New EU and UK Sanctions Targeting Russia and Belarus

On 24 February 2025, to mark the third anniversary of Russia’s full-scale and unlawful invasion of Ukraine, the EU and the UK introduced a new series of economic sanctions measures designed to restrict Russia’s activities.

In the EU, the Council of the European Union (the “Council”) adopted a new, 16th package of sanctions introducing a series of amendments across different aspects of the EU’s Russia sanctions framework. These include:

• Amendments to Council Regulation (EU) No 833/2014 (“Regulation 833”, the main Russia trade sanctions regulation). The amendments introduce new restrictions on exports, imports, and services, where these relate to Russia;
• Further Russia related asset-freezing designations targeting different Russian and non-Russian entities and individuals; and
• New restrictions regarding Crimea and the parts of the Donetsk, Kherson, Luhansk and Zaporizhzhia regions of Ukraine that are under Russian occupation.

The EU has also adopted a broad new set of sanctions against Belarus. These include several measures designed to align Belarus-related restrictions with those imposed against Russia.

In parallel with the EU’s actions, the UK government also introduced new Russia-related sanctions, including various new asset-freezing designations.

Asset-freezing Designations

Council Implementing Regulation (EU) 2025/389 adds additional individuals and entities to the EU asset-freezing list. The new designations include individuals and entities associated with the Russian military and entities operating in other sectors of the Russian economy, as well as their owners and senior managers. The regulation also includes several Chinese persons and entities, who the EU has determined to have supported Russia’s war effort.

In addition, Council Regulation (EU) 2025/390 introduces a significant new obligation on EU companies to undertake “best efforts” to ensure that any legal person, entity, or body, established outside the EU and that they own or control does not participate in activities that undermine the restrictive measures provided for Regulation (EU) No 269/2014 (“Regulation 269”), which is the principal EU regulation governing Russia related asset-freezing designations. The EU had already introduced a provision with identical wording in Regulation 833, which was limited to the provisions of that regulation. A similar provision is also included in the EU’s Belarus sanctions regulation.

As a result, EU companies are now required to undertake best efforts to ensure that entities in which they hold an interest of 50% or more (whether directly or indirectly), or that they otherwise control – including Russian entities – do not engage in activities that “undermine” the provisions of Regulation 269. Consistent with the approach taken in relation to Regulation 833, the recitals to the new regulation clarify that such activities include those that result “in an effect that those restrictive measures seek to prevent, for example, that funds or economic resources are made available to a person listed in Annex I to Regulation (EU) No 269/2014”. As such, EU entities now must undertake “best efforts” to ensure that their owned/controlled subsidiaries are not engaged in direct or indirect dealings with persons or entities subject to EU asset-freezing sanctions pursuant to Regulation 269.

Export / Import Controls and Services Restrictions

Council Regulation (EU) 2025/395 (“Regulation 395”) amends Regulation 833 to introduce a range of new trade sanctions in relation to Russia and expand existing ones.

New Export/Supply Controls

Regulation 395 includes new items in the following annexes to Regulation 833:

• Annex VII, which lists “goods and technology which might contribute to Russia’s military and technological enhancement, or the development of the defense and security sector[.]”The new measures include controls on, among other items, video game devices and a variety of chemicals, metals, and alloys.
• Annex XXIII, which lists “goods which could contribute to the enhancement of Russian industrial capacities[.]” The newly-designated items focus principally on various types of minerals and explosive materials.

EU persons are restricted from directly or indirectly selling, supplying, transferring, or exporting items falling within the foregoing annexes to Russia, or to any other jurisdiction if intended for use in Russia. The foregoing prohibitions are accompanied by independent restrictions on the provision of services that relate to the restricted goods and on the extension of intellectual property rights or trade secrets in connection with those goods. 

