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 The analytical paper has been prepared within the joint competition of the “Human
Rights and Justice Program Initiative of the International Renaissance Foundation and
UNDP Civil Society for Enhanced Democracy and Human Rights in Ukraine Project with
the financial support of the Ministry of Foreign Affairs of Denmark.
 Crimean sanctions:
violations, monitoring,
and enforcement
CONTENTS
● INTRODUCTION .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
● 1. SUMMARY AND RECOMMENDATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
● 2. HOW WESTERN COMPANIES CIRCUMVENT CRIMEA SANCTIONS. . . . . . . . . . . . . 9
2.1. General concepts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.2. Examples of how Western companies avoid
and evade Crimea sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2.1. Norwegian ilmenite for the Titan Plant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2.2. Construction of the Crimean bridge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.2.3. Credit cards in the Crimea.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.2.4. Retail companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.2.5. Siemens gas turbines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.2.6. Siemens-Grundfos water pumps. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.3. Prosecuted violators.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
● 3. MAP OF SANCTIONS APPLIED IN CONNECTION
WITH RUSSIA’S AGGRESSION AGAINST UKRAINE . . . . . . . . . . . . . . . . . . . . . . . . 19
3.1. Countries that have imposed sanctions in connection
with Russia’s aggression against Ukraine.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.1.1. US . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.1.2. EU.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.1.3. Countries that coordinate their sanctions regime with the EU. . . . . . . . . 25
3.1.4. Lithuania. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.1.5. UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.1.6. Canada. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.1.7. Australia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.1.8. New Zealand.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.1.9. Japan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.1.10. South Korea. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.2. Illegal entry of vessels into Crimean ports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Magnitsky acts and their use for Ukraine’s purposes. . . . . . . . . . . . . . . . . . . . . 31
3.3.
3.3.1. US.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.3.2. EU.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.3.3. UK.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.3.4. Canada .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.3.5. Australia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.3.6. Japan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.3.7. Other examples of Magnitsky Legislation in the world. . . . . . . . . . . . . . . . . 36
3.3.8. Coordination of global sanctions under the Magnitsky Acts . . . . . . . . . . . . . . . 36

3
INTRODUCTION

In an ideal world, the international and legal world order would be ensured by the UN
Security Council. In reality, two of its permanent members, Russia and China, are
authoritarian states. They violate the international and legal world order themselves and
stand ready to block any sanctions against them. Therefore, the second best option is
currently in place: a decentralized sanctions architecture, which, in essence, aims to
maintain the international and legal world order.

Sanctions imposed on Russia or Russian citizens after the occupation of Crimea and the
aggression in Donbas constitute the principal move taken by the Western states against
the attacker. This is their (often the only) way to show solidarity with the victim and an
attempt to change the behavior of the aggressor. However, sanctions will only be effective
insofar as they are potent. When the spirit or the language of sanctions is violated,
resulting in lack of any prosecution, Russia both gets the forbidden fruit and strengthens
its grip over Crimea, and on top of that it undermines the very spirit of Ukraine’s support
against the aggressor. Therefore, it is extremely important to understand the existing
architecture of sanctions legislation and the ways in which Russia and the Western
companies manage to circumvent it. This is exactly why this document was written.

Its author is Alya Shandra, a Ukrainian journalist and editor-in-chief of the English-
language website titled euromaidanpress.com. She is the author of an investigation
piece looking into the violations of sanctions by the German company Siemens, which
supplied gas turbines for power plants in the occupied Crimea.

The document includes three parts:

Summary and recommendations: summary of the entire document and recom-

mendations for the Ukrainian government to support and strengthen the
Western sanctions regimes.

How Western companies circumvent sanctions in the occupied Crimea: an

overview of general concepts from the theory of avoiding sanctions and a snapshot
of the ways to do it based on the example of six cases of ho Western companies
skirted sanctions in the occupied Crimea: Norwegian ilmenite delivered by
German shipping companies, construction of the Crimean bridge, credit cards in
Crimea, retail companies, Siemens gas turbines, and Siemens-Grundfos water
pumps. On top of that, we have collected some examples of Western
companies that were held accountable for violating sanctions.

The Map of sanctions applied in connection with Russia’s aggression

against Ukraine: an overview of the main current sanctions legislation in all
countries of the world, as well as the reasons for its absence in some key Asian
countries. Also, in this section we have collected information about the
“maritime sanctions” (i.e. the international ban on entering Crimean ports by
ships) that are critical for the Crimean economy, and the opportunities for
Ukraine that open up with the emergence of the so-called international
architecture under the so called Magnitsky Acts, which allow to prosecute
individual violators of human rights instead of an entire country.

4
 CRIMEAN SANCTIONS:
VIOLATIONS, MONITORING,
AND ENFORCEMENT

1. SUMMARY AND RECOMMENDATIONS

During the seven years of occupation of Crimea, Western companies have repeatedly
helped the Russian government consolidate its power over the occupied peninsula de-
spite sanctions imposed by their respective states (see Section 2). These are mostly EU
companies. There may be several explanations for this:

● In general, the European legislation defining the mechanism of EU sanc-tions

againstt about 70 countries (including Russia) is quite comprehensive.
However, the relevant sanctions regulation contains a “get-out clause”: when
the offending party "did not know and had no reasonable reason to suspect that its
actions would violate" the sanctions, it may present its ignorance as proof of
innocence. This creates a "gray area" that Western companies are currently ex-
ploiting to prove that sanctions have been violated without their involvement. For
example, they enter into contracts that prohibit shipments to the Crimea, and when
such shipments are made, they stop cooperating with the Russian violator compa-
nies and avoid liability for violating the sanctions. In order to bring companies to
justice, you need to have conclusive evidence of your intention to circumvent the
sanctions. The difficulty of obtaining such evidence makes prosecution of violators
unlikely.

● At the same time, the regulation includes an anti-circumvention clause prohibit-ing

participation in activities aimed in any way at avoiding compliance with sanctions.
Thus, bringing companies to justice directly depends on the work of law
enforcement agencies of individual countries, which, as evidenced by compar-i ing
the experience of different countries, may depend on political factors. So, according
to our data, in the Netherlands, under similar conditions, the prosecutor’s office
allegedly opened proceedings against the companies that helped build the
Crimean bridge (see 2.2.2), while in Germany the prosecutor’s office decided not to
open proceedings against Siemens (see 2.2.5).

● The desire of Western companies to create numerous schemes to circumvent

sanctions is explained both by the insignificant monitoring of their observance
and by the personal disagreement of their leadership with the sanctions re-
gime. All this undermines the spirit of sanctions, if not the letter of the law, thus
reducing their overall effectiveness. However, according to Dutch lawyer Heleen
over de Linden, the sanctions could be effective if the prosecutor’s office and the
customs in the EU member states worked effectively, which, in her opinion, is
cur-rently not the case.

However, changes in the EU’s sanctions policy appear to be brewing (see Sections
3.1.2 and 3.3.2). The EU is not just seeking to improve its ability to enforce sanctions in a
coordinated manner, it will also take steps to make itself less dependent on US extrater-
ritorial sanctions, such as the sanctions against Nord Stream-2. The opportunities for
Ukraine to join the process should be further explored. Namely: entering information
about violations of sanctions in the database to be compiled by the European Commis-
sion; liaising with the future sanctions contact center; making a proposal to the EU to join
the planned measures to assess the effectiveness of EU sanctions.

5
 Among other ideas that can improve the situation with the European sanctions, it is
worth mentioning the proposals made during the violation of sanctions by the Dutch
companies in 2017 (see 2.2.2). In particular, Brussels should better explain to companies
operating in the EU the nature and features of the sanctions regime. There were also pro-
posals to establish an independent European "sanctions court" to monitor compliance
with sanctions by the member states, and to create a panel of UN experts monitoring
sanctions against Crimea and Russia, following the example of the mechanism covering
North Korea. Regarding the first item, one of the recommendations that echoes it comes
from a RUSI report on the challenges for the EU and US sanctions and it talks about im-
proving public-private partnerships. As the success of the sanctions regime will directly
depend on how it is followed by private companies, it is worth involving them in the
process of discussing and planning sanctions from the outset, instead of merely send-
ing down orders. This approach can also be brought to Ukraine, as the time to revise the
internal sanctions architecture is now due; it can also be mentioned in the negotiations
with the European partners.

In addition, it is necessary to predict how easy it will be to circumvent sanctions al-

ready at the design stage. In particular, with regard to the EU sanctions, in 2016,
when Crimea was occupied (which in Russia is termed "annexed to the Southern
Federal District of Russia"), Ukraine’s Foreign Ministry expressed a desire to extend
Crimean sanctions to the entire district. If this were done, it would be much more
difficult to violate the sanctions in case of the Crimean bridge and Siemens turbines, as
in these cases the operations of EU companies would officially have to take place on
the Taman Peninsula (see 2.2.3 and 2.2.5). Also, the current configuration of EU
sanctions does not extend to Russian subsidiaries. This loophole is currently used by
Auchan and Metro Cash & Carry, which continue to operate in Crimea after re-
registering Crimean branches as legitimate Russian companies (see 2.2.3).

At the same time, Ukraine should not just join the European process, but also be
pro-active in its respective domain. So far, both the EU and Ukraine do not have enough
political will to ensure the effective m onitoring o f s anctions. U kraine n eeds t o s et t he
tone by enacting and enforcing effective sanctions legislation. First of all, it has to do with
preventing the export of raw materials from Ukraine to the Titan plant in the Crimea. In
addition, it is known that the Russian authorities will now attempt to provide Crimea with
fresh water. It is very likely that there also will be attempts to utilize sanctioned EU tech-
nologies. Therefore, the possible use of the Western technologies in Russia’s attempts to
produce fresh water in Crimea should now be pro-actively monitored (see 2.2.6). Howev-
er, it is important to remember that the success of bringing violator companies to justice
begins with procuring hard evidence, but companies are well trained to conceal it (see
2.2.2). Ukrainian law enforcement agencies should collect such evidence as a matter of
priority, as compliance with sanctions is primarily in Ukraine’s own interest.

As follows from the response of Ukraine’s Ministry of Foreign Affairs t o o ur i nfor-

mation request, as of today, none of Ukraine’s public authorities has been formally
authorized to monitor and respond to violations of international sanctions against
Russia. At the same time, since the beginning of the application of such restrictive mea-
sures by the international partners, the Ministry of Foreign Affairs has taken measures
of political and diplomatic response when it received information about violations of
sanctions regimes. In this regard, it is appropriate to establish a Ukrainian institution
responsible, inter alia, for monitoring violations of international sanctions. Also, as
illustrated by the discussed above cases of violations of sanctions, the political and
diplomatic response of the Ministry of Foreign Affairs did not result in preventing vio-
lations. It is worth analyzing why this is the case, while one should think of a strategy
that would be more effective.

6
 CRIMEAN SANCTIONS:
VIOLATIONS, MONITORING,
AND ENFORCEMENT

Flexibility and speed of response are the key to effectiveness of the Western sanc-
tions regime. The US and the EU must identify loopholes in the sanctions architecture
and eliminate them. From this point of view, US sanctions are much more effective, as
the Office of Foreign Assets Control (OFAC) regularly monitors such violations (as in
case of VISA & Mastercard, see 2.2.3) and imposes fines. The United States also fines
companies from other countries that have violated US sanctions. In this regard, a conflict
with the EU is brewing. The EU believes this is contrary to international law and takes
steps to counter such actions by the United States. As the United States sets the tone for
the sanction trends to some extent and remain most agile in imposing new sanctions (see
3.3.1), it makes sense to address them first in this matter.

