On October 22, 2025, the U.S. government imposed property-blocking sanctions on Russia’s two largest oil companies, Open Joint Stock Company Rosneft Oil Company (“Rosneft”) and Lukoil OAO (“Lukoil”), by designating these entities, as well as 34 Russia-based Rosneft and Lukoil subsidiaries, to the List of Specially Designated Nationals and Blocked Persons (“SDN List”) maintained by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”). These are the first Russia-related sanctions imposed by the current Trump Administration (other than the “secondary tariff” announced with respect to India in August 2025, which we covered in a prior alert), and mark a significant escalation in the Administration’s approach towards Russia sanctions.
In announcing the designations, the Treasury Department noted the sanctions were being imposed “as a result of Russia’s lack of serious commitment to end the war in Ukraine,” and Secretary of the Treasury Scott Bessent stated that “Treasury is prepared to take further action if necessary” to support an end to the war, though he did not specify what such “further action” might be.
The new U.S. designations follow the UK government’s October 15, 2025 designation of Rosneft and Lukoil, together with 88 other entities, individuals, and vessels that it had determined to be supporting Russia’s war in Ukraine. The EU followed suit on October 23, 2025, announcing its 19th package of sanctions against Russia, which includes various export, service, and other restrictions as well as designations of additional banks, companies, and vessels for asset-freezing sanctions. The EU also issued new Belarus sanctions.
This alert summarizes the U.S. SDN List designations of Rosneft, Lukoil, and certain of their subsidiaries. It also addresses certain general licenses, including a wind-down general license, that OFAC issued in parallel with the designations to authorize limited dealings with these entities. It further addresses the implications of these designations under the Export Administration Regulations (“EAR”), including in light of the Affiliates Rule recently issued by the U.S. Commerce Department, Bureau of Industry and Security (“BIS”), which is discussed in greater detail in our recent client alert. Finally, this alert summarizes the new UK sanctions designations, as well as the EU’s 19th package of sanctions against Russia and Belarus.
On October 22, OFAC designated Rosneft, Lukoil, and 34 Russia-based Rosneft and Lukoil subsidiaries to the SDN List pursuant to Executive Order (“E.O.”) 14024 for operating or having operated in the energy sector of the Russian Federation economy. As a result, U.S. persons are prohibited—unless authorized by OFAC—from engaging in or facilitating virtually all transactions or dealings, directly or indirectly, with or involving Rosneft, Lukoil, or their designated subsidiaries, as well as any entities owned 50% or more, directly or indirectly, individually or in the aggregate, by one or more of the foregoing entities and/or other SDNs (collectively, “blocked parties”). Additionally, property in which blocked parties have an interest must be blocked and reported to OFAC when such property comes into the United States or the possession or control of a U.S. person.
“U.S. person” means any U.S. citizen or lawful permanent resident (“green-card” holder) wherever located or employed, any entity organized under the laws of the United States or any jurisdiction within the United States (including non-U.S. branches), or any person in the United States.
These SDN designations significantly escalate the restrictions applicable to Rosneft and Lukoil, which were previously targeted under directives issued pursuant to E.O. 13662 for more limited sanctions that prohibited U.S. persons from dealing in new debt of Rosneft of longer than 60 days’ maturity and from providing certain goods, services, or technology in support of exploration or production for certain deepwater, Arctic offshore, or shale projects involving Rosneft or Lukoil.
Importantly, non-U.S. persons can be targeted for retaliatory measures (“secondary sanctions”) if they engage in certain dealings with Russia-related SDNs designated pursuant to E.O. 14024, such as Lukoil and Rosneft.
- First, Under Section 1(a)(vi) of E.O. 14024, persons determined by the U.S. Secretary of the Treasury or the U.S. Secretary of State “to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of” Rosneft, Lukoil, or their designated affiliates (and entities owned 50% or more, directly or indirectly, by one or more of the foregoing entities and/or other SDNs) may themselves be designated for property-blocking sanctions. Section 587.304 of the Russian Harmful Foreign Activities Sanctions Regulations (“RuHSR,” 31 C.F.R. Part 587), which implement E.O. 14024, broadly defines “financial, material, or technological support” to include “any property, tangible or intangible, including currency, financial instruments, securities, or any other transmission of value,” thereby affording the U.S. government wide latitude in determining whether to sanction, by designation to the SDN List, non-U.S. persons for dealing with Lukoil, Rosneft, and other persons blocked pursuant to E.O. 14024.
