On Saturday, March 5, the Singapore government announced specific sanctions to be imposed against Russia. The Singaporean foreign minister explained in comments to Parliament that Singapore has taken this rare step to unilaterally impose sanctions in the absence of binding United Nations Security Council (UNSC) decisions or directions following Russia’s veto of a draft UNSC resolution related to Ukraine (which was co-sponsored by Singapore and 81 other UN member states).
The Singaporean sanctions are broadly categorized into two parts: (1) export controls on items that can be directly used as weapons to inflict harm on Ukrainians as well as items that can contribute to offensive cyberoperations and (2) financial measures targeted at designated Russian banks, entities, and activities in Russia and fundraising activities that benefit the Russian government, which extend to all financial institutions in Singapore. These two sanction categories are described in additional detail below.
(1) Export Controls
a) A ban is imposed on the transfer (including export, transit, and transshipment) to Russia of all items listed as “Military Goods” under Singapore’s Strategic Goods (Control) Order 2021 (SGCO) as well as all items under category codes “Category 3 – Electronics,” “Category 4 – Computers,” and “Category 5 – Telecommunications and Information Security” on the “List of Dual-Use Goods” under SGCO.
b) The SGCO may be found here.
(2) Financial Measures
a) There is a prohibition on entering into transactions or establishing business relationships with the following four Russian banks: (i) VTB Bank Public Joint Stock Company, (ii) the Corporation Bank for Development and Foreign Economics Affairs Vnesheconombank, (iii) Promsvyazbank Public Joint Stock Company, and (iv) Bank Rossiya (Designated Banks). For existing business relationships, all financial institutions must freeze any assets and funds of these Designated Banks.
b) There is a prohibition on providing financing or financial services in relation to the export from Singapore or any other jurisdiction of goods subject to Singapore’s export controls on Russia. These relate to the goods subject to export controls in (1).
c) There is a prohibition on providing financial services in relation to designated Russian nonbank entities involved in activities in (b). Details about the designation of these nonbank entities will be provided later.
d) There is a prohibition on entering into transactions or arrangements or providing financial services that facilitate fundraising by (i) the Russian government, (ii) the Central Bank of the Russian Federation, and (iii) any entity owned or controlled by them or acting on their direction or behalf. Notably, with respect to the foregoing entities, this prohibition applies to buying and selling new securities of theirs, providing financial services that facilitate new fundraising by them, and making or participating in making any new loan to them. The Singapore government and Monetary Authority of Singapore will also cease investing in newly issued securities of the foregoing entities.
e) There is a prohibition on entering into transactions or providing financial services in relation to the following sectors in the breakaway regions of Donetsk and Luhansk: (i) transport; (ii) telecommunications; (iii) energy; and (iv) prospecting, exploration, and production of oil, gas, and mineral resources.
f) There is a prohibition on entering into or facilitating any transactions involving cryptocurrencies, to circumvent any of the above prohibitions in (a) to (e). This prohibition covers all transactions that involve cryptocurrencies and extends to the payment and settlement of transactions that relate to digital assets (including nonfungible tokens).
The sanctions landscape is continuing to evolve in Singapore and the rest of Asia. It is worth noting that U.S. Attorney General Merrick B. Garland announced a new interagency task force called Task Force Kleptocapture. The task force’s mission is to enforce the sanctions issued by the United States and its allies.
Companies should closely monitor the evolving international landscape of sanctions related to Russia’s actions in the Ukraine and reach out to legal counsel with any questions about compliance.
On March 14, 2022, the Monetary Authority of Singapore issued two additional notices to financial institutions that provide additional detail about the scope of the sanctions against Russia, as well as obligate financial institutions to self-report potential violations and possession of prohibited assets.
MAS Notice SNR-N01 echoes the financial measures imposed by Singapore against Russia, and mandates all financial institutions (including banks, finance companies, insurers, capital markets intermediaries, securities exchanges, payment service providers, and digital payment token service providers) to comply with these measures, whereas MAS Notice SNR-N02 sets out the categories of payments and transactions that are excluded from the scope of MAS Notice SNR-N01.
In addition to iterating the financial measures that all financial institutions are to comply with, MAS Notice SNR-N01 further obligates all financial institutions to “immediately inform” the MAS should they have any information about any prohibited transactions or activities, or has in their possession, custody, or control in Singapore of any funds, financial assets, or economic resources owned or controlled (directly or indirectly) by any Designated Banks or Designated Entities as defined by the Act.