On 23 July 2026, the Council of the European Union (the “Council”) adopted its twenty-first package of sanctions against Russia. The package further expands, in certain areas, the EU’s Russia sanctions framework, including through additional export, import and associated services restrictions, enhanced transaction bans, and new asset-freezing designations. At the same time, the new measures include targeted exemptions to aspects of the pre-existing EU-Russia sanctions regime, including, in particular, in relation to sanctions targeting the Russian energy sector.
On the same day, the EU also adopted a parallel package of measures targeting Belarus. These amendments further align the Belarus sanctions regime with the restrictions applicable to Russia, including through expanded export, import and services restrictions.
Council Implementing Regulation (EU) 2026/1843 adds 48 individuals and 168 entities to the EU asset-freezing list. The new designations target, among others, a broad range of Russian financial institutions, entities involved in Russia’s oil sector and so-called shadow vessel fleet, as well as companies operating in the gold, diamond, mining and metallurgy sectors.
Of particular note, the EU has designated Sistema, a major Russian conglomerate with interests across numerous sectors of the Russian economy. According to the designation statement, Sistema controls companies active in the energy, agriculture, pharmaceutical, tourism, electronics and healthcare sectors, including BESK, Agroholding Steppe, Binnopharm Group, Cosmos Hotel Group, Element, Intourist and Medsi.
The EU has also continued its practice of designating, for asset-freezing sanctions, entities established outside Russia who are involved in certain categories of business with Russia, including companies located in jurisdictions such as India, China and the United Arab Emirates. The EU designated the entities in question on the basis of their purported involvement in activities concerning the sale and transportation of Russian oil and oil products.
In addition, Council Regulation (EU) 2026/1844 introduces a number of targeted exemptions, derogations and other amendments to Regulation (EU) No. 269/2014.
Separately, on 13 July 2026, the EU designated a number of additional Russian individuals and entities through Council Implementing Regulation (EU) 2026/1708, including several companies operating in the Russian technology sector. Among those designated was VK, one of Russia’s leading technology companies and a major provider of social media, digital services and online platforms. The foregoing designations were adopted under Regulation (EU) 2024/1485, which establishes a separate EU sanctions framework targeting serious human rights violations and the Russian government’s repression of the Russian population.
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.
Council Regulation (EU) 2026/1848 (“Regulation 1848”) amends the EU’s principal Russia trade sanctions framework set out in Council Regulation (EU) No 833/2014 (“Regulation 833”). The new regulation introduces new restrictive measures and expands or adjusts existing ones across a range of sectors. Key developments are summarized below.
Export/Import Controls and Associated Services Restrictions
Regulation 1848 expands the scope of goods subject to export and services restrictions under Regulation 833:
- Annex VII (Article 2a – advanced technology items) has been expanded to include additional categories of sensitive goods and technology. These include certain radio-frequency systems, specialised self-adhesive films, tapes and strips used in the aerospace and defence sectors, UAV-related servomotors, launch and ground-support systems, flight-termination systems and related software, as well as nickel and beryllium powders.
The regulation also broadens the scope of the existing licensing derogations in Articles 2(4)(e), 2a(4)(e) and 3k(5)(g) relating to exports for civilian electronic communications networks. Previously, these derogations were limited to civilian non-publicly available electronic communications networks, such as private corporate networks. Following the amendment, the requirement that the network be “non-publicly available” has been removed, allowing EU Member State authorities to authorise exports for a wider range of publicly accessible telecommunications networks and services, provided that they are not owned by an entity that is publicly controlled or more than 50% publicly owned.
- Annex IV of Regulation 833 has been updated to include additional entities subject to enhanced export restrictions on dual-use items and goods listed in Annex VII. The newly listed entities are located both in Russia and in third countries, including Türkiye, the Kyrgyz Republic, China and Hong Kong.
In addition, Regulation 1848 expands the scope of the import and transfer restrictions in Article 3i of Regulation 833/2014. Annex XXI now covers certain additional ores, chemicals, glass products, unwrought zinc, and specified vehicle bodies and parts. Many of the newly listed products benefit from a wind-down provision for contracts concluded before 24 July 2026, provided that they are executed by 25 October 2026.
Transaction Bans
Regulation 1848 further expands existing transaction bans targeting both Russian and non‑Russian actors. These measures restrict EU operators from engaging in any transaction with the designated entities. The latest annexes (set out in amended Regulation 833) and associated designations include the following:
- Refineries processing Russian crude oil: A new transaction ban has been introduced for refineries in Russia and third countries that process or refine Russian-origin crude oil or petroleum products, or that are considered to have facilitated the circumvention of EU sanctions. The restriction applies to entities listed in Part D of Annex XLVII. At present, the only listed refinery is Kulevi Oil Refinery in Georgia. However, the application of the transaction ban has been deferred until 25 January 2027, pending an EU Commission review of the designation by 25 October 2026.