- Second, under Section 11 of E.O. 14024 (as amended by E.O. 14114), if the Secretary of the Treasury determines that a foreign financial institution “conducted or facilitated any significant transaction, or provided any service, involving” Rosneft, Lukoil, or their designated affiliates, the Secretary may, with respect to that foreign financial institution, prohibit the opening of, or prohibit or impose strict conditions on the maintenance of, correspondent accounts or payable-through accounts in the United States, or impose full property-blocking sanctions.
In parallel with the SDN designations of Rosneft, Lukoil, and various of their Russia-based subsidiaries, OFAC also issued (or amended) four related general licenses: Russia-related General License 124A, “Authorizing Petroleum Services and Other Transactions Related to the Caspian Pipeline Consortium and Tengizchevroil Projects”; Russia-related General License 126, “Authorizing the Wind Down of Transactions Involving Rosneft or Lukoil”; Russia-related General License 127, “Authorizing Certain Transactions Related to Debt or Equity of, or Derivative Contracts Involving, Rosneft or Lukoil”; and Russia-related General License 128, “Authorizing Certain Transactions Involving Lukoil Retail Service Stations Located Outside of Russia.”
General License 124A amends General License 124 to account for the designation of Rosneft and Lukoil to the SDN List. Specifically, subject to the conditions of the general license, Section (b) of General License 124A authorizes “all transactions prohibited by E.O. 14024 . . . that are related to the Caspian Pipeline Consortium or Tengizchevroil projects” involving one or more of Rosneft, Lukoil, or any entity in which one or more of Lukoil or Rosneft owns, directly or indirectly, individually or in the aggregate, a 50% or greater interest. The Caspian Pipeline Consortium, in which Lukoil holds a minority stake, operates the Caspian pipeline, which transports oil from the Tengiz oil field in Kazakhstan to the Novorossiyk-2 Marine Terminal in Russia. Tengizchevroil is a joint venture between Lukoil, KazMunayGas, and leading international oil and gas companies that produces oil, gas, and associated products in Kazakhstan.
General License 126 authorizes through 12:01 am EST on November 21, 2025, subject to the conditions of the general license, “all transactions prohibited by [E.O.] 14024 that are ordinarily incident and necessary to the wind down of any transaction involving one or more of” Rosneft, Lukoil, or any entity in which one or more of Lukoil or Rosneft owns, directly or indirectly, individually or in the aggregate, a 50% or greater interest.
General License 126 requires that any payment to Lukoil, Rosneft, or any entity that they own 50% or more in connection with such wind-down transactions be made into a blocked account in accordance with the RuHSR.
General License 126 does not authorize transactions prohibited by Directive 2 issued under E.O. 14024 (Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions) or Directive 4 issued under E.O. 14024 (Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation). It also does not authorize transactions involving any person subject to U.S. property-blocking sanctions other than Lukoil, Rosneft, or entities that they own 50% or more.
General License 127 authorizes through 12:01 am EST on November 21, 2025, subject to the conditions of the general license, “all transactions prohibited by [E.O.] 14024 that are ordinarily incident and necessary to the divestment or transfer, or the facilitation of the divestment or transfer” to a non-U.S. person “of debt or equity issued or guaranteed by” Rosneft, Lukoil, or any entity in which one or more of Lukoil or Rosneft owns, directly or indirectly, individually or in the aggregate, a 50% or greater interest (“Covered Debt or Equity”).
General License 127 also authorizes all transactions prohibited by E.O. 14024 that are ordinarily incident and necessary to “facilitating, clearing, and settling trades of Covered Debt or Equity” or that are ordinarily incident and necessary to the wind down of certain derivative contracts that either (i) include Rosneft, Lukoil, or any entity in which one or more of Lukoil or Rosneft owns, directly or indirectly, individually or in the aggregate, a 50% or greater interest; or (ii) “are linked to Covered Debt or Equity,” provided that any payments to a blocked person in relation to such derivative contracts are made into a blocked account in accordance with the RuHSR. Such trades must have been placed, and such derivative contracts must have been entered into, prior to 4:00 pm EDT on October 22, 2025 to be eligible for the general license.
