On October 8, 2024, the EU adopted a new restrictive measures programme against Russia: Council Regulation (EU) 2024/2642 of 8 October 2024 concerning restrictive measures in view of Russia's destabilizing activities (the “Regulation”).1
Factual background
The Regulation addresses an increasing number of a broad range of activities against the EU and its Member States, including cyber-attacks, information manipulation and interference campaigns, cases of arson, vandalism and sabotage, including against critical infrastructure as well as instrumentalization of migration and other disruptive actions. 2
The Regulation is rooted in the Strategic Compass for Security and Defense, approved by the Council in 2022. The document called for the adoption of a “EU Hybrid Toolbox” whose purpose is to identify complex and multifaceted hybrid campaign and coordinate tailor-made and cross sectoral responses to them, also by means of diplomatic and restrictive measures.3 The European Council's conclusions in June 2024 strongly condemned all types of hybrid activities and called for the adoption of a new sanctions regime and increased coordination with partners to detect and counter hybrid activities, not only by Russia but also by third countries – including false narrative and disinformation.4
In principle, the Regulation addresses conduct similar to those targeted by the United States under Executive Order 14024 issued on 15 April 2021 and which have formed the basis of sanctions against Russia since February 2022,5 as a separate sanctions program from the Ukraine/Russia Sanctions adopted in 2014.6
Key elements of the Regulation
Asset freezes
The Regulation provides for asset freezes and the prohibition to make funds and economic resources available to designated person and/or entities which meet the new listing criteria7 and designated in Annex I of the Regulation.8
Listing criteria
Specifically, the new criteria allow to designate person and entities responsible for:
- exploiting an armed conflict, instability or insecurity, including through the illicit exploitation or trade of natural resources and wildlife in a third country;
- instigating or facilitating an armed conflict in a third country;
- planning, directing, engaging in, directly or indirectly, or otherwise facilitating the obstruction or undermining of the democratic political process, including by obstructing or undermining the holding of elections or attempting to destabilize or overthrow the constitutional order;
- planning, directing, engaging in, directly or indirectly, supporting or otherwise facilitating:
- violent demonstrations, acts of violence, including activities to silence, intimidate, coerce, or exact reprisals against persons critical of the actions or policies of the Russian Federation;
- the use of coordinated information manipulation and interference;
- any actions targeted at the functioning of democratic institutions, economic activities or services of public interest, including by unauthorized entry into the territory of a Member State; and
- the instrumentalization of migrants, as defined in Article 1(4), point (b), of Regulation (EU) 2024/13599 (such listing criteria collectively as “direct listing criteria”).
Furthermore, the Regulation allows for designating natural or legal persons associated with, or which “support” the natural or legal persons engaged in activities referred to above (“derivative listing criteria”).10 The Regulation does not specify the nature of “support” that would be relevant for a derivative listing. This contrasts with the direct basis for designation under Regulation (EU) 269/2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine, which require a support that is “material” or “financial”.
This is a wide provision which provides the EU with more flexibility on listing and acts as a deterrent from engaging in dealings with entities and individuals who may be designated (even if they have not been designated yet). We foresee that the EU will use this basis for designation not only for targeting Russian persons, but also third country individuals and entities providing support to Russian persons. The derivative basis for designation continues approaching the EU sanctions practice to the USA sanctions practice which has usually contemplated derivative designations on the basis of provision of material assistance, sponsorship, or provision of financial, material or technological support.11 Yet, the EU has not gone as far as asserting extra-territorial jurisdiction through the imposition of secondary sanctions.
Travel bans
Natural persons will be subject to travel bans, preventing them from entering or transiting through EU territories.
Exemptions and derogations
The Regulation contains the exemption for humanitarian purposes12 and certain derogations.13 Specifically, National Competent Authorities (NCA) can authorize the release of frozen funds and the making available of funds and economic resources to designated person and/or entities when the funds or economic resources are:
- destined to certain uses (e.g. personal use; payment of legal fees);
- the subject of a claim secured in an arbitral decision rendered prior to the date of listing, or of a judicial or administrative decision rendered in the Union, or a judicial decision enforceable in the Member State concerned, prior to or after that date; or
- due under a contract or agreement concluded before the listing date.
Article 4 of the Regulation provides for a number of derogations related to the humanitarian assistance. Given the urgency and importance of such matters, if NCA does not provide any feedback14 within 5 working days from an authorization request under such derogations, then that authorization shall be considered granted.15 However, such presumption does not apply to other derogations, e.g. contained in Article 3 of the Regulation and mentioned in this legal alert above.