New opportunities for imposing sanctions opened for Ukraine after Brexit. The United
Kingdom is developing its own sanctions legislation and has ambitions to become a
leader in this area (see 3.1.5). However, in other countries, attempts to impose sanctions
against Russia look unpromising. When Australia imposed limited sanctions, the reaction
of New Zealand, Japan, and South Korea, despite their status as allies of the Western
world, was purely symbolic and is unlikely to escalate (see 3.1.8-10).

Wide opportunities open up for Ukraine with the emergence of the global architecture
of the so-called Magnitsky Acts (see 3.3). As Russian officials are involved in numerous
human rights violations both in the occupied Crimea and in the temporarily occupied
territories of Donbass, every opportunity should be taken to prosecute them. Simultane-
ous imposition of sanctions by various actors increases their effectiveness, demonstrates
transatlantic consolidation, and draws attention to the Ukrainian situation on a global
scale (see 3.3.8).

In particular, the practice of cooperation of non-governmental organizations with of-

ficial US authorities for enforcement of the Magnitsky Act and similar Executive Order
13818 offers broad opportunities (see 3.3.1).

At the same time, this evidence can and should be handed over to other countries
that have appropriate opportunities in their own legislation. These countries include
Canada, the aforementioned United Kingdom, Lithuania, and Estonia.

It is very likely that the potency of the "European Magnitsky Act" (a special sanctions
regime adopted at the EU level and directed against human rights violators) will increase.
Within discussions around this act, demands have already been presented for building
cooperation with civic organizations to obtain relevant information, introduce qualified
majority voting (rather than consensus, which simplifies a dvocacy), a nd a llow M EPs t o
propose sanctions under this regime. This means that the European Magnitsky Act will
become more effective and flexible, and Ukraine should already consider a strategy for
engaging with EU actors to take advantage of the opportunities that are opening up.

Measures which hit the Crimean economy hard while not being a part of Western
sanc-tions include Ukraine closing its Crimean seaports, which automatically means
stripping ships that still dare to enter of their flag. Sea ports that are not visited by
ships mean losses, a tense social and economic situation in port towns, and declines in
trade. These measures are effective because to punish violators, it is enough for the
Ukrainian authori-ties to submit the relevant evidence to the International Maritime
Administration. At the same time, evidence of ships entering ports is collected by
volunteers. Prior to active monitoring, the use of ports by vessels was almost
unrestricted. However, there are loop-holes for these bans as well. Therefore, to
optimize this restrictive regime, it is worth lis-tening to the recommendations of marine
experts: include monitoring of entry violations in the government system; appoint a
person in charge of the occupied ports and apply the maritime claim when the port

7
 captain informs the captain of the next port where the ship is heading, and about the
need to stop it; establish which companies own the ves-sels and impose sanctions
against them; halt shipments of ilmenite from Ukraine to the Titan plant, use the Long-
Range Identification and Tracking (LRIT) system to monitor the entry of foreign vessels
into Crimean ports, and prohibit vessels from staying in territorial waters around Crimea
closed for navigation (see section 3.2).

As journalists have played a leading role in monitoring violations of sanctions, it makes

sense for Ukraine to fully support investigative journalism. It were the media that played
a key role in uncovering violations of sanctions during the delivery of Siemens turbines
and Siemens-Grundfos pumps to occupied Crimea. The investigation into the violation of
sanctions by Dutch companies during construction of the Crimean bridge began when
a journalist from De Gelderlander overheard a company representative discuss ways to
circumvent the Crimean sanctions outside his house. It is volunteer journalists who moni-
tor the ships illegally entering Crimean ports, providing information used by the Ukrainian
state to prosecute violators. Sanctions should be the subject of public attention and in-
centives should be considered for journalists working on this complex topic.

8
 CRIMEAN SANCTIONS:
VIOLATIONS, MONITORING,
AND ENFORCEMENT

2. HOW WESTERN COMPANIES CIRCUMVENT

CRIMEA SANCTIONS

2.1. GENERAL CONCEPTS

Despite numerous sanctions imposed by the Western countries, violations
are frequent, and not always do violating companies face consequences. In this
context, it is important to distinguish between two categories of such violations, as
suggested by researcher Maria Shagina:

● Sanctions avoidance - a legal activity under applicable law where actors seek
loopholes in the sanctions regime. Although they avoid punishment, this
creates a gap between the letter and the spirit of the law. While being formally
legal, these activities undermine the spirit of sanctions and defy
de their ethical
intent. Such behavior occurs when actors have an incentive to seek loopholes i n
the law because they do not personally approve of the sanctions but refrain
fr om illegal actions due to effective control by the regulatory authorities and
reputational and other losses associated with violations of the law.
● Sanctions evasion - an illegal activity that violates the law where actors have t he
motivation to conceal their violations from the governing bodies and avoid
compliance with the sanctions regime. The keymotivation here is "deceit,
misrepresentation, and concealment ." Such activities fall under administrative
andcriminal penalties and carry reputational risks. They occur when the law is
ignored or does not work, and the governing bodies lack the powers to monitor
and implement it.

However, in practice, the boundary between these two categories of violations is

not so obvious and cases of violation of sanctions are in the "gray zone"; academic
literature uses the term sanctions avoision - a hybrid of the above categories. Actors
practicing avoision exploit the letter of the law to serve their own interests and to
disguise their evasion of sanctions. According to researcher Doreen McBarnett,
"Getting it wrong is not of itself an indication of evasion if you can provide
evidence that you tried to get it right.” By presenting evidence, the actors try to
prove compliance with the sanctions, but only in terms of form rather than substance.

EU sanctions against Crimea create a loophole for avoision. The Regulation of

the European Council of 30 July 2014 clearly states that European companies are
obliged to conduct a proper inspection to identify the final buyer and the final
destination of the goods, and that the company is directly responsible for ensuring
that the goods do not end up in the Crimea. In addition, the EU does not approve of
EU companies participating in activities aimed at circumventing sanctions, regardless
of their location, be it Crimea or elsewhere, including Russia.

The EU’s stance on this rule is unequivocal: EU companies must not “knowingly
or intentionally engage in activities that aim or have the effect of circumventing bans.”
Although EU regulations include a "get-out" clause stating that if a party "did not know
and did not have reasonable grounds to suspect that its actions would violate the
measures set out in the Regulation," then the party may invoke this justification to
prove its innocence. In practice, the European companies use this provision to
circumvent sanctions.

9
 In his interview for this report, Cedric Ryngaert, a professor of Public International
Law at the University of Utrecht, noted that EU Council Regulation 825/2014
prohibits "knowingly or intentionally engaging in activities that aim or have the
effect of circumventing prohibitions." In particular, this was stressed by NGOs and
the press during debates with the Dutch companies building the Crimean bridge (see
2.2.2) who claimed that they had not formally violated the sanctions. However, law
enforcement agencies need to prove that the company deliberately violated
sanctions through examining internal correspondence. Sanctions are often
underenforced because there is no access to this evidence, making it impossible
to prove an intent to violate sanctions. Since the EU enjoys the rule of law and
decisions on sanctions can be challenged in the EU court, national regulators want
to rest assured that a person was listed with due evidence.

"This is indeed a shortcoming, but a shortcoming we must accept, because the EU is

a society where the rule of law exists," said Prof. Ryngaert.

In addition, the capacity of the law enforcement system itself should be taken
into account, said Dutch lawyer Heleen over de Linden in an interview. According to
Ms. over de Linden, the EU regulations themselves are quite well formulated, the EU
court mostly takes the side of sanctions, but enforcement is lacking. There are many
ways to avoid sanctions but few ways to prosecute because prosecutors are
overburdened, customs can be inefficient, and companies are often well-prepared for
violations and bury the tracks. According to over de Linden, it is extremely
important for Ukraine to have prose cutors pre se nt at the crime sce ne who will
document the evidence. This includes proof of company representatives staying in
hotels, pictures, videos and interviewing people. "Primary evidence is the
beginning of everything," says over de Linden.

2.2. EXAMPLES OF HOW WESTERN COMPANIES EVADE AND AVOID

CRIMEA SANCTIONS
We selected six high-profile cases when Western companies
circumvented the Crimean sanctions adopted by their countries to show the variety
of ways in which Russia and the Western companies act to violate the prohibitions.
The examples given below cover both cases of violation of the "letter" of sanctions
and their "spirit." It is quite telling that after these high-profile cases, not a single
Western company was prosecuted; to date, formal mea-sure have been taken in only
two scandalous cases at the EU level. As a result, the EU imposed sanctions on
more Russian companies. However, a pre-trial investigation into the Dutch Crimea
bridge case is underway.

2.2.1. NORWEGIAN ILMENITE FOR THE TITAN PLANT

Ilmenite, the primary ore of titanium, was delivered by two German shipping
companies to the Crimean port of Kamysh-Burun for the needs of the Crimea's Titan
Plant in November-December 2017. A cargo ship owned by the German company
Hansa Heavy Lift GmbH received ilmenite from one of the largest titanium mines
in the Western Europe located in Norway. The vessel went to the Russian port
Kavkaz under the Liberian flag, but did not enter the port. Instead, a Russian
cargo ship approached it three times and allegedly transshipped the ilmenite
to Kamysh-Burun. The scheme was replicated with another German ves-sel
from German Heinz Corleis Reederei KG. Details of this case were described by
10 the investigators of blackseanews.
 CRIMEAN SANCTIONS:
VIOLATIONS, MONITORING,
AND ENFORCEMENT

The Western companies involved in this affair claim they did not know the final
destination of their cargo. A representative of one of them stated that the signed
contract provided for delivery from Norway to the port of Kavkaz, claiming that where
the cargo goes next was beyond his knowledge and responsibility. A representative of
another firm also pleaded not guilty, adding that the company had checked for any
embargo before delivery in accordance with the German export control guidelines,
and claimed that there were no restrictions on export of ilmenite to Russia. Jan Larsen,
director of Titania Kronos (a Norwegian company that owns one of the largest titanium
mines in the Western Europe from where ilmenite was shipped) said that the company
made no "direct sales" to Crimea and it was in the process of clarifying the issue with its
foreign ministry.

However, the captains’ excuses are unconvincing. They should have suspected
something, because Russia has its own ilmenite deposits, and in that region only the
Crimean Titan plant needs this raw material, and the route to this plant starts only 20
km from the port of Kavkaz. In addition, the smaller ships approached the German bulk
carriers three times and continued navigation with the ilmenite on board in the
direction of the occupied Crimea, and the captains probably understood perfectly well
after the first time what the final destination of their cargo was.

As of 2019, the operations of German and Norwegian companies were being in-
vestigated by the prosecutor’s office. Theoretically, the decision to open the case
and, consequently, to prosecute the companies should be made based on the results
of the investigation of the circumstances as to how thoroughly the managers carried
out an investigation into the potential violation of sanctions.