General License 127 does not authorize U.S. persons to sell or facilitate the sale of Covered Debt or Equity to blocked persons, whether directly or indirectly. It also does not authorize the purchase or investment in Covered Debt or Equity, or the facilitation of such purchase or investment, unless ordinarily incident and necessary to a divestment or transfer authorized under General License 127.
General License 127, like General License 126, also does not authorize transactions prohibited by Directive 2 or Directive 4 under E.O. 14024.
General License 128 authorizes through 12:01 am EST on November 21, 2025, and subject to the conditions of the general license, “all transactions prohibited by [E.O.] 14024 that are ordinarily incident and necessary to the purchase of goods and services from, or the maintenance, operation, or wind down of Lukoil retail service stations located outside of the Russian Federation (‘Lukoil Retail Service Stations’).” The general license defines “Lukoil Retail Service Stations” to mean “physical retail service stations located outside the Russian Federation and in existence on or before October 22, 2025” in which Lukoil or any entity in which Lukoil owns, directly or indirectly, a 50% or greater interest, has an interest.
General License 128 requires that “any payment, directly or indirectly, to a blocked person—other than blocked Lukoil Retail Service Stations—is made into a blocked account in accordance” with the RuHSR.
General License 128, as with General Licenses 126 and 127, does not authorize transactions prohibited by Directive 2 or Directive 4 under E.O. 14024.
Finally, none of the foregoing general licenses authorizes transactions involving blocked parties other than Rosneft, Lukoil, or any entity in which one or more of Lukoil or Rosneft owns, directly or indirectly, individually or in the aggregate, a 50% or greater interest.
Additionally, the general licenses are issued only pursuant to the RuHSR. They therefore do not authorize activities prohibited by the more limited sanctions previously imposed on Rosneft and Lukoil under E.O. 13662 and the Ukraine-/Russia-Related Sanctions Regulations (31 C.F.R. Part 589)—i.e., the prohibitions on U.S. persons dealing in new debt of longer than 60 days’ maturity of Rosneft (and entities owned 50% or more, directly or indirectly, by Rosneft) and providing certain goods, services, or technology in support of exploration or production for certain deepwater, Arctic offshore, or shale projects involving Rosneft or Lukoil (or entities that they own 50% or more, whether directly or indirectly).
The designation of Rosneft, Lukoil, and certain of their Russia-based subsidiaries to the SDN List pursuant to E.O. 14024 also implicates heightened restrictions under the EAR. In particular, pursuant to EAR § 744.8(a)(1), a BIS license is required, subject to limited exceptions (including, in some cases, where an OFAC general or specific license is available, as discussed below), for any person (whether a U.S. person or a non-U.S. person) to export, reexport, or transfer any items subject to the EAR (including non-sensitive EAR99 items) where an entity designated by OFAC to the SDN List pursuant to E.O. 14024 (among certain other OFAC sanctions authorities) is a party to the transaction (e.g., as purchaser, intermediate consignee, ultimate consignee, or end user). Accordingly, this license requirement now applies to Rosneft, Lukoil, and their affiliates designated to the SDN List pursuant to E.O. 14024. Further, as a result of the “Affiliates Rule” recently published by BIS and described in our prior client alert, this license requirement also now extends to non-U.S. entities that are owned 50% or more, directly or indirectly, individually or in the aggregate, by one or more entities identified on the BIS Entity List (Supplement No. 4 to EAR Part 744), the BIS Military End User List (the “MEU List,” Supplement No. 7 to EAR Part 744), and/or the SDN List under certain sanctions programs identified in EAR § 744.8(a)(1), including E.O. 14024. Accordingly, the foregoing license requirements also apply to entities owned 50% or more, directly or indirectly, by Lukoil or Rosneft (individually or in the aggregate with other SDNs designated under the sanctions programs identified in EAR § 744.8(a)(1), parties on the Entity List, or parties on the MEU List).
