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The first tranche of sanctions under the Russia Sanctions Act 2022 (passed under urgency on Friday 11 March) come into effect today, Friday 18 March, after the Russian Sanctions Regulations 2022 were issued by Order in Council yesterday.
The sanctions have four key parts.
- Specified sanctioned individuals are not permitted to travel to, enter, or remain in New Zealand unless they are a New Zealand citizen or the holder of a residence class visa. A list of sanctioned persons is contained in the Regulations, including one bank, Promsvyaz Bank (PSB).
- Restricted ships and aircraft are prohibited from entering New Zealand ports. This applies to ships and aircrafts owned or controlled by the Russian or Belarussian Governments or militaries, or owned, controlled or registered by sanctioned individuals. New Zealand ships or New Zealand owned ships are not included.
- New Zealand persons must not deal with any restricted assets. Restricted assets include those owned or controlled by a sanctioned individual, and related securities.
- New Zealand persons must not deal with services provided by any sanctioned individual, or with any services that are provided to, or for the benefit of, sanctioned individuals.
Various exceptions apply, including as to bank accounts, payments due, rental properties, property sales, household necessities, and legal services. For example:
- New Zealanders holding bank accounts with sanctioned entities are permitted to continue to do so, if they held the account before 18 March (or such later date if the sanctioned entity is subsequently added)
- New Zealanders may receive money that would otherwise be a restricted asset if they were due to receive this before 18 March (or such later date, as above)
- New Zealanders may continue to hold (but not deal with) restricted assets if they held the assets before 18 March (or such later date, as above)
- New Zealanders may use premises (e.g. residential housing) that are restricted assets if they were the person’s principal place of residence before 18 March (or such later date, as above)
- New Zealanders may buy or sell property that is a restricted asset if, immediately before 18 March (or such later date, as above), they had a legal obligation to do so (e.g. a sale transaction)
- New Zealanders may deal with restricted assets or restricted services if it is reasonably necessary for personal or household purposes, and
- New Zealand lawyers may provide legal services in connection with the Act and the Regulations.
Under the Act, the Government also has the ability to freeze any assets of sanctioned persons in New Zealand, and to prevent individuals and companies from moving assets to New Zealand to escape sanctions imposed by other countries.
New Zealand sanctions follow other international sanctions
The US, UK, EU, Canada, Australia and other states have implemented significant sanctions on Russia as the Russia-Ukraine conflict continues to escalate.
- blacklisting large Russian banks, most of which have been removed from the SWIFT international banking system, Russian financial institutions, and state-owned funds
- the banning of Russian oil, gas and energy into the US and UK and any new investments in the Russian energy sector (with the EU separately pledging to end its reliance on Russian energy)
- imposing strict export controls on dual-use goods (those that have both a military and a civilian use), and
- freezing the assets of, and imposing travel banks on, certain Russian individuals and companies.
Implications for NZ businesses
The Act and Regulations will co-exist with New Zealand’s Export Controls (Export Prohibition to Specified Places) Notice 2022, issued on 25 February. This prohibits the export of military goods to Russia or Belarus, and any goods (including food and medical supplies) that have a civilian use but are intended for military use or that may have military application. The Ministry of Foreign Affairs and Trade (MFAT) advises that businesses must do due diligence to ensure they are not knowingly exporting goods that could be directed to the Russian or Belarussian military or security forces.
New Zealand businesses should check existing customers, business partners and activities against the list of sanctioned persons now live, and stop business if required to do so.
It is also worth checking whether any interests your business may have in, or related to, Russia may be subject to or impacted by other countries’ autonomous sanctions regimes, particularly the US, which can apply to NZ entities even where they are acting outside of the US. This may, for example, involve considering key suppliers, determining any connections with persons subject to sanctions, and keeping informed of updates to ensure sanctions compliance.