Meanwhile, this scheme of shipping ilmenite to the occupied Crimea is used by

other vendors. In particular, a recent violation was committed in May 2021 by a
German ship-owner with the participation of a Russian captain who delivered ilmenite
from Mozambique, according to the SeaKrime project. While the German ship was in
neutral waters, another small ship approached it several times and completed the
transshipment of ilmenite, carrying it to occupied Kerch. As in the 2017 case, the
captain could not help but see that the small vessel was plying in the direction of the
occupied Crimea and back, but remained in place until all the cargo was transported.

2.2.2. CONSTRUCTION OF THE CRIMEAN BRIDGE

The Crimean bridge, which Russia opened in May 2018, could not have been
built without the participation of foreign companies - the conditions were too difficult.
In 2018, the Ministry of Justice of the Netherlands launched an investigation against
seven Dutch entities for participating in this project.T heir participation was kept secret:
all the time during the bridge's construction, Russian authorities officially claimed that
only Russian companies worked on the bridge.

The Dutch companies used various methods of sanctions circumvention to deliver

their products. Basically, they claimed that they did not know that their equipment was
used in the Crimea, and that they had simply sold it to an intermediary, or that
working on a bridge at sea was not equivalent to working in the Crimea, and
therefore the company should not be subject to sanctions.

Here we briefly present an overview of sanctions circumvention methods used by

the Dutch companies investigated by the Netherlands and Ukrainian prosecutors, who
launched a separate investigation.
11
 Dematec Equipment, which provided a hydraulic hammer, delivered the equipment to
Russia in early 2016, and it was assembled on Russian territory. The director of the com-
pany stated that the sanctions were not violated because they prohibit work in the Crimea,
but not in Russia. This justification is unconvincing, as the EU Council Regulation, while
indeed prohibiting work exclusively in Crimea, also prohibits circumventing sanctions. The
company clearly did not make sufficient efforts to perform the audit.
In the case of Bijlard Hydrauliek, a key component of a hammer was transferred
to an intermediary company in the Netherlands. Its director stated he did not be-
lieve that the sanctions would apply if the work was not carried out in the geographi-
cal area of the Crimean peninsula (the construction of the bridge was carried out
at sea, not in the peninsula proper), and that they did not know that their products
would go to Crimea. “We just sold the products to a Dutch customer. That’s all." In
this case, the assessment of the legitimacy of such actions should be based on the
thoroughness of the inspection carried out by the company. Did they make sure that the
company had no export history with Russia? If Bijlard Hydrauliek knew that the intermedi-
ary company was used simply as cover, then they are involved in illegal activities to evade
sanctions. Sputnik News estimates that Dematec and Bijlard made EUR 1.4 million by rent-
ing their equipment to build the bridge.
Enerpac Heavylifting installed elevators that helped install the bridge. An important
detail: Enerpac is a member of a US international company Actuant. As reported by the
Dutch online publication De Gederlander, Actuant reported itself to Dutch law enforce-
ment, claiming it had delivered the equipment to a Russian company without knowing it
would be used for building the bridge. However, the newspaper’s sources said that the
company knew everything, and added a provision in the contract that the equipment can-
not be used in the Crimea for its own protection. Following an internal investigation, Actu-
ant fired the company’s head in Niemiengen.
Dieseko, a manufacturer of vibrating hammers and hydraulic foundation systems said
that it had supplied equipment to a Russian customer through a Finnish distributor, and
that Dieseko had stopped working with the customer after the United States imposed
sanctions on it.
Allpacks International, according to De Gelderlander, also supplied an innovative vi-
brating hammer for driving in the piles. A photo of this hammer, first introduced in July 2016,
soon appeared on a construction site in the Sea of Azov. Allpacks went bankrupt in
May 2018; at the same time, the investigation into the actions of this company was
underway.
De Gelderlander also found that Cape Holland and IHC International had supplied pile
driving equipment for the bridge. Cape Holland admitted that it was delivered to Russia,
and IHC International said that the machinery they sold in the past was used to work
in the Crimea.
The Ukrainian prosecutor’s office has also launched an investigation into other
companies that are not being investigated by the Dutch prosecutor’s office due to a
lack of evidence. De Gelderlander noted that Ukraine's charges against Allnamics were
fair: this geotechnical engineering firm with offices in the Netherlands, Singapore, and
the United States supplied measuring equipment to the Russian company Mostovoye
Bureau. There are even photos on the company’s website where Allnamics employees
train Russians how to use equipment that measures the quality of pile foundations both
in the office and on the bridge itself.
At the same time, AkzoNobel, according to some reports, supplied the Resicoat
anti-corrosion paint. This company is one of the two largest global companies that
produce such paint; the second one is 3M from the US, which produces a product called
Scotchkote. Both companies have factories in Russia. Responding to De Gelderlander’s
request, 3M only stated that it is committed to "doing ethical business" and that its

12
 CRIMEAN SANCTIONS:
VIOLATIONS, MONITORING,
AND ENFORCEMENT

Russian subsidiary sells Scotchkote "in accordance with all regulations." AkzoNobel
denied that it supplied products for construction of the bridge, saying that "they do not
know where the Russian websites that talk about us got the information.” The paint
manufacturer states that all customers and suppliers of the company must adhere to its
business code, according to which all companies that interact with AkzoNobel must
comply with all the sanction provisions.
Mammoet is known for its extreme lifting and transport operations around the world.
Its founders were personally rewarded by Putin for lifting the Kursk submarine in 2001.
The company said there was a misunderstanding, specifically when a Russian newspaper
published a video alluding to the company’s involvement in the construction of the
bridge, but Mammoet said it was not involved in the construction and sought to correct the
information in the publication.

Russian political commentator Vedrussov also noted in a letter to De Gelderlander that

many other Western companies were involved in the construction of the bridge, but not
all of them were ready to talk about it publicly. It is likely that the investigation is being
conducted only in relation to the Dutch companies because the country had good inves-
tigative journalists who were able to discover and publish the relevant facts and, thus,
draw attention of the public to the crime.

Dutch lawyer Heleen over de Linden, who collaborated with the De Gelderlander
newspaper during the bridge scandal, also notes the importance of investigative jour-
nalists. In an interview for this report, she said she could not find evidence of the com-
panies’ sanctions violations in photos published by media - all branding was removed
from the equipment. In particular, the newspaper could not find pictures of AkzoNobel
and Mammoet products in the Crimea. The lawyer believes that the companies received
advice on methods of conspiration. She also claims that Dutch entrepreneurs are good
at creating contracts to circumvent sanctions by reselling goods to other countries.
It all runs down to money: if circumventing regulations is inexpensive, companies will
continue to do so. The lawyer also notes how difficult it is to get information about the
investigation from the prosecutor’s office - they are not open to inquiries and avoid tell-
ing anything specific. In addition, Heleen over de Linden is convinced that the customs
did not make enough efforts t o i nspect t he g oods, a s t hey d id n ot s top a ny c ompany
connected to the bridge project. In response to allegations, customs claim that it is the
responsibility of companies to investigate the end user.

It is also interesting to follow the political reaction. D66 MP Mariete Schaake com-
mented that the actions of the customs can both be explained by the fact that the law was
not formally violated, as well as by the lack of proper control. She wished that Brussels
would better explain the sanctions regime to companies, and also supported the idea of
creating an independent European "sanctions court" that would monitor the observance
of sanctions by member states. This idea is getting closer to implementation, given the
recent initiatives of the EU Commission (see 3.1.2).

At the height of the scandal, Dutch Foreign Minister Lillian Plouman said that the
state did not recognize the annexation of Crimea and "in no way encouraged
activities" that promote such recognition. When commenting about the companies’
arguments that their activities took place outside the geographical area of Crimea, the
official said that "even if the laws have not been officially violated, the Dutch
government expects companies to behave in a socially responsible manner."

13
 As a result of this incident, the EU sanctions list was expanded by six more individuals
in 2018, and two individuals and four legal entities in 2020. Sanctions have also been im-
posed by the United States, Australia, and Canada. However, no foreign company has
yet been held liable. According to the information provided by the prosecutor’s office to
Heleen over de Linden in 2020, the investigation was still ongoing, in other words, the
investigating authorities were probably still looking for evidence at that time. Without
sufficient evidence, there is a risk that the case will simply be closed. In view of this,
according to the lawyer, it is extremely important for the Ukrainian prosecutor’s office to
collect primary evidence. Thanks to such evidence, the sanctions case in the Netherlands
could result in prosecution.

As for the diplomatic response of Ukraine, received in an official response to the

author’s inquiry, the Foreign Ministry took plenty of measures to convey its stance to
the leadership of the Netherlands and the EU. For instance: walkouts in protest took
place at summits and bilateral meetings, letters were sent to the heads of institutions
and consultations were held, including EU-Ukraine consultations on the legal
consequences of the occupation of Crimea. Communication was carried out with the
representatives of EU member states, including in the respective groups of the EU
Council.

2.2.3. CREDIT CARDS IN THE CRIMEA

After the US expanded sanctions to cover banks owned by Putin’s financial
entourage, in April 2014, the world’s largest US-based credit card companies Visa and
MasterCard suspended their services in Crimea and blocked sanctioned Russian
banks from using their payment systems. However, in early 2016, the companies
returned to the Crimean market and were able to make transactions on their accounts
as long as they remained within the territory of Russia.

The method for circumventing sanctions in this case is as follows. In May 2014, Russia
passed the law On the National Payment Systems aimed at minimizing the negative
impact of Western sanctions on the Russian banking sector. According to the law,
credit institutions that wanted to keep their business in Russia had to move their
transactions to the new system. Gradually, Visa and MasterCard moved their
transactions under the "umbrella" of the Russian payment system. All international
transactions had to go through the Russian banking center before the information was
sent to the United States. The Russian payment system "hacked" the Visa and
MasterCard files, and as a result the transactions lost their links to the Crimea. Instead,
the place of transaction was indicated as "Russia."

However, this move did not help Crimea. In the end, only RNKB and Genbank banks
remained in the occupied peninsula. They were added to the sanctions list by the US
Office of Foreign Investment Control (OFAC), while Visa and MasterCard blocked
their transactions. In August 2018, Genbank stopped issuing new cards and switched
to the Russian payment system Mir. Crimeans were left without easy access to credit
cards.

From the point of view of Visa and MasterCard, the companies were "outwitted"
by the Russian authorities, which in fact forced them to circumvent the sanctions due
to the obligation to use the Russian payment system to remain in the Russian market.
The companies stated that they de jure complied with the sanctions regime, but de
facto did not control the transactions.

Although the company did not actually violate the sanctions directly, they
undermined the spirit of sanctions by yielding to the demands of the Russian
authorities, and thus helped to circumvent the Western sanctions, according to Maria
14
 CRIMEAN SANCTIONS:
VIOLATIONS, MONITORING,
AND ENFORCEMENT

Shagina, a sanctions policy expert. As soon as OFAC exposed the scheme, on July
30, 2015, OFAC issued a clarification stating that “The evasive practices identified by
OFAC include the omission or obfuscation of references to Crimea and locations
within Crimea in documentation underlying transactions involving U.S. persons or the
United States. These practices apply to a range of activities involving both the
financial services and international trade sectors." OFAC stated that it became aware of
the established practice of omitting the address of the initiator or beneficiary in SWIFT
messages. These models of concealment of information are considered by the US
agency as acts aimed at circumventing sanctions.

