EXPERT ADVICE NAVIGATING AND MANAGING BUSINESS RISKS WHEN

EXPERT ADVICE NAVIGATING AND MANAGING BUSINESS RISKS WHEN DOING BUSINESS INTERNATIONALLY Kaspars Frīdenbergs-Ansbergs Riga, March 13, 2019

AGENDA 1 Different regimes 2 Types of sanctions 3 Sanctions against Russia 4 Sanctions law 5 Contacts

– UN sanctions – EU sanctions – National sanctions – Sanctions of NATO member states – Sanctions imposed by the USA © Rödl & Partner SANCTION REGIMES VALID IN LATVIA 4

– 14 regimes – States and terrorist organizations (Al-Qaeda, DPRK, Lybia, Sudan, etc. ) © Rödl & Partner UN SANCTIONS https: //www. un. org/securitycouncil/ 5

– Same regime as UN, additionally Syria, Ukraine, specific terrorists, and chemical weapons sanctions – Sanctions against Russia © Rödl & Partner EU SANCTIONS https: //www. sanctionsmap. eu/#/main 6

– Sanctions against specific persons from DPRK © Rödl & Partner NATIONAL SANCTIONS https: //www. mfa. gov. lv/arpolitika/par-eiropas-savienibas-ierobezojosiempasakumiem/nacionalas-sankcijas 7

– Effective in Latvia in relation to procurement procedures and financial transactions; – Sanction list can be found at https: //www. treasury. gov/resourcecenter/sanctions/Pages/default. aspx © Rödl & Partner SANCTIONS IMPOSED BY THE USA – Also important: US oligarch list (https: //www. scribd. com/document/370313106/2018 -01 -29 -Treasury-Caatsa-241 -Final#from_embed) – No sanctions yet against these persons; however, transactions with these entities or individuals may be considered as high risk transaction. 8

© Rödl & Partner 2. TYPES OF SANCTIONS 9

– Banning travel to and from the EU – Individuals may be banned from entering certain states by their home countries © Rödl & Partner TRAVEL BANS 10

– Freezing of money – Investment ban – Freezing of assets © Rödl & Partner FINANCIAL (ASSET) RESTRICTIONS Control institutions: – FCMC (http: //www. fktk. lv/) – AML Authority (http: //www. prokuratura. gov. lv/lv/kontakti/kontrolesdienests) – SRS (https: //www. vid. gov. lv/) – CRPC (http: //www. ptac. gov. lv/en) 11

– Weapons embargoes – Ban or control of export of certain types of goods, or technologies – Import, export bans – Service bans © Rödl & Partner TRADE EMBARGOES – Main institution: Ministry of Foreign Affairs of the Republic of Latvia (https: //www. mfa. gov. lv/arpolitika/drosibas-politika/strategiskas-nozimesprecu-kontrole) 12

© Rödl & Partner 3. SANCTIONS AGAINST RUSSIA 13

– Diplomatic measures – Asset freezing and visa bans – Restrictions for Crimea – Economic sanctions © Rödl & Partner TYPES 14

– A ban on imports of goods originating in Crimea or Sevastopol unless they have Ukrainian certificates – No investing in Crimea – No tourism services in Crimea – Goods and technology for the transport, telecommunications and energy sectors or the exploration of oil, gas and mineral resources may not be exported to Crimean companies or for use in Crimea – Technical assistance, brokering, construction or engineering services in the same sector must not be provided © Rödl & Partner CRIMEA 15

– EU nationals and companies may no longer buy or sell new bonds, equity or similar financial instruments with a maturity exceeding 30 days, issued by: © Rödl & Partner ECONOMIC SANCTIONS I – five major state-owned Russian banks (SBERBANK, VTB BANK, GAZPROMBANK, VNESHECONOMBANK (VEB), ROSSELKHOZBANK) – three major Russian energy companies (ROSNEFT, TRANSNEFT, GAZPROM NEFT) – three major Russian defense companies (OPK OBORONPROM, UNITED AIRCRAFT CORPORATION, URALVAGONZAVOD) 16

– Embargo on the import and export of arms and related material from/to Russia, covering all items on the EU common military list, with some exceptions – Prohibition on exports of dual use goods and technology for military use in Russia or to Russian military end-users, including all items in the EU list of dual use goods. Export of dual use goods to nine mixed end-users is also banned – Additional restrictions for following companies: – – – – – © Rödl & Partner ECONOMIC SANCTIONS II JSC Sirius OJSC Stankoinstrument OAO JSC Chemcomposite JSC Kalashnikov JSC Tula Arms Plant NPK Technologii Maschinostrojenija OAO Wysokototschnye Kompleksi OAO Almaz Antey OAO NPO Bazalt 17

– Exports of certain energy-related equipment and technology to Russia are subject to prior authorization by competent authorities of Member States. – The following services necessary for the abovementioned projects may not be supplied: drilling, well testing, logging and completion services and supply of specialized floating vessels. © Rödl & Partner ECONOMIC SANCTIONS III 18

– Dual-use goods: © Rödl & Partner ECONOMIC SANCTIONS IV http: //trade. ec. europa. eu/doclib/docs/2015/october/tradoc_153894. pdf – Oil and gas goods https: //eur-lex. europa. eu/legal-content/EN/TXT/HTML/? uri=CELEX: 02014 R 0833 -20171202&from=EN 19

– Subjects: financial institutions, tax and legal consultants, real estate agents, other credit institutions – Law On International Sanctions and National Sanctions of the Republic of Latvia © Rödl & Partner INTERNAL PROCEDURES (outdated translation: https: //likumi. lv/ta/en/en/id/280278 -law-on-international-sanctions-and-national-sanctions-of -the-republic-of-latvia) – KYC, risk assessment, UBOs, etc… – Internal procedures 21

– https: //www. sanctionsmap. eu/#/main – https: //sanctionssearch. ofac. treas. gov/ – https: //www. un. org/securitycouncil/ – http: //sankcijas. kd. gov. lv/ – https: //www. mfa. gov. lv/arpolitika/par-eiropas-savienibas-ierobezojosiempasakumiem/ © Rödl & Partner WHERE TO FIND THEM 22

– Contact the Ministry of Foreign Affairs and ask – Be wary of certain regions – Finding out your client’s shareholders, and/or managers can be really hard – Remember that Russian companies are sometimes part of large holdings, therefore, technically connected with person on a sanctions list (or on the US ‘oligarch list’) – Ask your bank whethere any risks associated with certain transactions © Rödl & Partner BUT IN REALITY 23