Knowledge Highlights 8 March 2022
On 5 March 2022, Singapore’s Ministry of Foreign Affairs (“MFA”) issued a statement outlining the sanctions and restrictions it will impose against Russia in response to its invasion of Ukraine. The sanctions and restrictions comprise (1) export controls on items that can be directly used as weapons to inflict harm on or to subjugate the Ukrainians, and items that can contribute to offensive cyber operations, and (2) financial measures targeted at designated Russian banks, entities and activities in Russia, and fund-raising activities benefiting the Russian government. These measures aim to constrain Russia’s capacity to conduct war against Ukraine and undermine its sovereignty.
This development follows the announcement in Parliament on 28 February 2022 by Singapore’s Minister for Foreign Affairs that Singapore will act in concert with other like-minded countries to impose appropriate sanctions and restrictions against Russia, given Russia’s veto against the United Nations Security Council resolution condemning Russia’s aggression against Ukraine and the unprecedented gravity of Russia’s attack on Ukraine.
In its statement, MFA said that Russia’s invasion of Ukraine contravenes the United Nations Charter and is a clear and gross violation of international law. While Singapore continues to value good relations with Russia and the Russian people, the Russian government’s violation of the sovereignty and territorial integrity of another sovereign State cannot be accepted.
Details on the specific measures are set out below.
Singapore’s strategic goods control system regulates the transfer (export, transit and transshipment) of strategic goods which are generally military weapons or their parts, as well as high technology goods which could be used for both commercial and military purposes. Items subject to strategic goods control are listed in the Strategic Goods (Control) Order 2021 (“SGCO”).
In order to constrain Russia’s capacity to conduct its war in Ukraine and cyber aggression, all permit applications to Russia involving (1) all items on the List of Military Goods under the SGCO, and (2) all category codes under Category 3 (Electronics), Category 4 (Computers) and Category 5 (Telecommunications and “Information Security”) on the List of Dual-Use Goods under the SGCO, will be rejected. The descriptions of the items in the affected category codes are set out in the SGCO.
The Singapore government will impose financial measures targeted at designated Russian banks, entities and activities in Russia, and fund-raising activities benefiting the Russian government. Digital payment token service providers will be specifically prohibited from facilitating transactions that could aid the circumvention of the financial measures.
These measures apply to all financial institutions in Singapore, including banks, finance companies, insurers, capital markets intermediaries, securities exchanges and payment service providers.
Financial institutions in Singapore will be prohibited from the following:
(a) Entering into transactions or establishing business relationships with the following Russian banks:
- VTB Bank Public Joint Stock Company;
- The Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank;
- Promsvyazbank Public Joint Stock Company; and
- Bank Rossiya.
Where there are existing business relationships, financial institutions must freeze any assets and funds of these four banks.
(b) 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 goods comprise all items in the Military Goods List and specified categories in the Dual-Use Goods List of the SGCO.
(c) Providing financial services in relation to designated Russian non-bank entities which are involved in activities in (b): Where there are existing business relationships, financial institutions must freeze any assets and funds of these designated entities. Details on the designation of non-bank entities will be provided subsequently.
(d) Entering into transactions or arrangements, or providing financial services that facilitate fund raising by:
- the Russian government;
- the Central Bank of the Russian Federation;
- any entity owned or controlled by them or acting on their direction or behalf.
The prohibitions apply to buying and selling new securities, providing financial services that facilitate new fund raising by, and making or participating in the making of any new loan to, the above entities.
The Singapore government and the Monetary Authority of Singapore (“MAS”) will also cease investing in newly issued securities of the above entities.
(e) Entering into transactions or providing financial services in relation to the following sectors, in the breakaway regions of Donetsk and Luhansk:
- energy; and
- prospecting, exploration and production of oil, gas and mineral resources.
(f) Entering into or facilitating any transactions involving cryptocurrencies, to circumvent any of the above prohibitions in (a) to (e): The prohibited cryptocurrency transactions cover all transactions that involve cryptocurrencies and extend to the payment and settlement of transactions that relate to digital assets (such as non-fungible tokens).
MAS will issue directions to all financial institutions shortly, setting out the details of the above measures.