2.2.4. RETAIL COMPANIES

Despite sanctions, the French and German supermarket chains Auchan and
Metro Cash & Carry continue to operate in Crimea. In 2018, their goods were
delivered through the port of Kerch, despite the fact that EU companies are prohibited
from dealing with this listed institution. In 2017, the Prosecutor General’s Office of
Ukraine opened proceedings to find out whether Auchan violates Ukrainian law.
However, the investigation had no legal consequences for the company.

Auchan and Metro Cash & Carry were able to avoid liability by re-registering
their Crimean stores as Russian legal entities. Both companies use outside transport
companies to deliver goods from southern Russia through the port of Kerch. Both
companies claim they do not violate EU sanctions because their business activities in
Crimea are carried out by Russian subsidiaries, which have not been sanctioned.
Auchan’s press office explained that Russian retail businesses are subject to
Russian law rather than the EU. Antoine Pernod, Senior Vice President of
Communications at Auchan, justified the company’s decision to stay in Crimea with
a desire to improve the humanitarian situation and to continue supplying "some vital
goods" to the population and save jobs. Meanwhile, Metro Cash & Carry explained
that its Russian subsidiaries are not subject to EU sanctions, that the parent company
allegedly does not participate in any operations in the Crimea, and that most goods
come from Russian suppliers.

From the legal standpoint, this is a case of sanctions avoidance rather than evasion.
The EU bans exports of only certain categories of goods to Crimea, and Russian
subsidiaries are indeed not subject to sanctions. This case illustrates that EU sanctions
are not comprehensive - some activities are still legal even in the occupied Crimea. At
the same time, EU officials acknowledge that business operations of companies
violate the spirit of EU sanctions, however stating that "in the absence of a trade
embargo, there is always a fine line between compliance and non-compliance.”
Interestingly enough, although EU sanctions do not prohibit export of food to Crimea,
they still prohibit using the port in Kerch, and therefore European companies created
subsidiaries that could be tasked with using it. It is also noteworthy that companies
are appealing to "humanitarian" considerations, thus apparently feeling the need to
mitigate their reputational losses.

As compliance with sanctions is the responsibility of EU member states, this case

should be dealt with by the law enforcement agencies of France and Germany.
However, according to open sources, no cases have been opened so far.

The relationship between the parent company and its subsidiaries, which in this case
is complicated by the creation of complex corporate structures, is yet another loophole
to circumvent sanctions. According to Artem Zhavoronkov, a partner at Dentons law
firm, the European parent companies generally can be held liable "if they instruct their
local branch to act in violation of sanctions." However, it is now clear that the German
and French retail giants have found a loophole - namely, that EU law does not apply
to subsidiaries in Russia. 15
 2.2.5. SIEMENS GAS TURBINES

In July 2017, four Siemens gas turbines were delivered to the occupied Crimea. The
company stated that the turbines had been ordered and delivered for the Taman power
plant, and that its Russian partner, Tekhnopromeksport had send them further to new
power plants in the Crimea in breach of contract. Siemens filed a lawsuit against Tekhno-
promeksport in Moscow’s Arbitration Court, demanding the turbines be returned.
Predict-ably, the court dismissed Siemens’ lawsuit.

An investigation by Euromaidan Press found that Siemens had every reason to know
where the turbines were actually going. In particular, the contract between the German
company and the Russian partner was classified, and the partner company belongs to the
Russian state monopolist Rostek, whose CEO was sanctioned for intending to build
power plants in the Crimea. At the time the contract was concluded, the idea of
building a plant in Taman, to where the turbines were allegedly sold, was purely
hypothetical: it had no plan, economic justification, bidding process, investor, etc. It
existed only in public speeches of Russian officials and the Siemens turbines were the
wrong size for the voiced parameters of this hypothetical station. However, their size
was precisely right for the plants that a clone company of Tekhnopromeksport began
to build in occupied Crimea, while a company co-owned by Siemens even submitted a
bid for maintenance services of these new plants.

Given these details, it seems that the German prosecutor’s office ha d ev ery re ason
to launch proceedings against Siemens. However, as stated in the response of the Min-
istry of Foreign Affairs to our request of May 21, 2021, they did not do so, "because the
contract for supplying equipment included a no-supply clause with regard to shipping
turbines to the occupied Crimea.”

It seems that a well-drafted contract was enough for the prosecutor’s office to turn a
blind eye to all the facts proving that Siemens was deliberately violating the sanctions.

In the wake of the incident, the EU added three Russian officials and three companies
to its sanctions list. As of November 2018, the German prosecutor’s office was investigat-
ing the proceedings against three Siemens employees based in St. Petersburg, but as of
August 2021, there was no information about it in open sources.

As in the case of the Crimean bridge, the key role in drawing public attention to this
case of violation of sanctions was played by journalists of the Russian newspaper Viedo-
mosti and the Reuters international agency.

However, Ukrainian diplomats were also active, as evidenced by the above-mentioned

response of Ukraine’s Foreign Ministry. In particular, they acted as follows:

● During 2015-2017, notes were sent to the German Foreign Ministry warning it
of a possible violations of sanctions, and a meeting was held with the
leadership of the Office of the Federal Chancellor, the German Foreign Ministry
and Siemens;
● They communicated with the European External Action Service, the European
Commission and the European Parliament. The issue was also raised during the
EU-Ukraine Summit in July 2017;
● The same issues were raised during EU-Ukraine consultations on the legal
consequences of the temporary occupation of Crimea in October 2017 with
representatives of EU member states, as well as during round tables in the EU
Council.
16
 CRIMEAN SANCTIONS:
VIOLATIONS, MONITORING,
AND ENFORCEMENT

Euromaidan Press journalists also submitted information from their investigation to the
German prosecutor’s office. The Green Party used the investigation to submit a request to the
federal government through the Bundestag (the following response was received). However,
all these actions were not enough to prevent the violation of sanctions or prosecute Siemens.

Maybe a more active campaign to prove Siemens’ fault and a more thorough journal-
istic investigation, which would have been launched before the turbines were delivered,
could have changed the course of events. Also, this delivery would have been impos-
sible if the sanctions applied not only to the territory of Crimea, but to the entire district
to which Russia absorbed Crimea, as recommended by the Ministry of Foreign Affairs of
Ukraine in 2016. However, the decision not to open proceedings against Siemens was
probably a political one. After all, such diplomatic measures taken in relation to the situ-
ation in the Netherlands have had a more tangible result.

2.2.6. SIEMENS-GRUNDFOS WATER PUMPS

On March 18, 2021, a new water pumping station was opened near Simferopol. Jour-
nalists discovered that the photos of the opening of this station feature pumps co-pro-
duced by Siemens-Grundfos only in early April thanks to the TV footage of the scene. At
the same time, EU sanctions prohibit the supply of pumps to the occupied Crimea.

In its comments to DW, Siemens stated that all contracts between the company and
its subsidiaries have all the necessary export and end-user control clauses, and that they
require that companies that buy Siemens products also comply with the sanctions.

Thomas Heidemann, a partner at Moscow-based СМС Law firm that advises German
investors in Russia, told DW that the standard practice for a buyer/retailer is to sign a
so-called end-user certificate indicating the customers and end-users of equipment.
"The European supplier then files away this end-user certificate [to the supervisory
authorities] and can show it did everything possible to prevent a sanctions violation."

As for Grundfos, according to the Ukrainian Foreign Ministry’s response to our re-
quest, the company confirmed that it had sold the equipment in February to another Rus-
sian company through its subsidiary Grundfos Moscow. Grundfos Moscow was inspected
through Grundfos Holding A/S own export control system, and it did not raise any suspi-
cions. However, Grundfos Holding A/S was not informed that Crimea would be the final
destination for its equipment, and the company’s management acknowledged that the
text of the contract did not contain a separate article on the end user.

From the same response of the Ministry of Foreign Affairs it became known that the
Danish authorities intend to conduct an official investigation into the supply of pumps to
the Crimea and assure that all future equipment sales contracts, including in the territory
of the Russian Federation, will contain special conditions for prevention of delivery of
goods to the Crimea. In addition, the export control policy will be revised in terms of more
careful identification of the end recipients of the company’s products.

However, according to DW, under Russian law, the Russian subsidiary of Grundfos
cannot receive written confirmation from customers that the item will not be used in the
Crimea. In this case, a contract with a separate clause will have no effect if the sale goes
through a subsidiary.

The Danish prosecutor’s office is currently investigating whether Grundfos knew that
its equipment would be delivered to the Crimea. Danish export regulators have also told
DW that they are considering the matter and will launch an investigation if necessary.

17
 During the development of this story, the embassies of Ukraine in Germany and
Denmark held meetings with the management of Grundfos and Siemens, as well as with
the competent authorities of the respective countries. In addition, information on a pos-
sible breach of EU sanctions by Siemens and Grundfos Holding A/S was brought to the
attention of the European External Action Service and the EC Directorate-General for
Financial Stability, Financial Services and the Capital Markets Union.

At the same time, as in the case of the bridge project, the Russian authorities pre-
sented the opening of the water pumping station as a result of Russian skill and tech-
nology.

It is worth noting that the Russian authorities have now launched a major campaign
to bring fresh water to the Crimea, and therefore in the near future, there are likely to be
many more such cases of utilization of European water pumping technologies. It would
be expedient to proactively monitor construction of these facilities in the Crimea in
order to identify use of Western technologies.

2.3. PROSECUTED VIOLATORS

Although not as many as we would like, there exist cases of companies being pros-
ecuted for violating sanctions against Russia. Most of them deal with sectoral sanctions
imposed on the entire territory of Russia without a geographical link to Crimea.
However, for example, two US companies were prosecuted for working in the Crimea
- they pro-vided digital services, so it was probably not too hard to find enough
evidence.

● In March 2015, the Dutch prosecutor’s office wanted to fine a company in Schiphol
EUR 80,000 for the export of combat aircraft radar system components to Russia;
● In July 2017, the USA's OFAC fined oil company ExxonMobil USD 2 million for a
business transaction with the President of Rosneft;
● In November 2017, an Amsterdam court found that a Dutch company had violated
sanctions by exporting military goods to Russia and fined it EUR 50,000.
● In January 2018, a German company from the city of Ulm received a fine of EUR
190,000 for illegal export of dual-use goods to Russia. Exported equipment could
also be used for military purposes, which requires a special permit;
● In April 2020, the British OFSI fined the British bank Standard Chartered £ 20.5m
for loans given to a subsidiary of Sberbank;
● In July 2020, the United States fined Amazon with USD 134,523 for operating in
the occupied Crimea;
● In September 2020, Deutsche Bank agreed to pay a settlement fee of USD
583,000 to the US Treasury for facilitating transactions that violated “Ukrainian”
sanctions, namely for processing a transaction of a listed Cypriot oil company since
its owner was “involved in the situation in Ukraine,” as well as for processing
payments of the listed Krayinvestbank;
● In March 2021, OFAC imposed a fine of USD 507,375 and USD 98,830 for two vir-
tual currency providers Bit Pay and BitGo, which processed user transactions in
Crimea, Cuba, Iran, Sudan and Syria.