Removal of Exemptions to Export/Supply Restrictions

Previously, Article 2 and Article 2a of Regulation 833 – which govern the export of items listed in Annex VII and dual-use items to Russia and the provision of restricted services in relation to these items – were subject to a range of exemptions allowing exports for specific purposes, including, for example, in connection with the provision or export of software updates and consumer communication devices. Most of those exemptions have now been removed and instead incorporated as case-by-case licensing criteria. The only exemptions that remain in place in Articles 2 and 2a relate to (i) “humanitarian” and (ii) “medical” and “pharmaceutical” purposes. Moreover, the medical and pharmaceutical exemptions have been narrowed – they now only apply to products that are not listed in Annex XL of Regulation 833, which covers so-called “common high priority items”. If a product falls under Annex XL, its export requires prior authorization, even if intended for medical or pharmaceutical purposes.

Entities Subject to Heightened Export Restrictions

In addition, Regulation 395 expands the list of entities listed in Annex IV that are subject to enhanced case-by-case licensing restrictions regarding dual-use and Annex VII items. Regulation 395 also tightens the pre-existing measures regarding these entities by explicitly prohibiting not only exports, but also the provision of services and the transfer of restricted intellectual property rights to these entities unless a license is granted. Such licenses will only be issued under narrowly defined circumstances.

Import Controls

Regulation 395 imposes restrictions on the import, purchase, and transfer of certain aluminum products classified under CN code “7601”, if they originate in or are exported from Russia. These new restrictions are subject to a transitional period allowing for the import of up to 275 000 metric tonnes until 26 February 2026, after which the limit will be reduced to 50 000 metric tonnes between 26 February 2026 until 31 December 2026.After that date, the restrictions will come into full effect.

Anti-Circumvention Measures

Existing compliance program requirements, set out in Article 12gb of Regulation 833, for EU operators that deal in items listed in Annex XL of Regulation 833 (“common high priority items”) have been extended to also cover parties that deal in products listed in Annex XLVIII (which currently lists items falling under CN codes “8502 20” and “8536 50”, which cover switch devices and certain types of piston engine generating sets). These obligations will come into effect on 26 May 2025.

The new regulation also expands provisions, set out in Article 5ad, that allow for the designation of entities who are involved in circumventing or frustrating various restrictions set out in other articles of the Regulation (no entities have, however, as of yet been designated under Article 5ad).

Article 5n Professional Services Restrictions

Regulation 395 introduces a new category of “professional services” subject to restrictions in Article 5n of Regulation 833, covering “construction” services.

Moreover, pre-existing restrictions on the supply of software listed in Annex XXXIX to Regulation 833 (which includes ERP software and other business-related software) have been expanded to also cover the sale, licensing, or transfer in any form of intellectual property rights or trade secrets related to software listed in Annex XXXIX.

Dispute Remedies

Regulation 395 expands Article 11a of Regulation 833, which provides a right of action in EU Member State courts for damages caused by claims lodged in third countries concerning contracts or transactions whose performance has been affected by prohibitions in Regulation 833. The amendments expand Article 11a to cover both direct and indirect damages, and to cover damages incurred not only by EU persons/entities (as provided under the original version of Article 11a), but also non-EU subsidiaries of EU entities. The amendments also include language clarifying that actions may be brought not only against parties that bring such third-country claims, but also against persons or entities that own or control them.

Equivalent revisions have been introduced into Article 11b, which provides a right of action in Member State courts for damages caused by decisions implemented under Russian Federation Decree No. 302 of 25 April 2023 (including amendments or other Russian legislation related or equivalent to the foregoing decree). Decree No. 302 laid the groundwork in Russian law to expropriate, damage, or otherwise impair the investments of companies from jurisdictions deemed by the Government of Russia to be “unfriendly.” (We discuss the foregoing decree, and associated Russian law measures, in alerts available through the following link.)

Regulation 395 also introduces targeted amendments to Article 11c – which is intended to counter the impact of actions taken under the Russian Arbitration Procedure Code – and introduces a new Article 11d, which is intended to widen the jurisdictional basis upon which EU Member State courts may hear claims brought pursuant to Articles 11a or 11b.

