The G7 Summit unveils new sanctions against Russia

Last week, the G7 counties announced new sanctions against Russia at the G7-Summit which took place in Japan. The new round of sanctions aims to reaffirm world powers’ resolution in an effort to support Ukraine in the ongoing war.

According to Reuters, the latest sanctions were meant to limit Russia's access to materials needed for the battlefield, to close existing loopholes used to evade sanctions and further reduce international reliance on Russian energy, and to narrow Moscow's access to the international financial system. According to a U.S. official, Washington would take significant steps to align its actions closely with the EU and U.K. to ensure that the G7 remained as coordinated as possible in response to "Russia's brutal actions”.

Banning Russian diamonds and targeting major gold miners

Reuters reported that the U.K. published plans to ban imports of Russian diamonds, copper, aluminium and nickel and further announced new sanctions against Russia which are set to target firms that are connected to the suspected theft of Ukrainian grain. The additional sanctions are expected to only have a muted impact as Russian exports of the mentioned commodities to the U.K. have already dropped after the imposition of tariffs.

Since Russia is one of the world’s largest producers of gold, the U.S. also introduced sanctions on gold producer Polyus?(PLZL.MM)?and the Russian business of its peer, Polymetal?(POLYP.L), which would reduce Russian gold sales even further. Reuters noted that the latest U.S. sanctions only target the Russia-based part of Polymetal - Polimetall AO and do not apply to the parent company, Polymetal International PLC, which is based on Jersey island and owns assets in Kazakhstan.

Added to this, the U.K. will also target “shady individuals and entities” that are connected to the theft and resale of Ukrainian grain. However, targeting entities involved in grain trading is unusual because such activities are normally connected to humanitarian exemptions.

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Targeting future energy revenues and military-industrial supply chains

With the newly announced sanctions which is aimed at more than 300 targets, Reuters quoted U.S. Treasury Department Secretary Janet Yellen saying that "The latest actions will further tighten the vise on Putin’s ability to wage his barbaric invasion and will advance our global efforts to cut off Russian attempts to evade sanctions."

Also, U.S. Secretary of State, Antony Blinken stated that the new sanctions are focused on international networks that procure components for the Russian-based entity responsible for the manufacturing of the Orlan drone, which Russian forces and their proxies are using in Ukraine. Reuters reported that a joined investigation?between the news outlet and iStories, a Russian media house, in collaboration with the Royal United Services Institute, a defense think tank in London, uncovered a logistical trail last year that spans the globe and ends at the Orlan's production line, the Special Technology Centre in St. Petersburg, Russia. The investigation uncovered that among the most important suppliers to Russia's drone programme has been a Hong Kong-based exporter, Asia Pacific Links Ltd, which was also targeted by Washington on Friday, as well as the imports firm SMT iLogic.

According to Reuters, the U.S. Treasury Department indicated that it imposed sanctions on 22 people and 104 entities with touchpoints in over 20 countries or jurisdictions, including firms that import, manufacture or ship electronics components, semiconductors and microelectronics to Russia. Furthermore, the Treasury Department also stated that it was imposing sanctions on Russia’s energy educational and research institutions in a bid to “limit Russia’s future extractive capabilities” by targeting the training grounds for Russia’s future energy specialists, and sites where new extraction technologies are developed. Reuters noted that the Biden administration also halted the export of a wide range of consumer goods to Russia last week and added 71 firms?to the Commerce Department's list that bars suppliers from selling U.S. technology without a hard-to-obtain license.

A former State Department coordinator for sanctions policy, Dan Fried, stated that the latest sanctions were a broad and impactful sanctions package, but that further action could still be taken, including additional sanctions on banks and a reduction of the oil price cap.

Lysis Group has the expertise and infrastructure to assist global firms

With the latest, more coordinated sanctions imposed on 22 people and 104 entities with touchpoints in over 20 countries or jurisdictions, it is bound to have a ripple effect and impact firms across the globe which is why having a holistic client view has never been more important.

Also, with the newly imposed sanctions, there will be an increased focus from regulators on the quality of firms’ customer and payment screening and due diligence with very little room for leniency which amplifies the need for expert intervention. This also highlights the need for firms to review and refine their existing Anti-Money Laundering (AML) screening and monitoring technologies.

Lysis Group has the expertise and processes to review firms’ existing measures against sanctions and advise if improvements are needed. Secondly, Lysis is geared to manage firms’ business operations by providing trained analysts that can screen and flag suspicious transactions on their behalf.

Our managed service platform for initial screening and on-going monitoring requirements is in a league of its own.?All our staff are experienced in AML, Know Your Client (KYC) and other financial crime requirements. Using industry leading software partners, Lysis can also screen legal entities and individuals against all global watch lists and sanction lists, either in bulk or individually.