Consolidated version on the implementation of Council Regulation No 833/2014 and Council Regulation No 269/2014 [Version of 7 July 2023]

The EC has published an updated consolidated version of its FAQs on the implementation of Council Regulation No 833/2014 and Council Regulation No 269/2014 in light of the ongoing conflict in Ukraine. The consolidated version includes FAQs concerning EU sanctions adopted following Russia’s military aggression against Ukraine.
Below we would like to present the new and amended questions in full, quote:
Section C „Finance and Banking.“, topic 4 „CENTRAL BANK OF RUSSIA“ (starting on page 54)
New Question 8 (p. 56) Should the securities issued by Russian entities and owned by EU persons be reported?
Answer: No. The reporting required under article 5a(4a) of Reg.833/2014 is on assets of the Russian Central Bank and of legal person, entity or body acting on its behalf or at its direction.
For instance, a bond issued by a Russian entity and owned by a client of a EU-based entity does not have to be reported by this entity. If such bond is frozen because its owner is designated under Regulation (EU) No 269/2014, the relevant reporting foreseen under Reg.269/2014 should apply.
New Question 9 (p. 56) Should operators that have not immobilised any CBR assets submit nil reports?
Answer: No. Only operators that have actually immobilised CBR assets have to report them.
New Question 10 (p. 56) Can the three monthly update be aligned with usual quarterly updates regarding the value date for the reported CBR assets?
Answer: Yes. In line with FAQ 6, it is advised to align the three-monthly update with standard quarterly updates. Similar to the first two week transmission period for the first report, subsequent updated reports should be transmitted within two weeks of the end of the quarter.
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Section D „TRADE AND CUSTOMS.“, topic 2 „EXPORT-RELATED RESTRICTIONS FOR DUAL-USEGOODS AND ADVANCED TECHNOLOGIES“ (starting on page 122)
Amended Question 1 (p. 122) What is the purpose of this Guidance and how do the new export restrictions in the Sanctions Regulation relate to existing sanctions against Russia?
Answer: Council Regulation (EU) 2022/328 of 25 February 2022 , Council Regulation (EU) 2022/345 of 1 March 2022, Council Regulation (EU) 2022/394 of 9 March 2022, Council Regulation (EU)2022/428 of 15 March 2022, Council Regulation (EU) 2022/576 of 8 April 2022, Council Regulation (EU) 2022/879 of 3 June 2022, Council Regulation (EU) 2022/1269 of 21 July 2022, Council Regulation (EU) 2022/1904 of 6 October 2022, Council Regulation (EU) 2022/2474 of 16 December 2022 and Council Regulation (EU) 2023/427 of 25 February 2023 build on, and expand, the EU restrictive measures (sanctions) in form of export restrictions under the Sanctions Regulation.
This Guidance aims at supporting competent authorities and stakeholders, including exporters, in the implementation of the export restrictions introduced in Articles 2, 2a and 2b and the related provisions in Articles 1, 2c and 2d of the Sanctions Regulation, without prejudice to that regulation or of other regulations.
Amended Question 47 (p. 144) How does the EU ensure and verify that EU exports of items covered by the Sanctions Regulation to third countries are not re-exported to Russia?
Answer: EU operators should have in place adequate due diligence procedures to ensure that their exports of covered items are not diverted to Russia. This could include, for instance, contractual clauses with their third-country business partner giving rise to liability in case the latter re-exports the items to Russia, as well as ex post verifications. It is for Member States to implement and enforce sanctions. The Commission monitors sanctions’ implementation and enforcement by Member States. If a covered item exported from the EU to a third country is re-exported to Russia, the competent authorities may consider the EU exporter’s failure to conduct adequate due diligence as a breach of the Sanctions Regulation. If the EU exporter knowingly and intentionally fails to conduct such due diligence, this can beconsidered as participation in a circumvention scheme.