Financial Sector Measures

The EU has designated a number of financial institutions for restrictions under Article 5ac(2) of Regulation 833. Article 5ac(2) prohibits, subject to limited exemptions, EU persons from engaging, directly or indirectly, in any transaction with a legal person, entity or body established outside Russia that is listed in Annex XLIV. Previously, the Annex did not list any entities. Regulation 395 now adds the following entities to Annex XLIV: Bank BelVEB; Belgazprombank; and VTB Bank (PJSC) Shanghai Branch.

Annex XLIV includes financial institutions established outside Russia that use the “System for Transfer of Financial Messages” (“SPFS”) of the Central Bank of Russia, or equivalent specialized financial messaging services set up by the Government of Russia to serve as alternatives to the SWIFT (Society for Worldwide Interbank Financial Telecommunication) network.

Additional financial institutions have also been designated for restrictions under Article 5h, which prohibits the provision of “specialised financial messaging services” to entities listed in Annex XIV. These restrictions come into effect with regards to these newly designated entities on 17 March 2025.

Energy Related Measures

Regulation 395 introduces new measures targeting the Russian energy sector, including the following:

• It broadens existing restrictions on the supply of any goods, technology, and services for liquefied natural gas projects in Russia to now include “crude oil projects” in Russia. These restrictions are accompanied by additional measures prohibiting the provision of any services in relation to restricted goods and technical services or the provision of associated financial assistance.
• It introduces changes to restrictions under Article 3a of Regulation 833 on certain types of investments in the Russian “mining and quarrying” sector. These restrictions were subject to an exemption for mining and quarrying activities related to specific materials listed in Annex XXX. That exemption has now been removed and replaced with a case-by-case licensing provision.
• It introduces a prohibition – subject to certain targeted exemptions – against the provision of temporary storage for Russian crude oil and petroleum products within the EU.
• It adds items to Annex II – which lists oil/gas sector items subject to export-related restrictions – to capture certain types of software products.

Additional Measures

• Vessel Sanctions: Regulation 395 adds additional vessels to Annex XLI to Regulation 833. Listed vessels are subject to a port access ban, and a prohibition on a broad array of maritime services and other services such as financing and financial assistance including insurance and brokering flag registration, technical assistance, bunkering, and ship supply services.
• Aviation Sanctions: Regulation 395 introduces several amendments to pre-existing restrictions, set out in Article 3d of Regulation 833, on allowing Russian aircraft access to the EU or EU airspace. Among other measures, the restrictions now also capture any air carries listed in Annex XLVI. Annex XLVI, which currently lists no entities, is intended to capture air carriers operating domestic flights within Russia or exporting aircraft or other aviation goods and technology to Russian air carriers.
  
• Ports, Locks and Airports: The new measures include a prohibition against any transactions with certain ports, locks and airports in Russia listed in Annex XLVII to Regulation 833 and which, according to the EU, are used for the transfer of UAVs, missiles and related technology and components to Russia, or for the circumvention of the Oil Price Cap or other EU sanctions measures.
• Diamond Restrictions: Regulation 395 introduces amendments concerning existing restrictions against the import of Russian-origin diamonds, including changes with regards to the documentation that must be provided at the time of import into the EU. Regulation 395 also postpones the date of entry into force of the requirement to provide traceability-based evidence for imports of polished diamonds falling under CN code “7102 39 00”.
  
• Road Transport Restrictions: Regulation 395 amends the existing prohibition on the transport of goods by road within the EU by Russian road transport undertakings, to prohibit any changes to road transport undertakings’ capital structure that would increase the percentage share owned by a Russian natural or legal person to 25% or more.
• Broadcast Restrictions: The EU has designated additional media outlets under the broadcasting-related sanctions set out in Article 2f of Regulation 833. Newly-designated parties include EADaily / Eurasia Daily, Fondsk, Lenta, NewsFront, RuBaltic, SouthFront, Strategic Culture Foundation, and Krasnaya Zvezda / Tvzvezda.
• Miscellaneous Amendments: Finally, Regulation 395 includes a variety of targeted amendments to existing exemptions and licensing provisions to aspects of the import, export, public contracting, and financial services provisions of Regulation 833.

