Ukraine is set to impose sectoral sanctions against the russian financial sector

After imposing sanctions on a large number of managers of russian banks (including citizens of Austria, Azerbaijan, and France) a few days ago, on 22 February 2023 the National Security and Defence Council of Ukraine adopted a decision on the imposition of sectoral sanctions on the russian financial sector. The decision on sectoral sanctions was submitted for consideration by the Parliament and is pending approval by Verkhovna Rada of Ukraine as required by the Sanctions Law.

Who is affected? The sanctions cover the Central Bank of russia and all financial institutions registered or domiciled (i.e., having the actual place of a company’s business or office from which a company is ordinarily managed and its books are kept) in russia. This includes banks, insurance companies, investment funds, stock market operators (e.g., stockbrokers), payment systems, non-banking credit organisations etc. irrespective of whether they have purely russian origin or foreign-owned members of international financial groups. The sanctions are imposed for 50 years.

Scope of sanctions. The sanctions list contains 10 restrictive measures, including, cessation of transactions with assets owned by russian financial institutions, prohibition of entering into business relations and contracts with russian financial institutions, and freezing of fulfilment of any financial obligations to the benefit of russian financial institutions.

The decision also prohibits individuals and legal entities from conducting transactions / taking actions leading to breach or evasion of sanctions. Please note that the anti-evasion concept is rarely used in Ukraine in relation to sanctions and lacks clarity as to practical enforcement. Nevertheless, law enforcement authorities and the National Bank of Ukraine have been instructed to monitor compliance with the new sanctions. The Ministry of Foreign Affairs was instructed to update the EU and the US sanctions authorities on new restrictions suggesting following the path.

Implications. This is only the second case of catch-all sectoral sanctions in Ukraine and the first one that may have notable implications for multinational corporations. New sanctions can have broad and unexpected repercussions for a wide range of Ukrainian and foreign companies involved in the financial sector, including in the areas of compliance and AML.

Interesting to know. The National Agency on Corruption Prevention has already recommended the imposition of sanctions against individuals holding positions on boards and executive bodies of russian banks and financial institutions, including members of multinational financial groups. More details are available at the “Sanctions Portal” at

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