Financial Crime World

Croatian Companies Feel the Brunt of EU Sanctions Against Russia

The European Union (EU) has imposed a series of sanctions on Russia in response to its invasion of Ukraine, which is affecting Croatian companies that operate in the Russian market.

Overview of the Sanctions

The sanctions have been implemented in four stages since February and aim to restrict economic relations with Russia and prevent it from accessing EU financial markets. The measures include:

Import and Export Restrictions

  • Prohibition on sale and export of goods and technology used for oil refining, aircraft and space industry, as well as dual-use goods that could contribute to technological improvement of Russia’s defense sector.
  • Ban on export of maritime and radiocommunication technology.

Trade Relations Restriction

  • Prohibition on import and export of iron and steel products, luxury goods, and equipment for Russia’s energy industry.
  • Restrictions on direct or indirect sales, transfers, or exports of certain goods worth over EUR 300 to any natural person or legal entity in Russia.

Financial Sanctions

  • Limitations on influx of funds from Russia to the EU through Council of the European Union Decisions 2022/327, 2022/346 and 2022/430.
  • Restrictions include:
    • Prohibition on receiving deposits from Russian citizens or residents above certain amounts.
    • Handling accounts of Russian clients.
    • Conducting transactions with the Russian Central Bank.
    • Sale of euro-denominated securities to clients from Russia.

SWIFT Ban

  • Prohibition on specialized financial communication services used for the exchange of financial information to several Russian banks, effective March 12.
  • Ban applies to all legal entities or bodies with business originating in Russia whose ownership rights were held by these banks directly or indirectly.

Additional Restrictions

  • Ban on new investments in the Russian energy sector and participation in any transaction with state-own companies or those controlled by the state, as well as non-EU legal entities that hold more than 50% of shares.
  • Prohibition on credit rating services for all Russian citizens or natural persons residing in Russia and to all legal entities or bodies with establishment in Russia, effective April 15.

Impact on Croatian Companies

The EU restrictions in the financial sector will have an impact on companies operating in the Russian market, forcing them to adapt their business practices to comply with the sanctions. Croatian companies that cooperate with Russian companies or operate in the Russian market must be aware of these restrictions to avoid any potential legal and financial consequences.

  • Must assess their current business practices and adjust accordingly.
  • Should review their contracts and agreements with Russian partners to ensure compliance with EU sanctions.
  • May need to seek alternative suppliers, customers, or partners outside of Russia.
  • Should monitor the situation closely for updates on the scope and duration of the sanctions.