Many items subject to the EAR were already restricted for export, reexport, and transfer to or within Russia due to the EAR’s destination-based controls (regardless of the recipient) and to Rosneft and Lukoil as a result of their historical inclusion on the Entity List (albeit subject to less comprehensive licensing requirements than most other Entity List parties). Nonetheless, the SDN List designations of Rosneft, Lukoil, and certain of their Russia-based subsidiaries will have a significant impact on the newly designated entities and those they own 50% or more. In particular, licensing is now required to export, reexport, or transfer any item subject to the EAR (including EAR99 items) to Rosneft and Lukoil anywhere in the world (including in Russia), including where such licensing was not previously required. Further, pursuant to the Affiliates Rule, if Rosneft and Lukoil affiliates outside of Russia that are owned 50% or more, directly or indirectly, individually or in the aggregate by one or more of the recently designated entities are parties to a transaction involving items subject to the EAR, such transaction will now require BIS authorization.
Additionally, while an OFAC general or specific license may provide sufficient authorization under the EAR for exports, reexports, and/or transfers to entities subject to the Affiliates Rule solely as a result of their ownership by SDNs designated under sanctions programs identified in EAR § 744.8(a)(1), an OFAC authorization would not be sufficient if such entities are also owned by one or more entities on the Entity List or MEU List and the contemplated export, reexport, or transfer would trigger the licensing requirements of the corresponding Entity List or MEU List designation. (As noted, both Rosneft and Lukoil have long been designated to the Entity List, with a license requirement for all items subject to the EAR when used in certain deepwater, Arctic offshore, or shale projects.) This is because, as discussed in our prior client alert, the Affiliates Rule establishes a “Rule of Most Restrictiveness,” whereby if an entity is owned 50% or more, directly or indirectly, by multiple entities subject to EAR license requirements or other restrictions pursuant to some combination of the Entity List, MEU List, or SDN List under the OFAC programs listed in EAR § 744.8(a)(1), then the entity is subject to the most restrictive license requirements, license exception eligibility, and license review policy applicable to one or more of its owners under the EAR.
The foregoing U.S. measures followed new Russia-related sanctions implemented by the UK Government on October 15, 2025. In particular, the UK government announced 90 new designations on individuals, vessels, and companies under the UK asset-freezing list. Persons subject to UK sanctions jurisdiction—i.e., UK nationals, UK entities, and anyone (irrespective of nationality) engaged in conduct in UK territory—are broadly restricted from engaging in commercial dealings involving parties subject to UK asset-freezing sanctions or assets thereof. Those sanctions also extend to non-designated parties that are majority-owned or controlled, directly or indirectly, by any designated person or entity.
As with the new U.S. sanctions, the most notable of the new UK designations are those concerning Lukoil and Rosneft. The UK has also newly designated 32 other entities that it has determined to be involved in destabilising, undermining, or threatening Ukraine or supporting the Russian government (e.g., by supporting the Russian energy sector or by supplying electronics critical to Russian drones or missiles used in Ukraine). Entities from third countries feature prominently in these new designations—for example, ten Chinese companies, five UAE-based companies, a company based in Singapore, a Thailand-based company, and a Turkey-based company have all been designated. Additionally, the UK has designated the major India-based petrochemicals company Nayara Energy Limited (a Rosneft affiliate). Nayara Energy Limited was designated for EU asset-freezing sanctions in July 2025.
Along with the above entities, the UK has designated five individuals, including a Singaporean national and a New Zealand national, for owning or managing entities involved in destabilising, undermining, or threatening Ukraine or supporting the Russian government.
The Office of Financial Sanctions Implementation (“OFSI”) has issued three new general licences concerning certain of the newly designated parties. The licenses authorize, subject to certain conditions, the following activities:
- The continuation of transactions with the Rosneft subsidiaries Rosneft Deutschland GmbH and RN Refining & Marketing GmbH, and their subsidiaries (these entities are currently under the operational control of the Government of Germany, but continue to be owed by Rosneft);
- The wind down of transactions with Rosneft, Lukoil, and their subsidiaries (the abovementioned Rosneft subsidiaries aside); and
- The wind down of transactions with Nayara Energy Limited, certain newly designated Chinese petrochemicals companies, and their subsidiaries.
