European Union adopts new sanctions regime due to political situation in Moldova

On 28 April 2023, the European Union introduced a new sanctions regime against Moldova concerning, as the EU claims, “restrictive measures in view of actions destabilising the Republic of Moldova” (“Sanctions Regime”).

The Sanctions Regime was imposed by EU Council Decision 2023/891 of 28 April 2023Council Decision (CFSP) 2023/891 of 28 April 2023 concerning restrictive measures in view of actions destabilising the Republic of Moldova and EU Council Regulation 2023/888 of 28 April 2023Council Regulation (EU) 2023/888 of 28 April 2023 concerning restrictive measures in view of actions destabilising the Republic of Moldova.

We recall that the EU Council granted EU member candidate status to Moldova on 23 June 2022. The EU has now decided to introduce the Sanctions Regime in connection with the stated objectives of “strengthening the stability and security of the external borders of the EU”.

Measures taken under the Sanctions Regime

The Sanctions Regime imposes blocking sanctions against persons listed in Annex 1 to EU Council Decision 2023/891 of 28 April 2023 and Council Regulation 2023/888 of 28 April 2023 (“Designated Persons”).

As of the date of this information letter, no person has been designated. However, given the existence of the new sanctions regime, the imposition of sanctions, including against Russian natural and legal persons, is highly likely.

Blocking sanctions include:

• freezing all assets of a Designated Person;
• prohibiting the provision of any economic means to a Designated Person; as well as
• a prohibition on entry into the EU.

The competent authorities of the EU member states may, on an exceptional basis, issue licences to unfreeze blocked funds or economic resources, and allow economic means to be made available to a Designated Person if the competent authorities consider that this is necessary to:

• meet the basic needs of Designated Persons and their dependent family members (food, rent or mortgage payments, medicine and medical treatment, taxes, insurance premiums, utility bills);
• pay reasonable fees or reimburse expenses related to the provision of legal services;
• pay fees for the regular safekeeping or maintenance of frozen funds or economic resources;
• pay extraordinary expenses (provided that the competent authority of the EU member state has notified the other competent authorities and the European Commission); or
• make payments to or from the account of a diplomatic or consular mission or an international organisation enjoying immunity under international law insofar as such payments are intended for use for official purposes of the diplomatic or consular mission or international organisation.

The Sanctions Regime provides for the possibility to unfreeze blocked funds and economic resources in order to enforce a court, administrative decision or an arbitral award, as well as an obligation assumed by a Designated Person, provided certain conditions are met.

The prohibition to provide economic resources to a Designated Person does not apply if they are provided by organisations and institutions with EU pillar-assessed status and with which the EU has signed a financial partnership framework agreement under which the organisations and institutions act as humanitarian partners of the EU, provided that the provision of such funds or economic resources is necessary solely for humanitarian purposes in Moldova.

The EU Council stresses that the EU will encourage third countries to adopt similar sanctions.

Criteria for blocking sanctions

The Sanctions Regime allows the EU to impose blocking sanctions against

• natural or legal persons responsible for supporting or implementing actions which “undermine or threaten the sovereignty and independence of the Republic of Moldova, or democracy, the rule of law, the stability or security in the Republic of Moldova” through any of the following actions:
• “obstructing or undermining the democratic political process, including by obstructing or seriously undermining the holding of elections or attempting to destabilise or overthrow the constitutional order”;
• “planning, directing, engaging in, directly or indirectly, supporting or otherwise facilitating violent demonstrations or other acts of violence”; or
• “serious financial misconduct concerning public funds and the unauthorised export of capital”; and
• natural or legal persons, organisations or bodies associated with the abovementioned persons, organisations or bodies.

Meaning of the Sanctions Regime

The adoption of the Sanctions Regime means a broader range of grounds on which the EU can impose sanctions, including on Russian citizens and legal entities.

Previously, in our experience, in addition to the Russian sanctions regime, it was often important to consider the sanctions regime against Belarus. For example, the EU imposed sanctions on some Russian citizens not under the Russian but under the Belarusian sanctions programme.

Now, when assessing sanctions risks, it is necessary to take into account the existence of an additional Sanctions Regime.