Due to the ongoing conflict in Ukraine, international sanctions have been imposed on the Russian Federation in recent weeks. International sanctions can be described as a set of restrictive measures designed to maintain or restore international peace and security. International sanctions can be issued, for example, on the level of the United Nations or the European Union. The key sanctioning provisions on the EU level are then issued in the form of a Council Decision or EU Council Regulation and are gradually supplemented with new measures. Both of these forms of European legislation are directly legally binding for all Member States and contain several forms of sanctions regimes against the Russian Federation.
Examples of such sanction regimes include restrictive measures against certain persons, entities and bodies with regard to the situation in Ukraine or restrictive measures with regard to activities undermining or threatening territorial integrity, sovereignty and independence of Ukraine. In practice, these sanctions regimes are implemented by, for example, prohibiting the entry of persons on the sanctions list into the territory of the EU, or prohibiting the import or sale of certain goods or technologies, or prohibiting the provision of any transaction for the benefit of an entity on the sanctions list.
The persons included on the Sanctions Lists are also subject to the freezing of funds and economic resources and to the prohibition on making funds and economic resources available, directly or indirectly, to those persons, entities and bodies. Such persons are understood to mean all persons on the list, whether they are natural persons, legal entities, entities or bodies associated with them, or persons who own, hold or control the entities subject to sanctions.
There are also financial sanctions, which target not only funds but also economic resources in the sense of assets of all kinds that are not funds but can be used to obtain funds, goods or services. An overview of all sanctions applied can be found on the website of the Financial Analytical Office (https://www.financnianalytickyurad.cz/).
According to Act No. 69/2006 Coll., on the Implementation of International Sanctions, violation of any of the sanction measures carries the risk of heavy fines, in some cases up to CZK 50,000,000. In extreme cases, violation of international sanctions may be qualified as a criminal offence of violation of international sanctions or a criminal offence of violation of obligations in the export of dual-use goods and technologies, for which imprisonment may be imposed.
We therefore recommend that you consistently and actively check that your business partners are not on the sanctions lists and that you know their ownership structure and whether or not they are owned, held or controlled by a natural or legal person subject to financial sanctions. The sanction lists are published on the website of the Financial Analytical Office (see above) or, where appropriate, on the EU sanctions map (https://sanctionsmap.eu/). Should you find your partner on the sanctions list directly, you are obliged to report this fact to the Financial Analytical Office and you must not provide any transaction to the business partner.
Author: Veronika Odrobinová, Jessica Vaculíková