OFSI has also amended two existing general licences to allow:
- The continuation of transactions concerning six specified oil projects involving Rosneft or Lukoil, including the Caspian Pipeline Consortium project, the South Caucasus Pipeline, and the Shah Deniz project; and
- UK persons to purchase petrol from Rosneft and Lukoil petrol stations in Kyrgyzstan and Tajikistan, and allow UK businesses, Rosneft, and Lukoil to undertake any activity reasonably necessary to enable such purchases.
The UK also designated 51 vessels suspected of forming part of the so-called “shadow fleet” of vessels involved in the trade of Russian oil or vessels involved in the transportation of Russian natural gas under the flags of several countries, including Honduras, Liberia, and Turkey.
On October 23, 2025, the Council of the European Union (the “Council”) adopted its 19th package of economic sanctions against Russia.
The new package consists of a broad range of new measures and amendments to existing sanctions, including important new asset-freezing designations and significant new export and import controls, energy sector, financial services, and professional services restrictions (among other features).
Council Implementing Regulation (EU) 2025/2035 designates a new set of individuals and entities for EU asset-freezing sanctions. The newly listed entities include Russian and non-Russian companies in the defense, energy, financial, and transportation sectors. Notable parties subject to these new sanctions include Litasco Middle East DMCC (a Dubai-based subsidiary of Lukoil), A7 LLC (a subsidiary of PSB Bank), and Evraz LLC, a UK-based steel and mining company (which was previously designated by the UK government in 2022). In contrast to the United States and United Kingdom, the EU authorities determined not to impose asset-freezing sanctions on Lukoil’s global business, or on Rosneft (although Rosneft has been subject to more targeted EU sanctions, discussed below, since April 2022). The new EU designations also notably include several entities in China and the UAE, as well as UK and U.S. entities determined by the EU to have been involved in facilitating activities in relation to the “shadow fleet” of vessels used to circumvent the G7 oil price cap.
As with other EU asset-freezing designations, persons subject to EU sanctions jurisdiction are broadly restricted from dealing, directly or indirectly, with the newly listed persons and entities, or with any entity that designated parties own a 50% or greater interest in or otherwise control. EU sanctions jurisdiction extends to the worldwide conduct of EU persons and EU entities, as well as non-EU parties with regard to transactions occurring wholly or partly in EU territory.
Separately, Council Regulation (EU) 2025/2037 amends Council Regulation (EU) No 269/2014, the principal Regulation governing Russia-related asset-freezing designations. The new Regulation codifies criteria for applying the EU “control” standard, under which a non-designated entity can be subject to EU asset-freezing measures if it is “controlled” by a designated person (irrespective of the party’s ownership stake). Those criteria were previously set out in Council and Commission guidance.
The Regulation defines the term “owning,” consistent with current Council and Commission guidance, as “being in possession of 50% or more of the proprietary rights of a legal person, entity or body, or having a majority interest therein.” The Regulation also narrows the language in Article 2, which sets out the key prohibitions with respect to asset-freezing measures. Previously, the obligation to freeze funds and economic resources and the prohibition on making funds or economic resources available to a sanctioned party also applied to parties “associated with” a sanctioned person; this reference has now been removed.
Council Regulation (EU) 2025/2033 (the “Regulation”) amends the principal EU-Russia trade sanctions regulation, Council Regulation (EU) No 833/2014 (“Regulation 833”), to impose various new trade sanctions in relation to Russia and expand existing ones. The measures include the following, among other changes.
The Regulation includes new items in the following export controls-related annexes to Regulation 833:
- Annex VII has been updated to subject further advanced technology items to trade controls under Article 2a of Regulation 833, including electronic components, rangefinders, additional chemicals used in the preparation of propellants, and additional metals, oxides and alloys, and associated items.
- Annex XXIII, which lists “goods which could contribute to the enhancement of Russian industrial capacities” that are subject to trade restrictions in Article 3k of Regulation 833, also has been amended to include new items. The newly designated items cover certain types of salts and ores, articles of rubber, tubes, tyres, millstones, and construction materials.
- The Regulation introduces certain technical amendments to Annex XVIII (“luxury goods”) by removing certain items from the Annex that are already captured by other export-related Annexes in Regulation 833.
