Special economic and coercion measures were mentioned in Russian legislation in 2006 with the adoption of Federal Law No 281-FZ “On Special Economic Measures and Coercion Measures” dated 30 December 2006 (“Law”).
Special economic measures are applied when a set of circumstances arise that require an immediate response to an internationally unlawful act or unfriendly action by a foreign state or its bodies and officials that threatens the interests and security of the Russian Federation and (or) violates the rights and freedoms of its citizens1.
1 February 2024 several amendments to the Law, adopted by Federal Law No 422-FZ “On Amendments to Certain Legislative Acts of the Russian Federation” dated 3 August 2023, will come into force. Below we describe the most important amendments to one of the first counter-sanctions laws of the Russian Federation.
1. Clarified the definition of special economic measures2
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Old version |
New version |
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Special economic measures include prohibition of actions by foreign states and (or) foreign organizations and individuals, as well as individuals without citizenship permanently residing in the territory of a foreign state, and (or) imposition of obligation to perform the specified actions and other restrictions. |
Special economic measures include prohibition to perform actions by the blocked entities and (or) impose the obligation to perform the actions, as well as restrictions established by the legislation of the Russian Federation. |
This Law also introduces the term “blocked persons”, which means:
- foreign states, and (or) foreign organizations, and (or) foreign citizens, and (or) stateless individuals;
- legal entities controlled by foreign organizations, and (or) foreign citizens, and (or) stateless individuals (legal entities in which 50% or more of the votes in the supreme body belong to a foreign person)3.
Previously, the subjects to which special economic measures could be applied included only foreign States, entities and individuals. In the new version, they will also include Russian legal entities controlled by them.
2. Introduced a new special economic measure4
Under the Law there is a list of special economic measures that may be applied to blocked persons. For example, suspending implementation of all or part of the programs in the field of economic, technical assistance, as well as programs in the field of military-technical cooperation, or prohibiting or imposing restrictions on foreign economic transactions, and others. Amendments introduce a new measure:
- prohibition (restriction) of financial transactions with respect to blocked persons and (or) freezing (blocking) of monetary funds and (or) other property belonging to blocked persons, as well as financial transactions carried out in the interests and (or) in favor of blocked persons.
Freezing of the blocked person's property shall mean prohibition to conduct transactions with cash, securities and (or) other property belonging to the blocked person, as well as financial transactions made in the interests and (or) in favor of the blocked person.
In this case, the blocked person shall have the right to:
- receive funds to his accounts, receive and spend pensions, scholarships, allowances, social payments and other payments, as well as make payments of taxes, fees, insurance premiums, penalties, fines, interest;
- receive wages and spend them in an amount not exceeding 10 thousand rubles per month per each member of his family, as well as pay for medical services in an amount not exceeding 10 thousand rubles per month per each member of his family;
- to pay wages in an amount not exceeding the minimum wage, to make payments aimed at compensating for damage caused to the life or health of a citizen, and compensation for damage in connection with the death of the breadwinner5.
The obligation to freeze the property of the blocked person is imposed on organizations that carry out transactions with cash and (or) other property, such as credit organizations, professional participants of the securities market (except for professional participants of the securities market engaged exclusively in investment advisory activities) and others. Control over the implementation of this special economic measure is exercised by the Bank of Russia.
1 Paragraph 2 of Article 1 of Federal Law No. 281-FZ “On Special Economic Measures and Coercive Measures” dated 30 December 2006
2 Article 9 of Federal Law No. 422-FZ “On Amendments to Certain Legislative Acts of the Russian Federation” dated 3 August 2023
3 Article 9 of Federal Law No. 422-FZ “On Amendments to Certain Legislative Acts of the Russian Federation” dated 3 August 2023
4 Article 9 of Federal Law No. 422-FZ “On Amendments to Certain Legislative Acts of the Russian Federation” dated 3 August 2023
5 Article 9 of Federal Law No. 422-FZ “On Amendments to Certain Legislative Acts of the Russian Federation” dated 3 August 2023