- Ports, locks and airports: Annex XLVII has been further expanded to include additional ports, locks and airports that are subject to a transaction ban under Article 5ae.
- Crypto-asset service providers: A new Article 5bc creates a framework allowing the EU to impose transaction bans on crypto-asset service providers and crypto-asset trading platforms established in certain third countries. The mechanism applies to providers established in jurisdictions listed in Annex LVII, which is intended to cover countries that systematically fail to prevent the use of crypto-assets to circumvent EU sanctions. Annex LVII is currently empty.
- State-owned entities: Certain exemptions and derogations from the Article 5aa transaction ban have been extended until 31 December 2027. This includes both the exemption for transactions necessary to wind down joint ventures and similar arrangements concluded before 16 March 2022, and the derogation allowing competent authorities to authorise transactions required for the divestment and withdrawal of Annex XIX entities, and their EU subsidiaries, from EU-established entities.
- Financial institutions and payment service providers: New derogations have been introduced under Articles 5ac, 5ad and 5h for certain transactions involving entities listed in Annexes XLIV, XLV and XIV. In particular, Member State authorities may authorise transactions necessary for EU, EEA and Swiss nationals and residents to withdraw funds from, or close accounts held with, certain newly listed entities, subject to specified conditions, including transfer of the funds to a qualifying financial institution and submission of an authorisation request within three months of listing.
The Regulation also expands the list of financial institutions subject to transaction bans. A large number of additional banks have been added to Annexes XIV and XLV, while one additional institution has been added to Annex XLIV. Separately, Yelo Bank has been removed from Annex XLIV and is therefore no longer subject to the Article 5ac transaction ban.
Energy Sector Restrictions
Regulation 1848 introduces a range of targeted measures affecting Russia's energy sector, with a particular focus on LNG-related activities, maritime transport and oil trade restrictions. The regulation also expands certain exemptions and derogations intended to address specific energy security considerations. Key changes include the following:
- LNG terminal services: The scope of Article 3rb, which prohibits the provision of LNG terminal services from 1 January 2027, has been expanded. Previously, the restriction applied to Russian persons and to EU-established entities owned or controlled by Russian persons. It now applies to any entity, regardless of where it is established, that is more than 50% owned or controlled, directly or indirectly, by a Russian person or entity.
- LNG tanker sales: A new notification regime has been established for sales of LNG tanker vessels by EU persons to third-country purchasers. EU sellers must notify the relevant Member State authorities of transfers of ownership of LNG tankers, enabling the EU Commission and the EU Council to assess whether additional restrictions are necessary. The new provision also creates a framework for a potential future prohibition on transfers of LNG tankers to Russia or for use in Russia and, if activated, would impose diversion-risk assessments, compliance measures and contractual “no-transfer to Russia” requirements.
- LNG restrictions: Several exemptions and derogations have been introduced in relation to pre-existing trade restrictions regarding Russian LNG set out in Article 3ra to Regulation 833. A new exemption permits the transport by vessel of LNG originating from the Sakhalin-2 project and destined for Japan or the Republic of Korea, together with related technical assistance, brokering services, financing and financial assistance. This exemption applies until 31 March 2028.
In addition, a temporary exemption has been introduced from the Article 3ra LNG import/transfer ban for certain long-term contracts concluded before 24 February 2022. Until at least 25 July 2027 (with the ultimate timeline subject to annual Council review), transfers of Russian LNG to third countries, and related purchases, may continue under qualifying contracts.
Further amendments to Article 3ra introduce new reporting requirements for parties engaged in Russian LNG transactions under Article 3ra exemptions.
- Petroleum products refined from Russian crude: A targeted derogation has been introduced from the evidentiary requirements in Article 3ma, which generally require importers of certain petroleum products refined in third countries to demonstrate that the products were not produced from Russian-origin crude oil. EU Member State authorities may now waive this requirement where the products are intended to supply an EU outermost region or an associated overseas country or territory, and where particular geographic, logistical or supply constraints create a demonstrated risk of supply disruption with no economically and logistically viable alternative source available.
Russian oil restrictions: New derogations have been introduced under Articles 3m and 3nb, allowing for case-by-case licensing for transactions concerning Russian-origin crude oil and petroleum products that have been seized or confiscated in connection with EU Member State administrative or judicial proceedings.
The regulation also includes a targeted amendment to the licensing provisions associated with the Article 3nb prohibition concerning the temporary storage of Russian oil.