The Regulation includes limited wind-down provisions, exemptions, and licensing provisions regarding certain of the foregoing items.
Consistent with pre-existing restrictions in Articles 2a, 3k and 3h, EU persons are prohibited from directly or indirectly selling, supplying, transferring or exporting the foregoing items to Russia, or to any other jurisdiction if intended for use in Russia. Those prohibitions are accompanied by independent restrictions on the provision of any services, or extending intellectual property rights or trade secrets, in relation to restricted goods if intended for use in Russia.
The Regulation also adds new entities to Annex IV of Regulation 833, which designated entities for enhanced export controls regarding dual-use and Annex VII items, including a number of entities located in China, India, and Thailand.
Finally, the Regulation also broadens existing import and transfer restrictions in Article 3i on acyclic hydrocarbons listed in Annex XXI to include CN code 29011000, which was previously excluded. A wind-down exemption has been included for contracts concluded before October 24, 2025 until January 25, 2026, as well as certain exemptions for imports or transfers to Hungary.
Professional Service Sanctions
The Regulation significantly broadens Article 5n of Regulation 833, which restricts the provision of certain professional services and the supply of certain types of business software to the Russian government or to legal persons, entities, or bodies established in Russia. The new changes include the following:
- The scope of Article 5n has been expanded to cover integrated engineering, urban planning, and engineering-related scientific and technical consulting services. The new service categories are not further defined in the Regulation, but the recitals to the Regulation refer to the Central Product Classification (CPC prov., 1991) of the UN Statistical Office, under which these services correspond to CPC codes 8673–8675.
- New restrictions will also apply, effective November 25, 2025, to commercial space-based services (e.g., Earth observation and satellite navigation), artificial intelligence services (e.g., access to models or training platforms, fine-tuning, and inference), and high-performance computing or quantum computing services.
- Additional restrictions have been included in relation to services concerning to tourism activities in Russia, which is defined to include:
- “travel agency and tour operator services, including services rendered for passenger travel by travel agencies and tour operators and similar services; travel information, advice and planning services; services related to the arrangement of tours, accommodation, passenger and baggage transportation; ticket issuance services”;
- “tourist guide services”; and
- “advertising services related to the services referred to the foregoing points.”
These restrictions are subject to a wind-down exemption until January 1, 2026, for contracts that were concluded before October 24, 2025.
- Finally, a catch-all services restriction has been included, requiring prior authorization for any other services provided to the Russian government that are not prohibited elsewhere. This provision is also subject to a wind-down exemption until January 1, 2026, for contracts concluded before October 24, 2025.
Transaction Bans
Transaction Ban With Regards to Entities That “Frustrate” Regulation 833 Prohibitions
The Regulation adds further entities to Annex XLV, which are subject to a transaction ban under Article 5ad of Regulation 833. Article 5ad prohibits EU operators from engaging in any transactions with parties designated under Annex XLV (subject to targeted exceptions).
The new designations include Payeer, CJSCB Tolubay, OJSC Eurasian Savings Bank, CJSC Dushanbe City Bank, CJSC Spitamen Bank (Tajikistan), OJSC Commerce Bank of Tajikistan, Blackford Corporation Limited, and Fuel and Oil Dynamics FZE. The transaction ban takes effect on November 25, 2025 for Payeer and on November 12, 2025 for the remaining entities.
The Regulation also expands Article 5ad to cover entities operating as “mirror” or “successor” entities of those already designated in Annex XL (as further defined pursuant to criteria listed in Article 5ad).
The Regulation further broadens the types of entities eligible for designation under Article 5ad to include not only banks and crypto-asset service providers but also payment service providers.
Transaction Ban With Regard to Users of the Russian System for Transfer of Financial Messages (“SPFS”)
The Regulation expands the list of banks in Annex XLIV subject to a transaction ban under Article 5ac. Newly designated banks include CJSC Alfa-Bank (Belarus), OJSC Sber Bank (Belarus), VTB Bank (Belarus), and VTB Bank (Kazakhstan). Given the affiliation of these banks with Russian banks that are already subject to EU asset-freezing sanctions, the practical impact of these new designations will likely be limited.
