of Mr Dmitry Arkadievich Mazepin must remain frozen. The said person is a businessperson of Russian nationality. He is the owner and CEO of Uralchem, a Russian manufacturer of a wide range of chemical products. That company holds itself out as being the largest producer of ammonium nitrate in Russia as well as the second-largest producer of ammonia and nitrogen fertilisers.
In February 2022, in the aftermath of the initial stages of Russian aggression against Ukraine, Mr Mazepin and 36 other businesspersons attended a meeting with President Putin and other members of the Russian government. They discussed the impact of the course of action in the wake of Western sanctions against Russia. For the European Union, that fact that Mr Mazepin was invited to that meeting, alongside other evidence in its file relating to him, shows that he is a member of the closest circle of President Putin, that he is a leading businessperson and that he supports or implements policies which threaten Ukraine.
The Council of the European Union decided to impose the freezing of all his funds and economic resources within the EU and to prohibit him from entering into or transiting through the territories of the EU Member States. Mr Mazepin has challenged the Council’s decision before the General Court.
However, the General Court rejects the arguments put forward by Mr Mazepin. The Council provided a proper statement of reasons for its decision. Mr Mazepin had access to the evidence in the file relating to him, which easily allowed him to understand the allegations made against him and to defend himself. The Council has adduced a set of sufficiently specific, precise and consistent indicia capable of demonstrating that Mr Mazepin is a leading businessperson involved in a sector providing a substantial source of revenue to the Russian Government.
Consequently, the sanctions imposed on Mr Mazepin are such as to increase the costs of Russia’s actions in Ukraine. They therefore respond to the Council’s desire to exert pressure on the Russian authorities to put an end to their actions and policies destabilising Ukraine.
Sanctions evasion and avoidance - What increases a country's involvement
The Serious Organised Crime & Anti-Corruption Evidence (SOC ACE), managed by the University of Birmingham, has published a study on the role of thirteen countries (Armenia, Cyprus, Czechia, Georgia, Indonesia, Kazakhstan, Malta, Saudi Arabia, Serbia, South Africa, Spain, Türkiye and the UAE) in sanctions evasion and avoidance. These are those which are neither ‘senders’ nor ‘targets’ of sanctions regimes relating to sanctions imposed on Russia since the invasion of Ukraine.
In particular, the study finds that the following factors, most of which relate to trade and commercial capacity, increase the extent of a third country’s potential involvement in sanctions evasion and avoidance:
ease of setting up anonymous or nominee corporate structures and access to professional advisory services in the third country;
access to financial services, including banks, payment systems and cryptocurrency, in the third country;
transhipment capacity of the third country, namely the extent to which it acts as an intermediate point, where the destination or origin of sanctioned or dual-use goods can be obscured;
logistics capability in the third country and access to logistics infrastructure used in transhipment or shipment of sanctioned goods (that is, knowledge of and integration into global customs and trade infrastructure);
ability of target country citizens to easily move and engage in economic activity in the third country; and
level of ability of sanctions-sending states to regulate or enforce sanctions in a particular sector or industry.
Source: Allison, O., Hack, A. A., O’Shea, L. and Saiz, G. (2023). Illuminating the Role of Third Country Jurisdictions in Sanctions Evasion and Avoidance (SEA). SOC ACE Research Paper No 21. Birmingham, UK: University of Birmingham.
Read for you - Our readings of the week
US - BIS Conference rescheduled - The Bureau of Industry and Security has rescheduled the Update Conference on Export Controls and Policy from November 28–30, 2023 to March 27-29, 2024. The agenda will include sessions on Semiconductors (semiconductor tools, advanced computing), U.S. Persons Activities, Foreign Direct Product Rules Overview, Export Control Officers Abroad, Human Rights Due Diligence, The Entity List ERC, China Brief, Russia Brief, International Cooperation and Export Controls, and License Application Tips. 8 Nov 2023. Source.
EU - European Parliament study on sanctions regimes. In their study on the "Implementation and monitoring of the EU sanctions’ regimes, including recommendations to reinforce to EU’s capacities to implement and monitor sanctions", Clara PORTELA and Kim B. OLSEN analyse the sanctions imposed by the European Union (EU) against Russia following Russia’s 2022 invasion of Ukraine. They would have brought about an unprecedented emphasis on sanctions implementation and enforcement, which – in contrast to decision-making – have traditionally relied on a decentralised system. This has resulted in a mosaic of practices across the EU, involving more than 160 designated competent authorities within Member States. Oct 2023