- Maritime services and the oil price cap: The automatic mechanism introduced under the 18th sanctions package for periodically adjusting the Russian crude oil price cap has been suspended until 14 July 2027. During this period, the current price cap will remain in force. The EU Commission is required to calculate and report the average market price of Russian crude oil to the Council by 15 January 2027, following which the Council may decide whether to amend the cap. In the absence of such a decision, the existing cap will continue to apply. The automatic adjustment mechanism is scheduled to resume on 15 July 2027.
The exemption from the Article 3n restrictions on maritime transport and related services for crude oil originating from the Sakhalin-2 project and destined for Japan has also been extended until 31 March 2028.
Legal Protections for EU Operators
Regulation 1848 introduces a number of measures designed to strengthen the legal protections available to EU operators facing litigation, enforcement actions or losses arising from compliance with EU sanctions or from retaliatory measures adopted by the Russian government. Key changes include the following:
- No‑claims clause: The derogation from Article 11’s “no-claims” clause has been extended until 31 December 2027. EU Member State authorities may continue to authorise, on a case-by-case basis, the satisfaction of certain claims brought by Russian persons or entities where this is strictly necessary to facilitate the divestment from Russia or the wind-down of business activities in Russia.
- Damages recovery and litigation safeguards: Article 11a has been expanded to allow EU operators to recover damages, including legal costs, arising from a broader range of claims brought in third-country courts in connection with EU sanctions. Previously limited to claims brought by designated persons, other Russian persons, or persons acting on their behalf, the provision now also covers certain third-country persons and entities involved in transactions that undermine EU sanctions.
- Protection against foreign proceedings: The Regulation broadens the scope of Article 11c, which limits the recognition and enforcement within the EU of certain Russian court decisions. Previously limited to judgments and other measures issued under Articles 248.1 and 248.2 of the Russian Arbitration Procedure Code, the provision now extends to judgments, injunctions, administrative decisions and other measures issued by Russian courts or authorities under any Russian law that seek to hold EU operators, or entities they own or control, liable in connection with contracts or transactions affected by EU sanctions.
- Anti-suit protection: The scope of the anti-suit protection mechanism in Article 11ca has similarly been expanded to cover a broader range of proceedings brought before Russian courts, including proceedings initiated under Russian laws other than Articles 248.1 and 248.2 of the Russian Arbitration Procedure Code where such proceedings are brought in frustration of EU sanctions. The provision now also empowers EU Member State courts not only to order the discontinuation of such proceedings, but also to prohibit claimants from seeking to enforce, recognise or rely on any resulting judgment in any jurisdiction. Financial penalties remain available in cases of non-compliance.
Other Restrictions and Amendments
- Crypto-asset services: The scope of the existing ownership and management restrictions applicable to Russian nationals and residents in the crypto-asset sector has been expanded. Previously, Article 5b(2a) applied only to EU entities providing crypto-asset wallet, account or custody services. As of 25 August 2026, the restriction will apply to all crypto-asset services within the meaning of the Markets in Crypto-Assets Regulation (Regulation (EU) 2023/1114).
- Tourism-related services: A targeted exemption has been introduced from the prohibition on the provision of tourism-related services. The restrictions no longer apply to the provision of a computerised reservation system within the meaning of Regulation (EC) No 80/2009.
- Port ban: The EU has expanded Annex XLII to Regulation 833, adding further vessels to the list subject to the port access ban and related service restrictions under Article 3s. The newly designated vessels are linked to Russia’s so‑called shadow fleet.
- Additional changes: The regulation includes a range of other targeted changes to exemptions and licensing provisions in relation to various pre-existing restrictions in Regulation 833.
On 23 July 2026, the Council also adopted additional restrictive measures against Belarus. Council Regulation (EU) 2026/1846 (“Regulation 1846”) amends and expands the existing Belarus sanctions regime established under Council Regulation (EC) No 765/2006 (“Regulation 765”). The new measures are intended to align the Belarus sanctions framework more closely with the EU’s sanctions imposed on Russia.
Key measures include the following:
- Export/Import Controls: The new measures add additional items to Annex Va and Annex XXVII. These additions largely correspond with changes made to the export and import Annexes in Regulation 833 outlined above. Consistent with the amendments made under the Russia sanctions regime, the Regulation expands existing derogations relating to exports for civilian electronic communications networks by removing the requirement that the relevant networks be “non-publicly available.”
- Legal protections for EU operators: The package also expands the legal protection mechanisms available to EU operators, building on the measures introduced under Article 11a of Regulation 833 described above.
In addition, Council Implementing Regulation (EU) 2026/1817 adds two Belarusian entities to the EU asset-freezing list:
- European Trading Company LLC, a major Belarusian exporter of petroleum products; and
- OJSC Mozyr Oil Refinery, one of Belarus’s largest oil refineries.
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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, Brussels, 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 following members of our International Trade Controls or International Dispute Resolution practice.
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