Banks, "shadow fleet", crypto: the EU has prepared a new package of sanctions against Russia

The European Commission (EC) has proposed a 21st package of sanctions against Russia over the military actions in Ukraine. It will mainly focus on restrictions on Russian banks, cryptocurrency networks, drone production, and will also affect oil traders and refineries in the country. This was stated in a statement by the head of the European Commission, Ursula von der Leyen.

The new package will impose restrictive measures on 170 individuals and entities, among them nearly 90 banks, EU diplomatic chief Kaja Kallas wrote in X.

"We intend to strike a blow to the Russian financial sector: freeze the assets of nearly 90 banks and impose additional transaction bans on more than 30 banks in Russia and other third countries," she announced. Kallas did not specify which banks would be affected by the restrictions.

Von der Leyen said in a statement on the EC's website that it is about "extending EU transaction bans to 31 more Russian banks, as well as 20 banks, crypto firms, platforms and oil traders in third countries that have served under-sanctioned Russian entities and individuals or helped them circumvent European restrictions.""For the first time, we will introduce the possibility of a complete ban on crypto services for third countries [in connection with the circumvention of sanctions]," the head of the European Commission emphasized.

This will serve as a powerful deterrent to states that host platforms that help Russia evade EU sanctions, von der Leyen added in a conversation with reporters. Her words are reported by Reuters.

This is the largest single expansion of the sanctions list, which will increase the total number of under-sanctioned credit institutions to more than 100, Reuters notes. Thus, the restrictions will affect more than half of the 213 Russian banks with international ties, the agency notes.

The new package of restrictions in the EU will be considered on Wednesday, June 10, the adoption of sanctions will require unanimous approval of all members of the union, explains Reuters.

The aim of the restrictions is to weaken Russia's financial system and encourage Moscow to negotiate a peace deal with Ukraine, an EU diplomatic source told the agency on condition of anonymity.

- Oil price ceiling freeze: The European Commission plans to fix the cap on the price of Russian oil at $44.1 a barrel for six months to limit Moscow's revenues amid the Middle East conflict.

- Increased pressure on the "shadow fleet" and LNG: 30 more vessels of the Russian "shadow fleet" will be added to the sanctions lists, the resale of LNG tankers to Russia will be restricted, and measures will be introduced against foreign oil traders who served under-sanctioned Russian organizations and individuals or circumvented EU measures.

- Trade embargoes: the new package of restrictions will affect fish supplies from Russia for the first time (restrictions may affect imports of certain fish products to the EU), and will also impose export-import bans on high-tech alloys for the defense and aerospace industries.

- "Full-scale sanctions against [third] countries due to the activities of individual payment agents look unlikely so far," Alexander Matveev, partner at ANP Zenit, commented to OnInvest on the possibility of the EU imposing sanctions against third countries if payment agents registered in them frequently add to the sanctions lists. - The EU and the UK usually prefer point escalation," he explained. According to the expert, rather possible: "sanctions against individual banks; restrictions on correspondent relations; enhanced control of payments from specific jurisdictions; restrictions on exports of sensitive goods; secondary restrictions for financial institutions involved in settlements with Russia." "At the same time, if a certain country starts to regularly appear as a key hub for circumventing sanctions, the pressure on its financial system will grow," Matveev noted.

- The main mechanism of the EU's influence on third countries, which, according to the EC's assessments, violate European sanctions, is "cutting off the infrastructure," Andrey Gusev, senior partner at Nordic Star AB, noted in a conversation with OnInvest. "European banks block transactions, international banks can renegotiate correspondent relationships, and counterparties refuse to work so as not to fall under the sanctions analysis themselves," he explained. - The EU cannot directly demand that China, Kyrgyzstan or the UAE enforce European sanctions against their residents. But it can create such conditions under which working with Europe becomes economically impossible." In such a case, for the agent, sanctions, according to Gusev, "often begin not with the seizure of assets, but with the refusal of banks to make his payments." "This is a mild but effective form of pressure, familiar from the practice of export control and financial compliance," the expert added.

Western restrictions have already dealt a serious blow to the Russian banking system: in 2022, the country's largest credit institutions were disconnected from SWIFT, the international financial messaging system. However, Russian companies are now using a wide network of smaller financial institutions to circumvent sanctions and continue trading operations, Reuters notes.

Russia's economic growth slowed to 1% last year, down from 4.9% in 2024. Russian officials attributed such dynamics to high interest rates, Western sanctions and a strong ruble, Reuters reports.

This article was AI-translated and verified by a human editor