Separately, from January 25, 2026, the prohibition in Article 5ac on EU entities connecting to the Russian SPFS will also apply to other Russian systems, including the National Payment Card System (“Mir”) and the Fast Payments System (“SBP”).
Transaction Ban with Regards to Russian Financial Institutions Previously Subject to Specialized Financial Messaging Services Restrictions
The Regulation extends the separate transaction ban set out in Article 5h to include additional financial institutions listed in Annex XIV. Newly designated entities include MTS Bank, Alfa Bank, NPO “Istina” (JSC), LLC “Zemsky Bank,” and Commercial Bank Absolut Bank (PAO). These restrictions, which are subject to targeted exemptions, take effect on November 12, 2025.
Transaction Ban with Regards to Russian-Government Linked Entities
The Regulation introduces several amendments to Article 5aa, which governs the transaction ban, originally implemented in April 2022, with regards to certain Russian government-linked entities listed in Annex XIX. Of particular note:
- A pre-existing wind-down exemption for joint ventures or similar legal arrangements involving designated entities that were concluded before March 16, 2022 has been extended from December 31, 2025 to December 31, 2026. The Regulation tightens Article 5aa restrictions relation to Rosneft and Gazpromneft, which were originally designated for sanctions under Article 5aa in April 2022. The Regulation removes, in particular, Rosneft and Gazpromneft from eligibility for exemptions in Article 5aa allowing imports into the EU (and certain other jurisdictions) of Russian oil and oil products, natural gas, and certain metals and minerals.
- However, the Regulation also includes a new exemption in Article 5aa allowing transactions with Rosneft or Gazpromneft in relation to the third-country transfer of Russian-origin oil and petroleum products, provided that those transactions comply with the EU price cap regime.
Additional Energy Related Measures
LNG Import/Transfer Ban
The Regulation introduces a prohibition on the purchase, import, or transfer, directly or indirectly, into the EU of liquefied natural gas (CN code 2711 11 00) originating in or exported from Russia, as well as the provision of related technical or financial assistance.
These restrictions are subject to a wind-down exemption until January 1, 2027, for contracts concluded before June 17, 2025, provided the contract has not been amended thereafter and has a duration exceeding one year.
Third Country Petroleum Products Import Ban
The Regulation amends existing restrictions in Article 3ma restricting the import of petroleum products refined from Russian-origin crude oil. The Regulation expands, in particular, the list of “partner countries” in Annex LI from Canada, Norway, the United Kingdom, the United States, and Switzerland to now also include Australia, Japan, and New Zealand. Imports from these partner countries are exempt from the origin verification requirement for crude oil used in refining activities set out in Article 3ma(1).
Investment Restrictions
The Regulation introduces Article 5ah, which establishes a range of new investment restrictions concerning entities or projects located in “special economic, innovation, or preferential zones” in Russia, as listed in Annex LII. Article 5ah also includes restrictions—applicable from January 25, 2026, forward—on maintaining pre-existing business activities concerning Annex LII assets or entities.
A new Annex LII has been added into Regulation 833, and includes 11 designations (including various Russian economic zones, and one port and innovation center).
Crypto-asset Sanctions
The Regulation expands existing restrictions under Article 5b on the provision of crypto-asset services (as defined in Regulation (EU) 2023/1114) to now also cover the issuing of payment instruments, acquiring of payment transactions, or payment initiation services, as defined in Directive (EU) 2015/2366; and issuing of electronic money, as defined in Directive 2009/110/EC of the European Parliament and of the Council.
The Regulation also introduces, in Regulation 5ba, a new restriction on dealing in specifically listed crypto-assets identified in Annex LIII, which currently includes only the crypto-asset “A7A5.”
Port Ban, Maritime Service, Vessel and Aircraft Restrictions
The Regulation expands the list of vessels in Annex XLII subject to a port ban and related services prohibitions under Article 3s of Regulation 833, while removing certain others, and extends the scope of Article 3s financial services restrictions to cover reinsurance.
The Regulation also introduces a new prohibition, at Article 5u, on entering into arrangements which result in the transfer of risks from, or the ceding of exposure to risks associated with, insurance coverage for vessels or aircraft during the five years following the sale or any form of lease arrangement of vessels or aircraft that were operated, directly or indirectly, by the Government of Russia or by a legal person, entity or body established in Russia.