The EU has also adopted new measures that amend existing restrictions related to Crimea, Sevastopol, and those parts of the Donetsk, Kherson, Luhansk and Zaporizhzhia regions of Ukraine not currently under Ukrainian government control (“specified territories”).

The new measures concerning Crimea and Sevastopol are introduced through Council Regulation (EU) 2025/401 which amends Regulation (EU) No 692/2014, while the new measures related to the specified territories are introduced through Council Regulation (EU) 2025/398, amending Regulation (EU) 2022/263.

The key provisions include:

• Restrictions on the export of banknotes denominated in any official currency of EU member states;
• Professional service restrictions, which are similar to those imposed in relation to Russia;
• Restrictions on the supply of “software for the management of enterprises” and “software for industrial design and manufacture”, and of related intellectual property rights or trade secrets; and
• A “best efforts” clause, which mirrors the provision already included in the Russia sanctions regulations.

On 29 June 2024, the Council imposed additional sanctions measures on Belarus in response to Belarus’s support of the Russian invasion of Ukraine. Council Regulation (EU) 2025/392 (“Regulation 392”) expands upon pre-existing Belarus sanctions established in Council Regulation (EC) No 765/2006 (“Regulation 756”). Most of the new measures are broadly similar to – and in some respects substantively identical to – pre-existing EU-Russia sanctions. The new measures include the following:

• Export/supply Controls: Regulation 392 adds additional items to the following Annexes to Regulation 756:
  • Annex Va, which lists “goods and technology which might contribute to Belarus’s military and technological enhancement, or the development of the defense and security sector”;
  • Annex XVIII, which lists goods that could “contribute to the enhancement of Belarusian industrial capacities”; and
  • Annex XIVa and Annex XIX, which list goods subject to Belarus transit restrictions.

Similarly to what was outlined above with regards to the Russia restrictions, Regulation 392 introduced changes to export restrictions in Articles 1e (dual use items) and Article 1f (Annex Va items). Existing exemptions have been replaced with case-by case licensing provisions, except for exemptions related humanitarian purposes and medical or pharmaceutical purposes.

Regulation 392 introduces new restrictions on the supply of software listed in the newly established Annex XXXII, along with restrictions on the provision of related services and the transfer of intellectual property rights associated with the restricted software. The software captured by this Annex corresponds to the software added to Annex II of Regulation 833 and includes software “used in oil and gas exploration”.

• Import Controls: Consistent with the new Russia measures outlined above, Regulation 392 also introduces import-related controls on aluminum products falling under CN code “7601”.  
• Anti-Circumvention Measures: Consistent with the new Russia measures, Regulation 392 expands the obligation for EU operators that trade in common high priority items listed in Annex XXX to Regulation 765 (which lists the same items listed in Annex XL of Regulation 833) to conduct risk assessments concerning the risk of their products being diverted to Belarus, and implement appropriate risk mitigation controls also in relation to activities of their subsidiaries. Effective 26 May 2025, the same obligation also applies in relation to items listed in Annex XXXI of Regulation 765.
• Professional Service Sanctions: Regulation 392 introduces new restrictions against the provision of “construction services”. In line with existing professional service restrictions related to Belarus, these restrictions apply only to services provided to the “Republic of Belarus, its government, its public bodies, corporations or agencies; or any natural or legal person, entity or body acting on behalf or at the direction of the foregoing persons”.
• Road Transport Restrictions: Consistent with the EU-Russia sanctions, Regulation 392 includes a new measure prohibiting any changes to road transport undertakings’ capital structure that would increase the percentage share owned by a Russian natural or legal person to 25% or more.
• Deposit Restrictions: Regulation 392 expands existing restrictions on accepting deposits by Belarusian persons exceeding 100 000 EUR. These restrictions now also apply to any entities that are at least 50% owned by such parties.
• Crypto-asset Wallet Services: New restrictions have been introduced on the provision of crypto-asset wallet, account or custody services to Belarusian parties. Effective 26 March 2025, Belarusian nationals will also be prohibited from holding any positions in the governing bodies of EU entities providing these services.
• Derogation: Regulation 392 also introduces changes to the asset-freezing restrictions in Regulation 765, including by adding provisions allowing Member State authorities to grant case-by-case licenses to release funds frozen due to the involvement of a sanctioned (intermediary) bank in the transfer of the funds from Belarus to the EU, under the conditions that the transfer is between two non-sanctioned natural or legal persons, entities or bodies and is carried out using accounts at non-sanctioned credit institutions.
• Miscellaneous Amendments. Finally, Regulation 392 includes a variety of amendments to existing exemptions and licensing provisions to aspects of the import and export provisions of Regulation 765.