18
 CRIMEAN SANCTIONS:
VIOLATIONS, MONITORING,
AND ENFORCEMENT

3. THE MAP OF SANCTIONS APPLIED

IN CONNECTION WITH RUSSIA’S
AGGRESSION AGAINST UKRAINE
3.1. COUNTRIES THAT HAVE IMPOSED SANCTIONS IN CONNECTION
WITH RUSSIA’S AGGRESSION AGAINST UKRAINE

3.1.1 US
The United States was the first to respond to the occupation of Crimea; also, com-
pared to other sanctions regimes, US sanctions have the broadest application - there is
a complete ban on any transactions and activities in the Crimea. These sanctions are
based on the following executive orders issued in 2014:

13660 - authorized sanctions against legal entities and individuals responsible for the
situation in Crimea.
13661, 13662 - extended the list. Four directives under EO 13662 prohibit transactions
involving new debt and the provision of goods, services and technologies in
support of "deep-sea, Arctic offshore or shale projects that have the poten-
tial to produce oil" for the Russian Federation or with the participation of any
blocked persons.
13685 - identified a set of specific measures for the Crimea, namely US citizens were
banned from:
● making new investments, including in the energy sector;
● providing goods, technologies and services to Russian projects for the de-
velopment and production of offshore, Arctic or shale oil fields, including
the Black Sea shelf, which Russia has appropriated after the occupation;

● exporting and importing any goods, technology, or services, directly or in-

directly, for all U.S. citizens, wherever they may be;
● assisting foreign nationals performing transactions subject to U.S. sanc-
tions.

To minimize the negative impact on the civilian population, some transactions involv-
ing agricultural products, medical supplies and medicines, personal goods, and software
have been allowed.

It is noteworthy that the United States took a proactive stance aimed at minimizing
circumvention of sanctions. In particular, in 2016, OFAC updated its sanctions lists to
counter attempts to circumvent US sanctions legislation, including by companies that
built the Crimean bridge.

In 2017, the Countering America’s Adversaries Through Sanctions Act (CAATSA)

was enacted. It imposed sanctions on certain transactions with foreigners who evade
sanctions, namely any person who “substantially violates, attempts to violate,
conspires to violate or causes a violation” or “facilitates significant operations.”

19
USA
Russia
25
Canada 25 25
United Kingdom 22 Lithuania

19
EU
Ukraine 29 28
South Korea Japan
USA

26
Australia

27
New Zealand

Crimea

20
 CRIMEAN SANCTIONS:
VIOLATIONS, MONITORING,
AND ENFORCEMENT

In particular, this law contains three provisions: acts on Iran and North Korea, and the
Countering Russian Influence in Europe and Eurasia Act of 2017. Its main provisions
are as follows:

● the President must submit proposals to Congress for the suspension or lifting
of sanctions against the Russian Federation;

● anti-Russian sanctions imposed by previous presidential decrees remain

in place;

● new sanctions against Russia for interfering in the 2016 US elections and for
interfering in the situation in Ukraine and Syria. Also, the Act gave previous pu-
nitive measures, which were previously introduced by executive decrees, the
status of law to prevent the mitigation, suspension, or termination of Presidential
sanctions without the approval of Congress;

● The President may waive certain sanctions related to cybersecurity and Ukraine;

● The bill provides for sanctions for engaging in activities related to: (1) cybersecu-
rity, (2) crude oil projects, (3) financial institutions, (4) corruption, (5) human rights
violations, (6) evasion of sanctions, (7) transactions with the Russian defense or
intelligence sectors, (8) export pipelines, (9) privatization of state assets by gov-
ernment officials and (10) transfers of weapons to Syria;

● The State Department cooperates with the Government of Ukraine to increase

Ukraine’s energy security;

SSIDES (the Support for the Sovereignty, Integrity, Democracy, and Economic Stabil-
ity of Ukraine Act of 2014) requires to introduce sanctions for those responsible for seri-
ous human rights violations in any territory forcibly occupied or otherwise controlled by
the Russian state. In November 2018, according to this act, sanctions were imposed on
three individuals involved in human rights violations in the occupied territories.

In 2019, OFAC imposed sanctions on six Russian individuals and eight legal entities,
including four officials involved in the attack on Ukrainian ships in the Kerch Strait, Rus-
sian defense firms operating in the Crimea, and two Ukrainian citizens involved in
the “elections” in the so-called "Donetsk People’s Republic." It is noteworthy that the
impo-sition of sanctions by the United States for the Kerch Strait attack took place
simultane-ously with Canada and the EU.

On 15 April 2021, OFAC, in coordination with the EU, the United Kingdom, Canada
and Australia, imposed sanctions on five individuals and three legal entities. The mea-
sure affected Russian companies involved in the construction of the Crimean
bridge and operation of SIZO-1 (remand prison) in Simferopol ("It is known that inmates
freeze, starve, suffer from parasites and are kept in poorly ventilated unsanitary cells.
Among the wide variety of prisoners held in this overcrowded prison are those
detained on politically motivated criminal charges, as well as Crimean Tatars and
other Ukrainians detained indefinitely”), as well as five officials from the occupied
Crimea.

21
 The list of sanctioned persons can be found on the website of the Office for the Con-
trol of Foreign Assets (OFAC, Specially Designated Nationals and Blocked Persons List
(“The SDN list”)). They apply to any transactions with property and a share in the property
of companies or listed individuals, or with companies where 50% or more is owned by
the listed persons. Blocked persons are prohibited from transacting with or entering the
United States.

The same website has a list of people who have been subject to special restrictive
measures in connection with the introduction of sectoral sanctions (Consolidated Non-
SDN List). Sectoral sanctions apply to specific entities in the Russian financial, energy
and defense sectors. The property of the persons included in the list is not blocked - the
restrictions apply only to specific transactions. The scope of the restrictions depends on
the directive applied.

Criminal penalties for violating US sanctions include fines of up to USD 20 million and
imprisonment for up to 30 years.

The DASKA Act (Defending American Security from the Kremlin Aggression Act),
which provides for strong sanctions against Russia, is currently under consideration in
the US Congress. The Russian newspaper Kommersant published the text of the bill after
which the value of ruble fell by 2.2%. If adopted, it will significantly expand the scope of
СААTSA and provide for:

● a ban for Russia’s largest state-owned banks to transact with the US dollar;
● sanctions against investments in the Russian government and related oil and gas
companies;
● sanctions against persons from Russia suspected of involvement in cyberattacks
against the United States;
● creation of a new Sanctions Office within the US Department of State.

If it is adopted, than sanctions will apply to at least 24 FSB officials involved in the inci-
dent in the Kerch Strait where 24 Ukrainian sailors were arrested. On 18 December 2019,
the US Senate panel approved the DASKA Act, but so far it is unknown when the Senate
itself can vote on it.

3.1.2. EU
In agreement with the United States, the EU strongly condemned the occupation of
Crimea in March 2014. The European Council later imposed additional restrictive mea-
sures, including an entry ban and freezing of assets of 33 Russian and Ukrainian offi-
cials who supported the annexation of Crimea.

Since June 23, 2014, the EU has required a certificate issued by the Ukrainian au-
thorities to import goods originating in the Crimea and Sevastopol as a policy of non-
recognition.

Following the downing of Malaysian Airlines flight MH17 in July 2014, sectoral sanc-
tions were imposed on Russia, restricting trade and investment in transport, telecom-
munications and energy, including exploration and production of oil, gas and minerals.

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 CRIMEAN SANCTIONS:
VIOLATIONS, MONITORING,
AND ENFORCEMENT

Due to the lack of progress in the implementation of the Minsk Protocol, in December
2014 the EU significantly expanded Crimean sanctions. European or EU-based compa-
nies were prohibited from:

● buying or investing in real estate or in legal entities in the Crimea, and provide
financial and technical assistance;
● intermediary, construction and engineering services related to infrastructure
projects in the Crimea, as well as the supply of key equipment and technologies
for exploration of natural resources;
● EU operators were banned from offering tourist services in Crimea;
● cruise ships are prohibited from entering any Crimean port, except in emergen-
cies. The ban applies to all vessels owned by EU citizens or registered under EU
jurisdiction.

Contracts signed before March 20, 2015 were exempted from regulation.

In 2016, the EU imposed sanctions for six Crimean residents who became members
of the State Duma of Russia. With regard to the elections in the occupied territories,
in 2018 sanctions were also imposed on nine people who participated in the elections
in the so-called DPR and LPR, and five people who organized the Russian presidential
election in Crimea. In 2017, three Russian citizens and three companies were added to
the list due to their participation in the transfer of Siemens gas turbines to the Crimea.

In 2018, the EU added six more Russian entities to the sanctions list because of their
participation in the construction of the Crimean bridge. In 2020, the list was expanded to
two more individuals and four legal entities.

In 2019, eight Russian officials were sanctioned in response to an incident in the Kerch
Strait synchronously with the United States.

Although Crimean sanctions of many allies are indefinite, the European Commission
annually votes in favor of continuing the restrictive measures. At the time of drafting of the
report, sectoral sanctions were in effect until 31 July 2021, and restrictive sanctions im-
posing restrictions on travel and financial transactions were in effect until 15 September
2021. Currently, 177 individuals and 48 legal entities are subject to sanctions. The ex-
tension of sanctions is tied to progress in Russia’s implementation of the Minsk Protocol.

In general, the EU has one framework regulation for imposing sanctions and it applies
to around 70 countries. This regulation, according to Dutch lawyer Heleen over de
Linden, is well spelled out. In particular, support staff may also be held liable for
violating sanctions. For example, the interpreter working for a Dutch firm which
participated in the Crimean bridge project (see 2.2.2.) is now in the spotlight of the
prosecutor’s office.

However, as the implementation of sanctions is the responsibility of the national

governments of the member states, this process is different in different cases. To
understand exactly how they are different is important to distinguish between two
different legal instruments - decisions and regulations of the EU Council. The decision
provides a common political and legal basis, while the regulation ensures the uniform
application of sanctions in the EU member states. If sanctions are imposed by a
regulation, all EU member states have to do is issue a sanction order prohibiting
breaches of regulation, and the Commission will be able to launch proceedings

23
 against non-compliant member states, including by applying to the EU Court of
Justice. Financial sanctions are almost always imposed by regulation.

However, if sanctions are imposed only by a decision, they must be adapted to na-
tional law before they are applied, and the Commission cannot take action in the event of
a breach. The decision, for example, imposes entry bans and the Commission remains le-
gally powerless if EU member states violate EU travel bans. The Commission has recently
tried to raise the status of entry restrictions in the text of the Global Sanctions for Human
Rights to a regulatory level, but this idea has met with resistance from some member
states, who believe that the Commission is overstepping its powers.

The willingness of individual EU member states to comply with sanctions and inves-
tigate their violations depends on their attitude towards Russia, said Cedric Ryngaert,
a law professor at the University of Utrecht, during the interview. As a result,
sanctions remain "under-enforced."

In view of this, there are important messages saying that the EU Commission is in-
creasing its geopolitical ambitions, including the right to impose sanctions and be a
player in the international arena. However, given the realities of the division of power
between member states and the EU’s institutional structure, the Commission has chosen
to approach the existing rules rather than creating a European version of the US OFAC.
According to prof. Ryngaert, the Commission’s move happened in parallel with the EU’s
adoption of the Global Sanctions Regime for Human Rights, which raised the issue of
varied compliance with the European sanctions by different EU countries. Therefore, in
January 2021, the European Commission issued a communication outlining a strategy
to improve the openness and resilience of the EU economic system. Its two important
components are:

● implementation and enforcement of the EU sanctions regimes;

● EU resilience to the effects of extraterritorial sanctions by third countries (es-

sentially the Blocking Statute - measures taken by the EU to prevent European
companies from complying with certain US sanctions, such as against Iran,
Cuba and NordStream-2) . The EU considers such sanctions to be contrary to
international law.