Separately, the Regulation amends Article 5ae to allow for the designation, for transaction-ban sanctions under Annex XLVII, of non-Russian ports and locks involved in the categories of EU sanctions circumvention set out in Article 5ae.
Russian Divestment
The Regulation makes various technical amendments to Russia divestment-related provisions of Regulation 833, including extending the deadlines for certain derogations from export, import, and services restrictions required for divestment from Russia. Many of these derogations were previously due to expire at the end of 2025, and are now extended until December 31, 2026.
Russian Diplomats
The Regulation introduces new restrictions concerning Russian diplomats. When travelling within the Schengen area beyond their country of accreditation, Russian diplomats must notify the relevant EU Member State in advance. Member States are authorized to impose an authorization requirement for such travel.
Finally, the Regulation also introduces various other technical amendments to Regulation 833, not specifically described in this alert, including targeted changes to the scope of various licensing provisions and exemptions.
On October 23, 2025, the Council also imposed additional sanctions measures on Belarus in response to Belarus’s support of Russia’s full-scale invasion of Ukraine. Council Regulation (EU) 2025/2041 expands upon pre-existing Belarus sanctions established in Council Regulation (EC) No 765/2006 (“Regulation 765”). Most of the new measures are broadly similar to—and in some respects substantively identical to—the new EU-Russia sanctions. The new Belarus sanctions include the following measures of particular note.
Export/Import Controls: The new measures add additional items to the following export controls-related Annexes to Regulation 765. These additions largely correspond with changes made to the export Annexes in Regulation 833 outlined above:
- 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 and technologies which could contribute to the enhancement of Belarusian industrial capacities”; and
- Annex XXV, which lists “luxury goods.”
Similar to the Russia sanctions, the Regulation also expands existing import and transfer restrictions relating to acyclic hydrocarbons originating in or exported from Belarus.
Professional Service Sanctions
Consistent with the amendments to the Russia sanctions, the Regulation amends the professional services restrictions in Article 1jc of Regulation 765. These changes include the introduction of new restrictions on the provision of:
- integrated engineering, urban planning, and engineering-related scientific and technical consulting services;
- commercial space-based services, artificial intelligence services, and high-performance or quantum computing services; and
- a new catch-all clause covering any services provided to the Republic of Belarus, its government, public bodies, corporations, or agencies.
The Regulation also expands the list of software products subject to supply restriction in Article 1jc (as set out in Annex XXVI) to include—consistent with the Russia sanctions—certain types of software used in the banking and financial sector.
Unlike the Russia professional services restrictions, which apply to services provided to any Russian entity, the restrictions in Article 1jc apply only to services and software supplied to:
- the Republic of Belarus, its government, public bodies, corporations, or agencies; and
- any natural or legal person, entity, or body acting on behalf of or at the direction of the Republic of Belarus, its government, public bodies, corporations, or agencies.
The Regulation also introduces new exemptions and licensing provisions in relation to these measures.
Other Sectoral Measures
- Crypto-asset Restrictions: The Regulation expands existing restrictions on the provision of crypto-asset services so as to align them with the corresponding Russia measures. The restrictions now also apply to the issuing of payment instruments, acquiring of payment transactions, payment initiation services, and the issuing of electronic money to Belarusian parties.
- Transaction Ban: The Regulation introduces new exemptions to the transaction ban in Article 1zb of Regulation 765, which prohibits transactions involving certain Belarusian financial institutions listed in Annex XV. The new exemptions apply, among other things, to transactions necessary for the export, sale, supply, transfer, or transport of pharmaceutical, medical, agricultural, or food products.
New Asset-freezing Designations
Council Implementing Regulation (EU) 2025/2039 designates additional Belarusian individuals and entities for EU asset-freezing measures. The newly listed parties include various individuals and companies operating in Belarus’s technology sector.
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We continue to closely monitor developments concerning the U.S., UK, and EU sanctions against Russia and Belarus, 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 the European Union, regularly advises clients across business sectors concerning the full range of U.S. and European export controls and sanctions regulations. Our trade controls lawyers 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.
If you have any questions concerning the material discussed in this client alert, please contact the members of our International Trade Controls practice.
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