Lastly, mirroring the structure of others EU regulations implemented against Russia, the Regulation also impose reporting obligations on individual and entities for information on frozen funds and economic resources16 and provides for an anti-circumvention clause.17
In particular, the circumvention clause is similar to the one introduced under the Council Regulation No. 833/2014 through the 14th sanctions package against Russia.18 In that occasion, the EU clarified that circumvention includes not only the case where a person deliberately seeks the object or effect of circumventing restrictive measures, but also where a person participates in an activity without deliberately aiming to circumvent the sanctions programme, but can be shown to have been aware that participation could have that effect, and accepted that possibility.
Practical implications
The adoption of the Regulation further complicates the EU framework imposing restrictive measures against Russia (which mainly includes Council Regulation (EU) No. 269/2014, Council Regulation (EU) No. 833/2014, as amended, adopted simultaneously with respective decisions, as well as trade embargo on certain regions19 and “horizonal” regimes of global rights violations).20
From a practical perspective, EU operators need to keep in mind that a person that is not subject to asset freezes under Council Regulation (EU) No. 269/2014 can be targeted with asset freezes under the new Regulation. Although no listing has been made yet under the new Regulation, EU operators should carefully monitor further developments.
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Footnotes
1. Council Regulation (EU) 2024/2642 of 8 October 2024, OJ L, 2024/2642, 9.10.2024, available at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L_202402642.
2. See Council Press release, Hybrid threats/Russia: Statement by the High Representative on behalf of the EU on Russia's continued hybrid activity against the EU and its Member States, (8 Oct. 2024), available at https://www.consilium.europa.eu/en/press/press-releases/2024/10/08/hybrid-threatsrussia-statement-bythe-high-representative-on-behalf-of-the-eu-on-russia-s-continued-hybrid-activity-against-the-eu-and-itsmember-states/.
3. The Strategic Compass for Security and Defence, approved by the Council in 2022, (7371/22) calls for the development of an EU Hybrid Toolbox that brings together existing and possible new instruments to detect and respond to a broad range of hybrid threats, available at: https://www.eeas.europa.eu/eeas/strate gic-compass-security-and-defence-1_en
4. European Council meeting (27 June 2024) – Conclusions. EUCO 15/24, available at: https://data.consili um.europa.eu/doc/document/ST-15-2024-INIT/en/pdf.
5. Executive Order 14024 of April 15, 2021, (86 Fed. Reg. 20249).
6. See Ukraine-/Russia-related Sanctions available at: https://ofac.treasury.gov/sanctions-programs-andcountry-information/ukraine-russia-related-sanctions.
7. Article 2, paragraph 2 of the Regulation.
8. Please note that, as of now, Annex I to the Regulation does not yet contain a list of designated entities or individuals.
9. Article 1(4), point (b), of Regulation (EU) 2024/1359 of the European Parliament and of the Council of 14 May 2024 addressing situations of crisis and force majeure in the field of migration and asylum and amending Regulation (EU) 2021/1147 defines a situation of crisis as: “a situation of instrumentalisation where a third country or a hostile non-state actor encourages or facilitates the movement of third-country nationals or stateless persons to the external borders or to a Member State, with the aim of destabilising the Union or a Member State, and where such actions are liable to put at risk essential functions of a Member State, including the maintenance of law and order or the safeguard of its national security”, available at: http://data.europa.eu/eli/reg/2024/1359/oj
10. Article 2, paragraph 3, point c) of the Regulation.
11. See e.g. Sec. 1(a)(vi) of E.O. 14024.
12. Article 4 of the Regulation.
13. Articles 3, 5 and 6 of the Regulation.
14. NCAs' feedback consist of negative decisions, requests for information or notices for additional time to evaluate the request.
15. Article 4, paragraph 4 of the Regulation.
16. Article 8 of the Regulation.
17. Article 9 of the Regulation.
18. For further details please check Curtis' client alert on this topic available at: https://www.curtis.com/ourfirm/news/the-eu-adopts-its-14th-sanctions-package-against-russia
19. Council Regulation (EU) No 692/2014 of 23 June 2014 concerning restrictive measures in response to the illegal annexation of Crimea and Sevastopol, available at: http://data.europa.eu/eli/reg/2014/692/oj Council Regulation (EU) 2022/263 of 23 February 2022 concerning restrictive measures in response to the illegal recognition, occupation or annexation by the Russian Federation of certain non-government controlled areas of Ukraine available at: https://eur-lex.europa.eu/eli/reg/2022/263/oj
20. Council Regulation (EU) 2020/1998 of 7 December 2020 concerning restrictive measures against serious human rights violations and abuses, available at: https://eur-lex.europa.eu/eli/reg_impl/2024/1488/oj; and Council Implementing Regulation (EU) 2024/1488 of 27 May 2024 implementing Regulation (EU) 2024/1485 concerning restrictive measures in view of the situation in Russia, available at: https://eurlex.europa.eu/eli/reg_impl/2024/1488/oj
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