This communication announces important changes that can be expected from the EU
sanctions regime in the future. In particular, it is planned that in 2021 the Commission will:

● develop a database for exchange of information on implementation and en-

forcement of sanctions between member states and the Commission;
● work to establish a single point of contact on sanctions that have a cross-border
dimension;
● assess the effectiveness of EU sanctions and consider the practices used to cir-
cumvent and undermine sanctions (including through cryptocurrencies). It will
be used for making proposals to increase the effectiveness of the EU sanctions
regime;
● It will create a new tool to facilitate anonymous reporting of violations (including
whistleblowing), with the necessary guarantees of confidentiality.

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 CRIMEAN SANCTIONS:
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AND ENFORCEMENT

The Commission also said that in the first half of 2022 it will present a roadmap
for transition from detection of non-compliance to consideration of cases by the EU
Court.

3.1.3. COUNTRIES THAT COORDINATE THEIR SANCTIONS REGIME

WITH THE EU
Some countries that are not part of the EU but belong to the European Economic
Area comply with its sanctions legislation. For example, Montenegro, Albania, Ice-
land, and Norway have announced that they will automatically adopt EU sanctions
legislation. Switzerland and Liechtenstein have also broadly replicated EU sanctions
legislation and introduced legislation that prevents circumvention of sanctions. How-
ever, there are still many differences between Norway/Switzerland and EU sanctions.
A good comparison table (until September 2019) is presented here. In addition, Geor-
gia, Ukraine and Moldova have joined the EU sanctions against Crimea.

3.1.4. LITHUANIA
In addition to EU sanctions, on April 12, 2016, Lithuania imposed sanctions on Rus-
sian officials involved in imprisonment of Nadiya Savchenko, Oleg Sentsov and Olek-
sandr Kolchenko. On December 6, 2016, the country banned judges of the
Russian Constitutional Court from entering the territory of Lithuania because "in
2014, they issued a judgment formalizing the annexation of Crimea.” On
December 7, 2018, it imposed sanctions against Russian citizens involved in the
incident in the Kerch Strait. In addition, Lithuania sent messages in February 2021
confirming its readiness to apply EU sanctions against human rights violators in
Crimea if Ukraine could provide relevant evidence and lists of violators.

3.1.5. UK
Following the exit of the United Kingdom from the EU, the country kept the previ-
ously adopted sanctions. Special regulations were adopted to ensure the effective
operation of EU sanctions after January 1, 2021, in particular - regulations on Russia
sanctions. Since then, they have been updated twice. An update and a current list of
sanctioned individuals is available here.

A list of all individuals and legal entities subject to UK sanctions can be found
here. For more information on UK sanctions, see Section "Magnitsky Acts and their
potential benefits for Ukraine."

3.1.6. CANADA
In matters of sanctions against Russia, Canada has in fact followed the actions of
the EU and the United States. On March 17, 2014, Canada, together with the United
States and the European Union, imposed sanctions on those involved in the occupa-
tion of Crimea; the list was expanded several times during April-June. In particular,
they prohibit the following:

25
 ● any financial interactions with sanctioned persons;

● Crimean real estate investments and any related transactions;

● import and export of goods to/from the Crimea;

● providing technical services or data to the Crimea;

● provide or receive tourist services in the Crimea;

● entry of Canadian cruise ships to the Crimean ports.

Individuals in Canada and all Canadian citizens are prohibited from contributing in any
way to activities sanctioned by Canada.

On July 24, 2014, the sanctions were expanded to include officials of the Russian-
controlled "Luhansk and Donetsk People's Republics"; sectoral sanctions were also
introduced as follows: the list of sanctions included companies in the Russian defense,
finance and energy sectors. The list of sanctioned individuals and legal entities was
expanded in August and December 2014. In December, sectoral sanctions were also
expanded, including restrictions on export of oil explo-ration and production
technologies in Russia. New persons were added to the list in February and June
2015, and March 2016. In most cases, Canada simply aligned its list with those of the
United States and the European Union.

After the break, the list of sanctions was updated in March 2019 in response to the
incident in the Kerch Strait, and then in March 2021 in connection with the
construction of the Crimean Bridge.

3.1.7. AUSTRALIA
Australia imposed its first sanctions on March 19, 2014. Financial and travel
restrictions were imposed on 12 Russian and Ukrainian citizens; they were expanded to
50 individu-als and 11 legal entities on May 21. On 1 September 2014, the sanctions
were expanded to include a list of relevant EU-level sanctions for 113 individuals and 32
legal entities, as well as sectoral sanctions, which:

● restricted arms exports/imports from/to Russia;

● restricted exports of oil exploration and production goods to Russia;

● restricted Russian state-owned banks’ access to Australian capital markets;

● banned export of energy and mineral sector goods and services to the Crimea;

● restricted Australian trade in Crimea and investment in infrastructure, telecom-

munications, energy, oil, gas and mining sectors.

In addition, Australian sanctions prohibit import of goods from the Crimea if they have
not received authorization from the Ukrainian authorities.

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 CRIMEAN SANCTIONS:
VIOLATIONS, MONITORING,
AND ENFORCEMENT

In March 2019, seven Russian citizens were sanctioned in connection with an incident
in the Kerch Strait. In March 2021, Australia imposed additional sanctions in connection
with the construction of the Crimean Bridge.

If the West’s reaction to Russian aggression in Ukraine was more or less unanimous,
the response in Asia-Pacific region was different.

3.1.8. NEW ZEALAND

On March 3, 2014, the country suspended negotiations with the Customs Union of
Russia, Kazakhstan, and Belarus on the establishment of a free trade zone. This
was not well received by Foreign Minister Winston Peters, who said in 2018 that
there was no evidence that Russia was involved in the downing of MH17 or
interfered in the US election and received the support of the Prime Minister. Peters
then said that human rights abuses in other countries had not stopped New Zealand
from trading with them.

On March 23, 2014, according to the Minister of Foreign Affairs, New Zealand
im-posed "modest and cautious" sanctions against individuals involved in the
occupation and annexation of Crimea. The gesture was interpreted as quite
symbolic, as it only prohibited entry into New Zealand. The list was not published.

On November 27, 2014, after Australia imposed sectoral sanctions against

Russia, Wellington considered joining them, but eventually failed to do so, calling
on businesses to restrict trade with Russia. However, as New Zealand banks are
subsidiaries of Australian banks, they have closed the correspondent accounts of
a number of listed Russian state-owned banks. Wellington later moved away from
the West’s common stance by refusing to respond to an attempt to poison Sergei
Skripal, despite the UK’s request. According to sanctions expert Maria Shagina, a
multi-vector foreign policy as a strategy for the survival of a small country, as well
as the trade-dependent and export-oriented economy of New Zealand are the
factors that determine the country’s pragmatic approach to sanctions.

Unlike other Five Eyes countries (FVEY - USA, Canada, UK, Australia, New
Zea-land), New Zealand does not have its own independent sanctions regime,
so its sanctions are largely limited to the implementation of UN Security Council
programs. Due to this restriction, New Zealand cannot impose serious anti-Russian
sanctions. Attempts to impose an independent sanctions regime through the
adoption of the Autonomous Sanctions Bill in parliament failed in late 2020 after
more than three years of waiting without consideration. Although now, with
increased attention to the issue of forced labor and transparency in supply chains,
as well as the deteriorating human rights situation in Myanmar, the National Party is
calling for a reconsideration of the bill, which they say, "parliament will easily pass.”

The current Labor government is expected to act cautiously so as not to

damage diplomatic relations with either China or the United States (New Zealand’s
first and third largest export trading partners, respectively). It is believed that the
absence of an autonomous sanctions regime helps to maintain this balance. If the
government could impose unilateral sanctions, it would undoubtedly be under
considerable pressure to respond to human rights violations in Myanmar and China.

27
 3.1.9. JAPAN

According to sanctions researcher Maria Shagina, Russia’s aggression against

Ukraine has been a challenge to the Shinzo Abe administration. On the one hand, Japan
as a member of the G7 was expected to join the international community in condemning
Russian crimes. On the other hand, Japan has pursued a policy of reconciliation with
Russia, hoping to resolve the conflict o ver t he o ccupied Kuril I slands, a nd h as b egun
to see Russia as a strategic partner in the region and an ally, sandwiched between two
threats - North Korea and the increasingly powerful China. This led to a limited reaction
of Japan to the occupation of Crimea and further aggression.

Japan condemned the occupation of Crimea, suspended talks on visa liberaliza-tion

and froze agreements on new investment and cooperation in space. Subsequent
Russian destabilization in Donbas forced Japan to ban entry of 23 Russian officials,
although no financial s anctions w ere i mposed, c ontrary t o e stablished p ractice. A lso,
the names of the officials themselves were concealed, which limited the effect of pub-
lic shaming, which is considered one of the purposes of the sanctions. Unlike Western
countries, which have significantly tightened sanctions against Russia since the down-
ing of MH17 by imposing sectoral sanctions on the energy, defense and financial sec-
tors, Japan has taken only symbolic measures. Tokyo has suspended funding for new
Russian projects through the European Bank for Reconstruction and Development
and has extended visa bans to officials in the occupied Crimea and Donbas. It was
only after some pressure from the Obama administration that Japan imposed sectoral
sanctions in September 2014, including export restrictions on arms and dual-use goods,
and banned new securities transactions for five Russian state-owned banks. It was
a symbolic gesture, as Japan hardly exports arms to Russia, Russian officials have
no significant accounts in Japanese banks, and no Russian defense company has
been targeted, while the energy sector has not been restricted at all.

According to Maria Shagina, this message was received in Moscow - Russia has nei-
ther released a list of listed Japanese nationals nor extended its counter-sanctions to
Japan.

Since December 2014, Japan has not renewed its anti-Russian sanctions and encour-
aged by weak commitment to sanctions of some G7 members such as France and
Italy, refrained from any direct criticism of Russia. In particular, Japan did not support
the UK in its response to the assassination attempt on former Russian spy Sergei
Skripal, refrained from directly supporting air strikes on the Russian-backed Bashar
al-Assad regime in Syria, and remained silent in calling on Australia and the
Netherlands to prosecute Russia for downing MH17.

Japan is currently on the fence, deciding between prestigious G7 membership and a

desire for rapprochement with Russia. According to Shagina, this limits the
effectiveness of sanctions, as unity of actions among G7 members is critical to closing
loopholes in sanctions regimes and maximizing financial and economic impact on
sanctions targets. Due to the fact that Tokyo did not impose sanctions on the Russian
energy sector, Russian and Japanese companies were able to carefully find ways to
cooperate under the sanctions regime. For example, the government-sponsored
Japan Bank for International Coop-eration (JBIC) has provided significant support to
Russian energy projects. In 2015, JBIC considered exchanging the ruble-yen directly
with Gazprombank, VTB and VEB sanc-tioned by US and EU to circumvent its
dependence on US dollar transactions. In 2014, JBIC provided a USD 39 million loan
to the listed Sberbank for a construction project in the Far East and invested USD
400 million in Yamal LNG, which is controlled by US-sanctioned Novatek. Another
JBIC project has invested USD 170 million in Transneft - a Russian oil and gas

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VIOLATIONS, MONITORING,
AND ENFORCEMENT

monopoly remaining under US and EU sanctions. In addition to its purely economic

impact, Japan’s policy is morally undermining the effectiveness of sanctions, providing
numerous reasons for the Russian media to cover the growing op-position to the
sanctions regime.