Moreover, the Commission services, in coordination with international partners, have identified a number of dual-use goods and advanced technology items whose export to Russia is prohibited under Regulation 833/2014 used in Russian military systems found on the battlefield in Ukraine or critical to the development, production or use of those Russian military systems. These items include electronic components such as integrated circuits and radio frequency transceiver modules, as well as items essential for the manufacturing and testing of electronic components of printed circuit boards retrieved from the battlefield.
These battlefield items have been grouped into a list of High-Priority Battlefield Items, which can be found in Annex II to this FAQ. The List may support due diligence and effective compliance by exporters and targeted anti-circumvention actions by customs and enforcement agencies of partner countries determined to prevent that their territories are being abused for circumvention of EU sanctions purposes.
Amended Question 53 (p. 146) Who are the partner countries and what benefits do they enjoy pursuant to the Regulation?
Answer: United Kingdom, South Korea, Australia, Canada, New Zealand, Norway and Switzerland. The Commission will keep reviewing the measures adopted by third countries and maintaining close contacts with them with a view to ensuring effective sanctions.
The concept of “partner country” has several dimensions related to Articles 2 and 2a of the Sanctions Regulation:
Firstly, entities owned or controlled by an undertaking of a partner country are eligible for the same exception as those owned or controlled by an undertaking of a Member State. As a result, Member States may authorise the sale, supply, transfer or export of covered goods and technology or the provision of related technical or financial assistance to these undertakings, provided that it is not intended for military use or for a military end user.
Secondly, Member States may authorise the sale, supply, transfer or export of covered goods and technology, or the provision of related technical or financial assistance intended for the diplomatic representations of partner countries located in Russia.
Thirdly, the EU will exchange information with partner countries, where appropriate, and on the basis of reciprocity, with a view to supporting the effectiveness of export restrictions under the Sanctions Regulation and the consistent application of export restriction measures applied by partner countries.
Amended CORRELATION TABLE (ANNEX VII) (p. 149) [Access here]
Amended Annex II – List of High Priority Battlefield Items (p. 149-153)
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Section G „SECTOR SPECIFIC QUESTIONS.“, topic 11 „INTELLECTUAL PROPERTY RIGHTS“ (starting on page 307)
Amended Question 14 (p . 314) Is the sale, licensing or transfer in any other way of IPRs or trade secrets as well as granting rights to access or re-use any material or information protected by means of IPRs or constituting trade secrets allowed for the use in relation to goods or technology that are subject to certain restrictions under Council Regulation 833/2014?
Answer: No, unless an exception applies. Articles 2(2)(c), 2a(2)(c), 2aa(2)(c), 3(2)(c), 3b(2)(c), 3c(4)(c), 3f(2)(c), 3h(2)(c) and 3k(2)(c) of Council Regulation 833/2014 prohibit the sale, licensing or transfer in any other way of IPRs or trade secrets as well as granting rights to access or re-use any material or information protected by means of IPRs or constituting trade secrets, if used in relation to goods and technology referred to in those Articles. These restrictions apply irrespective of whether the IPR or the trade secret is registered before an intellectual property office in the EU, in a Member State or in a third country or otherwise protected under EU law, a Member State’s law or a third country’s law. Thisis because the sale, licensing or transfer in any other way, as well as the granting of rights to access or re-use per se is prohibited. Similarly, the above also applies in cases of IPRs or trade secrets being sold, licensed or transferred in any other way, as well as rights being granted access or re-use them outside the territory of the EU or being granted to a person who is not required to comply with Council Regulation 833/2014 as per Article 1351, whenever that is related to the relevant goods and technology and to the provision, manufacture, maintenance and use of those goods and technology, directly or indirectly to any natural or legal person, entity or bodyin Russia or for use in Russia.
By way of example, the restrictions at hand encompass the following situations:
selling trade marks or patents52 as well as sharing a trade secret with a third country operator while knowing, suspecting or accepting the risk53 that those IPRs or trade secrets will be used to manufacture restricted goods destined for Russia or to be affixed on restricted technology or goods that will be exported to Russia;
granting access to data covered by copyright to obtain regulatory registrations or any other licenses, including in third countries, to manufacture restricted technology or goods which will be used in Russia54.
