21st sanctions package adopted: EU targets Russia's energy, financial and crypto sectors

On July 23, the Council of the European Union adopted the 21st package of restrictive measures against Russia in response to its military aggression against Ukraine. That is according to the Council's press service, an correspondent reports. "It [the package] includes harsh economic sanctions hitting the sectors that have the greatest impact on Russia's economy and its ability to fuel its war of aggression against Ukraine, and the largest batch of individual listings of the last four years, totaling 218, of which 48 individuals and 170 entities, the statement said.

EU High Representative for Foreign Affairs and Security Policy Kaja Kallas stressed that with each round of sanctions, the EU squeezes Russia's economy and its capacity to prolong its illegal war. "Our 21st package includes the highest number of listings in four years. We're hitting over a hundred banks and crypto operators, 40+ vessels in Russia's shadow fleet, and several oil refineries in Russia and Belarus.

More than 50 military-industrial entities are included, key actors involved in the production of Russia's long-range drones. Russia will only negotiate to end its illegal war and stop killing civilians if it is pressured to do so. Sanctions add to this pressure, she said.

The EU is significantly expanding action against Russia's financial and banking sector as a vehicle of Russia's war economy. The Council is imposing asset freezes and a prohibition to make funds available to 94 banks and major financial institutions, as well as to an important figure in Russia's banking establishment. It is extending its transaction ban to 33 additional Russian credit and financial institutions.

Furthermore, it is introducing a transaction ban against a Kyrgyz bank connected with the SPFS (System for Transfer of Financial Messages) ban and three other non-Russian banks for circumventing sanctions. The EU has also added four designations related to the cross-border A7 network, including its new links to Africa. It has extended its transaction ban to 14 crypto-related service platforms based in Georgia, Panama, the UAE, the Marshall Islands, Kyrgyzstan, and Belarus and, for the first time, introduced the possibility of a full third-country ban for crypto-asset services, as a strong deterrent to countries hosting platforms that help Russia evade EU sanctions.

In addition, the package pauses the automatic adjustment of the oil price cap mechanism until July 15, 2027. The EU is also continuing to target the shadow fleet by extending the scope of the existing rules also to cover vessels supporting the shadow fleet, by providing bunkering and other services, and listing 41 more vessels on top of the 632 already sanctioned. These measures target non-EU tankers that are part of the shadow fleet circumventing the oil price cap mechanism, that support Russia's energy sector in other ways, or that transport military equipment for Russia or stolen Ukrainian grain. The EU is designating 8 entities and 1 individual active in the shadow fleet ecosystem, including companies operating on behalf of Russia's oil majors and, for the first time, a crewing agency providing support to the shadow fleet.

Furthermore, the EU is targeting the oil sector, in particular refineries. It is designating 18 entities and 1 individual in the oil sector, including 3 refineries in Russia, a major Belarusian oil refinery, as well as a company created to sell Belarusian petroleum products within Russia. In addition, the package creates the possibility to prohibit transactions with listed refineries in Russia and in third countries which process or refine Russian crude oil and petroleum products.

In that framework, the EU is imposing a transaction ban – entering into force in six months - on a Georgian refinery trading and processing Russian oil in Kulevi. Furthermore, the EU added five oil traders to the entities subject to transaction ban for frustrating the prohibition on purchasing Russian crude oil and petroleum products. The EU has also extended the transaction ban to two Russian ports and four airports in Russia.

The package introduces a notification obligation for the sales of LNG tankers and a possibility to introduce new restrictions on the sale of LNG tankers to Russian citizens and companies and introduces other contractual obligations to mitigate the risk of reselling to Russia or for use in Russia. The EU is also targeting other means of Russia's revenue generation by designating 7 major actors in the gold sector, one of the most important diamond companies, as well as several entities active in the mining and metallurgy sectors. To constrain Russia's ability to wage war and carry out strikes, most notably through the use of long-range drones, the package introduces 56 individual listings of persons and companies involved in the Russian Military Industrial Complex.