3.1.10. SOUTH KOREA

Despite its strategic defense alliance with the United States, South Korea has not
followed the West with anti-Russian sanctions, limiting itself to condemning the annexa-
tion of Crimea and symbolic measures, such as boycotting the May 9 parade in Moscow
and opening of the Sochi Olympics. A non-G7 member, South Korea has come under
less external pressure to join anti-Russian sanctions than Japan.

3.2. ILLEGAL ENTRY OF VESSELS INTO CRIMEAN PORTS

In addition to the sanctions imposed by individual countries in response to Russia’s
aggression against Ukraine, Ukraine’s decision to close Crimean ports is crucial to
countering the occupation of Crimea, including a ban on foreign vessels entering the
harbors of the occupied peninsula. When foreign vessels violate this prohibition, they
also violate Ukrainian law. If these facts become known, these vessels will be excluded
from the maritime registers of the countries which flags they fly.

This decision is crucial for the Crimean economy, as it has effectively stopped trade
with the occupied peninsula and hit its economy - massive lay-offs in ports that are key
to the local economy; now they are making losses.

However, shipowners found ways to circumvent the bans. For example, ship captains
turn off AIS (automatic information system). This system is mandatory for ships with a
tonnage of more than 300 registered tons operating internationally. There is no pen-
alty for this. At the same time, European owners also use "flags of convenience" and
often re-register ships with fictitious shipowners from other countries. Because of this,
detecting ships entering ports is not easy. According to Vitaliy Moshkivskyi, Ukraine’s
permanent representative to the International Maritime Organization (IMO), Ukrainian
agencies use information about the entry of foreign vessels into the closed ports of
Crimea received from the materials of investigative journalists.

SeaKrime is one of such projects. According to the project manager Kateryna Yares-
ko, the number of vessels calling at Crimean ports in violation of the ban was signifi-
cantly reduced due to the monitoring by volunteer journalists of this project, as well as
further reaction of the Ukrainian state; in 2016 it was still an "free-for-all," now only
ships under Russian and Syrian flags enter the ports.

In particular, the Embassy of Ukraine in London addressed them requesting materials

for the IMO. SeaKrime journalists collect evidence that a ship under a certain flag visited
the Crimea, this evidence is then passed by the Ukrainian permanent representative to
the IMO to the so-called flag administration, which conducts its own investigation that
may result in a fine or removal of the flag for the ship in question. The ship has to reap-
ply for documents, thus wasting time and money. Kateryna Yaresko estimates that after
the flag is removed, the ship will be stationary for about a month, so it loses the oppor-
tunity to make a profit and can spend up to USD 50,000 on documents. According to
Ms. Yaresko, it is because of these costs that ships do not enter Crimean ports.

29
 However, some vessels bypass closed ports using the following methods:

1) cargo from the Crimea can first be shipped to the nearest ports in Russia, and
transhipped there, although this is economically unreasonable and thus infre-
quent.

2) Transshipment: a method of reloading cargo to another ship that will deliver car-
go to the sanctioned port. It is economically justified and is observed more of-
ten. Ships choose one of two ways: small vessels approach the anchorage in the
Kerch Strait and bring/take cargo from/to the port of Kavkaz; the second method
takes place in the neutral waters of the Black Sea, where there is no control. In
particular, such a transshipment took place recently during shipment of Mozambi-
can ilmenite to the Crimea by a German company. At the same time, the vessels
turn off the AIS, and it is difficult to understand which vessel was approached by
which. "So far we have not found a way to deal with this," says Ms. Yaresko.

As for the role of the government bodies, embassies send warning letters to the au-
thorities of the respective countries. At the same time, the Prosecutor’s Office of the Au-
tonomous Republic of Crimea and the Security Service of Ukraine are collecting data on
illegal port entries in a single criminal proceeding. When such a vessel enters Ukrainian
waters, it must be arrested by the State Border Guard Service.

An example of a successful arrest of an infringing vessel in Ukrainian waters is the

Neyma tanker, which blocked passage of Ukrainian vessels during the capture operation
in the Kerch Strait in 2018. The bankrupt ship was bought by a company from Gelendzhik,
who later sent her to Izmail for repairs where the ship was arrested.

Kateryna Yaresko notes that attempts to bypass the closed ports will be made by the
Crimean authorities constantly, and this requires a constant proactive position by Ukraine
to prevent their operation. She also mentioned the steps Ukraine should take to make
better use of closed port opportunities:

1. Include monitoring of port entry ban violations in the government system. This
has been done with solely the help of volunteers for 5 years now.

2. When Ukraine closed the ports, the Ministry of Infrastructure removed them from
its scope of work, and no one takes care of them now. Had the authorities tak-
en care of them, then additional response mechanisms could have been put in
place, such as a maritime claim, where the port captain informs the captain of the
next port to which the ship is heading about the need to stop her.

3. Identify which companies own the vessels and apply sanctions against them. For
example, there is a scheme under which a Turkish company supplies construc-
tion materials to the Crimea and at the same time supplies gypsum to Ukraine.
Ukraine could well impose sanctions on this company.

4. Halt shipments of ilmenite from Ukraine to the Titan plant. Despite isolated cas-
es of supply of ilmenite to this plant (controlled by Dmytro Firtash) from Norway
and Mozambique, the bulk of the mineral comes from Ukraine, namely from the
state-owned United Mining and Chemical Company. There is reason to believe

30
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VIOLATIONS, MONITORING,
AND ENFORCEMENT

that the planned privatization of this enterprise will not stop the supply of ilmen-
ite, and this is worrying, because: a) it undermines the position of Ukraine when
it asks for sanctions from the Western countries; and b) the Titan plant is one of
the largest enterprises and, as such, pays taxes in the occupied Crimea. Ukrainian
ilmenite is supplied through a number of illegal schemes, including a US-sanc-
tioned vessel linked to a Syrian general that transhipped Ukrainian ilmenite in
Egyptian and Romanian ports. Transhipment is also made in Turkey and Bulgaria
to further deliver it to the Crimea.

The Representation of Ukraine to the IMO also believes that the country could
use the Long-range identification and tracking (LRIT) to monitor the entry of foreign
vessels into Crimean ports. Unlike AIS, the use of LRIT on ships is controlled by the
flag state through national remote identification and location control centers. Vitaliy
Moshkivskyi emphasizes that the technical possibilities of using this system have not
been resolved at the state level.

Another potential step Ukraine can take, according to Bohdan Ustymenko, an ex-
pert on international maritime law, is to ban ships from entering closed territorial
waters around Crimea. Ustymenko believes that Ukraine should do so in accordance
with the UN Convention on the Law of the Sea and the International Convention SO-
LAS-74. This would allow Ukraine to avoid international liability for possible mari-
time disasters in its territorial waters and reduce the number of illegal entries into all
Crimean ports.

3.3. MAGNITSKY ACTS AND THEIR USE FOR UKRAINE’S PURPOSES

In addition to the sanctions regimes imposed by Western countries directly in re-
sponse to Russian aggression, Ukraine should take advantage of the opportunities
offered by the adoption of the so-called Magnitsky Acts in the legislation of various
countries. The Magnitsky Act was first adopted in the United States as a result of a
long-running campaign to prosecute the murderers of a Russian lawyer Sergei Mag-
nitsky. Over time, it has spread to other countries around the world, which have en-
acted their own legislation that allows sanctions to be imposed on those involved in
large-scale corruption and human rights abuses. The specifics of the Magnitsky Acts
means that sanctions are imposed on individuals when there is convincing information
about their involvement in violations. Ukraine can use them to target Russian officials
involved in human rights abuses in the occupied Crimea or Donbas. Ukrainian civil
society, represented by both anti-corruption and human rights organizations, already
has a successful track record of submitting lists of Russian officials to relevant West-
ern institutions for listing. It is worth noting that this work requires diligence, accuracy,
and detail, as well as evidence (mostly from open sources) about the involvement of a
particular person in the violation. Let’s take a closer look at the main Magnitsky Acts
that are adopted globally.

3.3.1. US
US sanctions law includes a notable Magnitsky Act passed in 2012 to prosecute
Russian officials involved in a "criminal conspiracy" which had been uncovered by a
Russian lawyer Sergei Magnitsky resulting in his subsequent imprisonment and death
in 2009.

31
 Since 2016, the law has been amended: Congress enacted the Magnitsky Global
Act, which also requires the President to impose sanctions on those he believes have
committed human rights abuses against persons who fight to expose illegal activi-
ties of Russian government officials or seek internationally recognized human rights
and freedoms. In 2017, the Magnitsky Global Act was used for the first time against
13 individuals, including Berkut Commander Sergei Kusyuk, who fled to Russia after
the Euromaidan, and Artem Chaika, the son of the Russian Prosecutor General. Later,
an additional 39 companies and individuals were also listed by OFAC. In particular,
Chechen leader Ramzan Kadyrov was listed at the time.

In 2018, the Act imposed sanctions on 23 people, including 17 Saudi officials in-
volved in the death of journalist Jamal Khashoggi, a Dominican Republic politician
involved in corruption, and Turkish officials involved in imprisonment of an American
pastor Andrew Brunson.

In 2019, the United States imposed additional sanctions on those involved in Mag-
nitsky’s death and large-scale human rights violations in Russia. In particular, the
list included Yelena Trikulya, a member of the Investigative Committee of the
Russian Federation, Deputy Head of Section of the Investigative Committee
Gennady Karlov, Abuzayed Vismuradov, Commander of the Chechen Special Rapid
Response Unit Ter-ek (involved in the persecution of political opponents and LGBT
activists), Kadyrov’s "personal bodyguard" Ruslan Geremeev and the governor of
the IK-7 prison in Kare-lia, Serhiy Kosev (involved in beating and torturing inmates).

In 2020, sanctions under the Magnitsky Act were imposed on Chinese officials in-
volved in the persecution of Uighurs and the suppression of protests in Hong Kong.
On December 10, 2020 (the Human Rights Day), sanctions were imposed on those
involved in human rights violations in Haiti, Yemen and Russia. As for Russia, five
"Kadyrovites" were listed. These are the persons who executed Ramzan Kadyrov’s
orders to persecute activists, journalists and LGBT people in Chechnya, as well as
six companies affiliated with Kadyrov.

There have been repeated calls for the wider application of the Global Magnitsky
Act. In 2017, a group of NGOs and anti-corruption organizations nominated 15 cases
from around the world eligible for sanctions under the Magnitsky Act. Also in 2017,
the Trump administration was accused of not listing any of the Arab League countries.
There were also calls for a tougher response against Chinese officials; in particular,
in 2019, the House of Representatives passed the Uighur Rights Act, and the Con-
gressional Committee issued a report calling on the United States to adopt sanctions
against Chinese officials. In 2020, there were proposals to use the Magnitsky Act
against Chinese officials, who silenced doctors and journalists criticizing China’s re-
sponse to the pandemic.

