Commercial & Business, Insights, Law Changes

Russia Sanctions Now In Effect

On Friday 18 March, the first slew of sanctions made under the Russia Sanctions Act 2022 came into effect, through the Russian Sanctions Regulations 2022. Businesses that have any dealings with Russian companies or black-listed individuals will have to review their arrangements to ensure they are compliant with the new regulations. Here we outline the sanctions regime so you may have a good idea of what to do and what to look out for.

The regulations prescribe a list of sanctioned persons. There are four key sanctions relating to such persons:

  • Sanctioned persons are not permitted to travel to, enter or remain in New Zealand unless they are a New Zealand citizen or hold a residence class visa.
  • Ships and aircraft owned or controlled by Russian or Belarussian governments or militaries, or sanctioned persons are prohibited from entering New Zealand ports. This does not include New Zealand owned ships.
  • New Zealand persons must not deal with any restricted assets. Restricted assets include those owned or controlled by sanctioned persons, as well as related securities.
  • New Zealand persons must not deal with services provided by any sanctioned person, or with any services that are provided to, or for the benefit of, sanctioned persons.

There are a variety of exemptions available, most of which permit New Zealand persons to continue to hold, receive, use, buy or sell restricted assets where their relationship to those assets predates the imposition of sanctions (in certain circumstances). Persons may also apply to the Minister of Foreign Affairs for an exemption from a sanction if it is based on humanitarian need or for “any other reason”.

MFAT is required to maintain a public online register of all sanctions and exemptions. However, failure to publish a sanction will not render the sanction invalid or unenforceable.

The regime also includes a duty to report suspicions for designated “duty holders”. This includes AML/CFT Reporting Entities and other persons prescribed by regulation. Duty holders must file a report with the Commissioner of Police when they suspect on reasonable grounds that they are in possession or immediate control of assets that may be sanctioned assets or assets owned or controlled, directly or indirectly, by a sanctioned person. They must also report dealings with any sanctioned services or services conducted in relation to a sanctioned person.

New Zealand businesses should now check existing customers, business partners, and activities against the designations listed by the sanction regulations. If you would like assistance in ensuring your compliance with the sanction regime, please contact us.