The terms ‘intellectual property rights’ in Articles 2(2)(c), 2a(2)(c), 2aa(2)(c), 3(2)(c), 3b(2)(c), 3c(4)(c), 3f(2)(c), 3h(2)(c), 3k(2)(c), Council Regulation 833/2014 must be understood in a broad sense, in particular encompassing trademarks, designs, patents, copyrights, or utility models.
The terms ‘trade secrets’ in Articles 2(2)(c), 2a(2)(c), 2aa(2)(c), 3(2)(c), 3b(2)(c), 3c(4)(c), 3f(2)(c), 3h(2)(c), 3k(2)(c) of Council Regulation 833/2014 must be understood as per the definition of Article 2(1) of Directive (EU) 2016/943. In essence, trade secrets are valuable pieces of information for an enterprise that is treated as confidential and that gives that enterprise a competitive advantage because it is secret. That includes a wide range of know-how and business information, such as early-stage inventions, manufacturing processes, precise tonnages manufactured, links between manufacturers or importers and their distributors or downstream users including lists of suppliers and clients, the precise use, function or application of a chemical, details of full compositions of mixtures (recipes or chemical compounds), insofar as the criteria of Article 2(1) of Directive (EU) 2016/943 are met. Subsidiaries of EU parent companies incorporated under the law of a third country are not bound by the restriction at hand. However, EU parent companies cannot use those subsidiaries to circumvent the obligations that apply to the EU parent, for instance by transferring IPRs to them so that they can transfer them in violation of the aforementioned provisions.
Last, it is to be noted that Article 10 of Council Regulation 833/2014 establishes that actions by natural or legal persons, entities or bodies shall not give rise to liability of anykind on their part, if they did not know, and had no reasonable cause to suspect, that their actions would infringe the measures set out in that Regulation.
Amended Question 20 (p. 316) What is the responsibility of a person required to comply with Articles2(2)(c), 2a(2)(c), 2aa(2)(c), 3(2)(c), 3b(2)(c), 3c(4)(c), 3f(2)(c), 3h(2)(c), 3k(2)(c) of Council Regulation 833/2014 if the buyer, the licensee or the person that whatsoever benefits from/received the relevant IPRs or trade secrets, uses them on goods or technology in breach of Council Regulation(EU) 833/2014?
Answer: According to Answer to Q.24, Section D.2 of the Russia Sanctions FAQs “it is for the EU Company to ensure that the provision of services in question is not related to the sanctioned good or to the provision, manufacture, maintenance and use of this sanctioned good.”In the event that a company required to comply with Council Regulation (EU) 833/2014 as per Article 13 thereof (‘obliged person’), sells, licenses or transfers in any other way IPRs or trade secrets, or grants rights to access or re-use any material or information protected by means of IPRs or constituting trade secrets to a person, including in a third country, that uses them in relation to goods or technology sold, transferred, exported or supplied in breach of Council Regulation (EU) 833/2014, the relevant NCA should assess the company’s responsibility in lights of Article 10 of Council Regulation (EU) 833/2014, whereby actions by natural or legal persons, entities or bodies shall not give rise to liability of any kind on their part if they did not know, and had no reasonablecause to suspect, that their actions would infringe the measures set out in this Regulation. This entails that the obliged person has to take appropriate actions to ensure that the buyer, the licensee or the persons that whatsoever benefits from/received the relevant IPRs or trade secrets will not use them in relation to the restricted goods or technology for prohibited actions. This may include contractual arrangements, verifications on the use of the IPRs or trade secrets by the licensee, investigations and due diligence on the reliability of the latter (including online). It is for the obliged person to assess whether and what type of due diligence is necessary on the basis of the risk assessment and risk management (e.g. high risk or low risk that the licensee might, willingly or negligently use the IPRs or trade secrets in breach of Council Regulation (EU) 833/2014). The obliged person must also comply with Article 12 of Council Regulation (EU) No 833/2014, which provides that it is prohibited to participate, knowingly and intentionally, in activities the object or effect of which is to circumvent prohibitions of that Regulation. See also section A.2 of these FAQs, Circumvention and Due Diligence.