In parallel with the Magnitsky Act, there is another similar initiative in the Unit-
ed States aimed at punishing human rights violators called Executive Order 13818
(E.O.13818).

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AND ENFORCEMENT

Briefly about the differences between the two regimes:

● Magnitsky Act is directed against "gross violations of internationally recognized

human rights, as defined by the Foreign Assistance Act of 1961 - such as torture,
cruel, inhuman or degrading treatment or punishment, prolonged detention with-
out prosecution and trial; causing disappearance of persons; and "other blatant
denial of the right to life, liberty or security of person.” The Act is also intended
pri-marily to protect human rights and anti-corruption activists and prosecute
those directly responsible for these violations.

● EO 13818 opposes "serious human rights abuses," which include a wider range
of violations, such as sexual violence or non-violent human rights violations, such
as persecution on the grounds of race or religion. The use of "abuse" in the sin-
gular form also indicates that the imposition of sanctions does not require proof
of systemic nature of violations, for example, a single murder may result in the
imposition of sanctions. Unlike the Magnitsky Act, this EO allows sanctions to be
imposed regardless of whether the victim has the status of a journalist / activist,
etc., and, accordingly, allows for penalties for violations committed against ordi-
nary citizens. The effect of the EO is also broader than Magnitsky Act - it allows
to prosecute all persons who are in one way or another connected to human
rights violations, such as lawyers and accountants, whose work is necessary for
the commission of financial crimes, which are usually related to human rights
viola-tions or through which corruption is committed.

Currently, the Magnitsky Act and EO 13818 operate in parallel, but in practice, the EO
is most often applied because its effect is broader.

Even before the Magnitsky Act and EO 13818 were adopted, the US Treasury warned
that its internal resources would not be sufficient for the timely and accurate imposition
of sanctions. Therefore, to assist the Treasury, human rights NGOs, including Human
Rights First, have assembled a broad consortium of human rights groups and clinics
(including Ukrainian organizations) to help implement the Magnitsky Act and EO 13818
by preparing background research and bio-identifiers of potential violators for submis-
sion to OFAC. These research results may also be submitted to the Human Rights and
Special Prosecutions Section of the Department of Justice if certain individuals are po-
tentially subject to U.S. criminal law, to the Center for Human Rights and War Crimes
Violators, and to the State Department to update the CLASS database (Consular Look-
out and Support System). This is to make sure the United States neither grants asylum
for human rights violators nor even an opportunity to spend vacation in the country.

3.3.2. EU
The EU also has something similar to the Magnitsky Act called the Global Human
Rights Sanctions Regime, adopted on 7 December 2020. It allows the EU to impose
sanctions on those responsible for genocide, crimes against humanity and other seri-
ous human rights violations, such as torture, slavery, extrajudicial executions, arbitrary
arrests and detentions. Unauthorized persons are banned from entering the country,
funds and property are seized, and EU individuals and legal entities are prohibited from
financing them directly or indirectly.

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 For the first time, the EU imposed human rights sanctions on March 2, 2021 in con-
nection with the imprisonment of Russian opposition leader Aleksei Navalnyi, as well
as the suppression of further protests by imposing sanctions on Aleksandr Bastrykin,
Chairman of the Investigative Committee, Prosecutor General Igor Krasnov, National
Guard Chairman Viktor Zolotov and Aleksandr Kalashnikov, the Head of the Prison
Service.

This regime was applied for the second time on March 22, 2021, when sanctions
were imposed on 11 individuals and 4 legal entities involved in the persecution of
Uighurs in China, repressions in North Korea, extrajudicial executions in Libya,
South Sudan, and Eritrea, and torture of political opponents and LGBT persons in
Chechnya.

It is worth noting that Lithuania can become the "entry point" to the European Mag-
nitsky Act. In February 2021, the country announced that it was ready to invoke EU
sanctions against human rights violators in Crimea if Ukraine could provide relevant
evidence and lists of violators.

As prof. Ryngaert explained in an interview for this report, the Netherlands

became the key driver of the Magnitsky European Act. Prof. Ryngaert considers
the Netherlands and specifically the local left-liberal party D66, one of the most
"anti-Russian" countries in the EU.

Currently, sanctions under this regime are imposed as a result of a

unanimous decision of the foreign ministers of the 27 EU member states. However,
Heleen over de Linden, a Dutch lawyer and sanctions expert, noted in her interview
for the report that the European Commission has ambitions to simplify sanctions by
introducing a majority vote rather than adopting a unanimous decision. However,
according to prof. Ryngaert, this can be difficult as it will require changes to EU
regulations, which in turn will also require consensus.

Unlike other similar initiatives, the Magnitsky European Act does not provide for
penalties for corruption. However, this is likely to change: The European
Parliament’s resolution of 8 July 2021 calls on the Commission to extend its scope
to include the possibility of imposing sanctions on those who have committed
"corruption related to human rights violations." The parliamentarians also called
for allowing MEPs to propose to consider cases of human rights violations,
establish cooperation with the public sector and called for the introduction of
qualified majority voting. This shows that we can soon see an increase in the EU’s
power as a global player in the sanctions regime.

3.3.3. UK
In connection with its exit from the EU, in 2018 the United Kingdom adopted
its first unique sanctions program called the Sanctions and Anti-Money Laundering
Act 2018 (SAMLA). Although it was adopted to ensure the sustainability of UK
sanctions legislation after Brexit, it allows the country to go beyond EU sanctions. In
particular, it is becoming possible to introduce new sanctions that "promote respect
for democ-racy, the rule of law, and good governance." With the adoption of
SAMLA, the United Kingdom has developed new sanctions regimes, increased the
number of listed persons, and declared about its desire to outrun the EU in a
proactive response to global crises through sanctions.

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 CRIMEAN SANCTIONS:
VIOLATIONS, MONITORING,
AND ENFORCEMENT

In particular, on 6 July 2020, the United Kingdom for the first time imposed sanctions
against human rights violators under its own law in the form of the Global Regulations on
Human Rights Sanctions 2020 (GHRSC). These regulations are similar to the Magnitsky
Act in that they give the UK the right to unilaterally, without coordination with the UN and
the EU, impose sanctions for human rights violations by individuals and organizations.

Sanctions apply to persons who violate:

● the right to life;
● the right to freedom from torture or cruel, inhuman or degrading treatment or
punishment;
● the right to freedom from slavery, servitude or forced or compulsory labor.

Listed persons are not allowed to move funds through the UK’s banks, use its fi-
nancial system for profit, or enter the country. Violation of sanctions is considered a
criminal offense and shall be punishable by restriction of liberty for up to seven years
and/or a fine.

With the introduction of the GHRSC, sanctions were imposed on 49 persons: 25

Russian nationals involved in the death of Sergei Magnitsky, 20 Saudi officials
involved in the death of a journalist Jamal Khashogghi, two Myanmar generals in-
volved in violence against the Rohingya and other ethnic minorities, and two organi-
zations involved in North Korean labor camps. So far, the act has imposed sanctions
on 78 people, including four Chinese officials and one state-owned company. This is
the first time UK applied sanctions against China since 1989.

Additionally, on April 26, 2021, the United Kingdom adopted the Global Anti-Cor-
ruption Sanctions Regulations 2021 (GACSR), which expanded the UK’s sanction-
ing capacity by enabling for the first time sanctions against corruption, similar to the
United States and Canada. On the same day, the United Kingdom listed 14 Russian
nationals accused of corruption exposed by Sergei Magnitsky, three businessmen
from South Africa, three individuals from Latin America and one person from Sudan in-
volved in embezzlement. These sanctions have been welcomed by the United States
as promoting the US-UK partnership and strengthening cooperation and coordination
of human rights and anti-corruption initiatives such as the Magnitsky Act.

3.3.4. CANADA
Canada also has its own version of the Magnitsky Act called the Justice for Victims
of Corrupt Foreign Officials Act. This act allows for the imposition of sanctions on
foreign individuals (rather than legal entities, which is being discussed in connection
with the need to extend this Act) who have caused or been involved in extrajudicial
executions, torture, or similar gross violations of internationally recognized human
rights against activists, journalists, etc. In other words, the range of its categories of
victims is similar to the US Magnitsky Act. See the list of persons listed under this Act
by following the link. In particular, in 2017, the act imposed sanctions against officials
in South Sudan, Venezuela, and 30 Russian officials involved in Magnitsky’s assas-
sination and corruption he uncovered. In 2018, Canada imposed sanctions on human
rights violators in Myanmar and on Saudi nationals involved in the assassination of
journalist Jamal Khashoggi.

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 3.3.5. AUSTRALIA

In 2018, a bill similar to the Magnitsky Act was submitted to the parliament, but there
has been no vote on it yet. The United States and the public are currently pressuring the
country’s officials to implement the Act and demand more sanctions against China.

3.3.6. JAPAN
The talks about creation of the Japanese version of the Magnitsky Act that occur in
the wake of the country’s weak reaction to Russian aggression, began between the
mem-bers of the inter-party group called "Japanese Parliamentary Alliance on China
(JPAC)" and continued on January 27, 2021 when MPs discussed establishment of an
inter-party group to create a Japanese version of the Magnitsky Act. In particular, Yamao
Shiori from the opposition Democratic Party for the People noted that Japan is the only
G7 country that does not have such legislation. However, it is likely that if such an Act
is adopted, Japan will primarily cooperate with the United States on the adoption of
sanctions against China.

3.3.7. OTHER EXAMPLES OF MAGNITSKY LEGISLATION IN THE WORLD

In December 2016, Estonia was the first European country to adopt its version of the
Magnitsky Act - not as a separate law, but rather through the adoption of
amendments to the Article of the Law "On Compulsory Exit and Entry Ban" as follows:
if “there is in-formation or good reason to believe that a person has participated in or
contributed to a human rights violation in a foreign state that has resulted in the death
or serious harm to the health of another person; if the person contributed to the
unreasonable conviction of another person for political reasons."

In November 2017, a similar initiative was introduced by Lithuania through the adop-
tion of amendments to the "Law on the Legal Status of Foreigners": A person may be
blacklisted if there is information or serious grounds to suspect that a foreigner has been
involved in corruption offenses; m oney l aundering; v iolation o f h uman r ights, r esulting
in death, serious injury or unjustified c onviction o f t he p erson i n r espect o f w hom t he
violation was committed. The following year, a similar law was passed by Latvia. Kosovo
adopted its own Magnitsky Act in 2020.

In 2018, the bill adopting the Magnitsky Act was registered in the Moldovan parlia-
ment; it provides for sanctions against "persons who have committed or been involved in
human rights violations and especially serious acts of corruption that harm international
political and economic stability." However, it has not yet been adopted.

3.3.8. COORDINATION OF GLOBAL SANCTIONS UNDER THE MAGNITSKY

ACTS
It is becoming increasingly difficult to create global sanctions regimes within the UN
Security Council. Therefore, the coordinated application of human rights acts by the Unit-
ed States, Canada, the United Kingdom and the EU is a promising process. This allows
to multiply the deterrent and restrictive effect of sanctions. An example of the effective
application of sanctions is the coordinated imposition of sanctions against Chinese of-
ficials persecuting Uighurs, which was made in March 2021 by all countries armed
with the "Magnitsky Acts."

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