European Union sanctions imposed on Russia
The EU regulations regarding sanctions imposed on Russia can be divided into those directed at the European Union institutions and member states, as well as those aimed at all individuals and entities residing or having their headquarters within the territory of the EU.
In a simplified manner, the sanctions on Russia affecting EU entrepreneurs can be summarized as follows:
- Freezing of financial assets and economic resources of entities under the control of individuals listed in the EU sanction lists.
- Prohibition on supplying dual-use goods and technologies to the territory of the Russian Federation, as well as the prohibition on supplying other goods explicitly indicated in the EU regulations to the territory of the Russian Federation.
- Prohibition on importing materials and goods mentioned in the EU regulations from the territory of the Russian Federation.
- Prohibition on providing certain services specified in the EU regulations.
Polish Sanctions List
Polish Sanctions Act provides for the creation of a list of individuals and entities subject to sanctions, including:
- Order to freeze financial assets and economic resources.
- Exclusion from participation in public procurement proceedings or competitions conducted based on the Public Procurement Law.
- Inclusion in the list of foreigners whose stay in the territory of the Republic of Poland is undesirable.
This list is maintained by the minister responsible for internal affairs and published in the Public Information Bulletin. It includes the identification of the person or entity subject to sanctions, along with the determination of which measures apply to them.
The decision to include or remove a person from the list is made by the minister responsible for internal affairs regarding individuals likely to support the aggression against Ukraine that began on February 24, 2022, or whose funds or economic resources may be used for this purpose. This also applies to individuals directly related to such persons or entities, particularly due to personal, organizational, economic, or financial ties.
The decision regarding inclusion or removal from the list is final and is subject to immediate execution. The minister responsible for internal affairs may limit the scope of justification for the decision due to the security of the state or public order.
What are the penalties for non-compliance with EU and Polish sanctions?
The Polish Sanctions Act introduces penalties for violating EU and Polish sanctions provisions. According to the law, individuals or entities that:
– Fail to freeze financial assets, funds, or economic resources, or fail to comply with the prohibition on providing financial assets, funds, or economic resources.
- Fail to comply with the informational obligations specified in the EU regulations.
- Fail to adhere to the prohibition of conscious and deliberate involvement in actions aimed at circumventing the application of sanctions.
are subject to a monetary penalty imposed by the Chief of the National Fiscal Administration, up to PLN 20,000,000.
Furthermore, individuals responsible for violating the prohibition on supplying dual-use goods and technologies, as well as other goods listed in the applicable regulations, may be subject to imprisonment for a term not less than 3 years.
How to avoid inclusion on the Polish Sanctions List?
To avoid violating the obligation to freeze financial assets and economic resources, as well as the prohibition on supplying goods and technologies of dual use or other goods specified in the applicable laws, and consequently the risk of being included on the Polish sanctions list, it is important to implement appropriate procedures to verify counterparties. In particular, it is necessary to establish the correct way to verify the beneficial owner’s data. It often happens that the entities registered and operating in countries not subject to sanctions are the contractors, while the actual beneficiaries of the activities carried out by them are individuals explicitly listed in the sanction lists.
Demonstrating due diligence in the process of verifying contractors will be highly significant in the event of potential inspection conducted by Polish authorities.
The entry into force of the Polish Sanctions Act has significantly increased the legal risk for entrepreneurs conducting transactions with entities based or with the beneficial owner in the territory of the Russian Federation or Belarus. To avoid the risk of being included on the sanctions list, entrepreneurs should ensure the implementation of appropriate procedures for verifying counterparties.
How can we help?
The Grant Thornton Law Firm provides comprehensive support in assessing existing business relationships in the context of potential sanctions, as well as in implementing procedures aimed at mitigating the legal risks associated with sanctions violations.
AUTHOR: Jakub Mazur, Intern at Grant Thornton legal advisory