On 24 February 2025, the UK government marked the third anniversary of Russia’s invasion of Ukraine by announcing its “largest sanctions package against Russia since 2022”. This package consists of 107 new asset freezing designations targeting individuals, companies and ships. The designations aim to “to put Ukraine in the best position to achieve peace through strength” by “target[ing] Russia’s military machine, entities in third countries who support it and the fragile supply networks that it relies on”.

Entities and individuals from third countries feature prominently in the new designations. In a first for the UK sanctions regime, a non-Russia based financial institution providing financial services to Russia, the Kyrgyzstan-based OJSC Keremet Bank, has been designated. “Enablers and suppliers” of electronics, minerals, tools, and dual-use technologies to the Russian military, based in Central Asian states such as Kyrgyzstan and Kazakhstan, as well as in China, India, Turkey, and Thailand, have been designated. The UK also has designated senior North Korean ministers and officials involved in supporting Russian military action against Ukraine, such as defence minister No Kwang Chol.

In an effort to “put further pressure on [Russian] energy revenues”, the UK has designated 40 vessels suspected of forming part of the “shadow fleet” of tankers involved in the trade of Russian oil, under the flags of a range of countries including Barbados, Gabon, and Panama.

The newly designated Russian entities include suppliers and importers of dual-use goods, including from Europe, to the Russian military. The Russian individuals targeted include 14 “New Kleptocrats” who the UK government believes are involved in sectors of strategic significance to the Russian Government. For example, Roman Trotsenko, one of Russia’s wealthiest men, has been designated due to his ownership of Novaport Holding, which controls a number of Russian airports, and LLC Aeon Corporation, which operates in the extractives, energy, and chemicals sectors.

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We are closely monitoring developments concerning the U.S., UK, and EU sanctions against Russia, and will issue further updates in the event of material developments. In the meantime, we would be happy to address any questions you may have.

Covington’s International Trade Controls team—which includes lawyers in the firm’s offices in the United States, London, and Frankfurt—regularly advises clients across business sectors, and is well-placed to provide support in connection with the evolving Russia sanctions and export controls. Our trade controls lawyers also work regularly with Covington's Global Public Policy team—consisting of over 120 former diplomats and policymakers in the United States, Europe, the Middle East, Latin America, Africa, and Asia—many of whom have had substantial government experience in sanctions and export controls matters, and who regularly advise our clients on emerging sanctions policy matters and related engagements with government stakeholders. Moreover, as the Ukraine crisis continues to unfold, Covington is exceptionally well-positioned to assist clients in navigating their most complex challenges, drawing on the multidisciplinary capabilities of additional practices in areas such as international arbitration and disputes, cybersecurity, anti-money laundering, insurance, and corporate restructuring.

If you have any questions concerning the material discussed in this client alert, please contact the members of our International Trade Controls or International Dispute Resolution practice.