Knowledge Highlights 23 March 2022

The Singapore government has brought into force export control measures and financial measures against Russia following its invasion of Ukraine. The export control measures, implemented by way of the Regulation of Imports and Exports (Amendment) Regulations 2022, took effect on 16 March 2022, while the financial measures, implemented by way of two notices to financial institutions issued by the Monetary Authority of Singapore (“MAS”), took effect on 14 March 2022.

Some of the key measures are set out below.

1. Export controls

Singapore’s strategic goods control system regulates the transfer (export, transit and transhipment) 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”).

With effect from 16 March 2022, the Regulation of Imports and Exports Regulations (“RIE Regulations”) have been amended to provide that despite regulations 3 and 5A of the RIE Regulations (which concern permit requirements for the import, export or transhipment of certain goods), there must be no exportation from, transhipment in, or transit through, Singapore of any goods falling within the following class or description, if the destination is or intended to be Russia, whether or not the goods originated in Singapore:

  • Military goods, being goods specified in any Category Code in Division 2 of Part 1 of the Schedule to the SGCO as in force on 16 March 2022 (“Military Goods”).
  • Dual-use goods specified in Category 3 (Electronics), Category 4 (Computers) or Category 5 (Telecommunications and “Information Security”) in Division 2 of Part 2 of the Schedule to the SGCO as in force on 16 March 2022 (“Specified Dual-use Goods”).

The descriptions of the items in the affected category codes are set out in the SGCO.

2. Financial measures

MAS Notice SNR-N01 on Financial Measures in Relation to Russia (“Notice SNR-N01”), which was issued and took effect on 14 March 2022, imposes financial measures targeted at designated Russian banks, entities and activities in Russia, and fund-raising activities benefiting the Russian government. These measures apply to all financial institutions in Singapore, including banks, finance companies, insurers, capital markets intermediaries, securities exchanges, and payment service providers. Digital payment token service providers are therefore specifically prohibited from facilitating transactions that could aid the circumvention of the financial measures.

The categories of payments and transactions which are excluded from the scope of the financial measures in Notice SNR-N01 are set out in MAS Notice SNR-N02 on Financial Measures in Relation to Russia - Non-prohibited Payments and Transactions (“Notice SNR-N02”).

A. Prohibition against dealing with, and freezing of assets of, Designated Banks and Designated Entities

Under Notice SNR-N01, a financial institution must not, directly or indirectly (including through any provider of any brokering or other intermediary services), establish business relations with or undertake any financial transaction for, enter into any financial transaction with, provide any financial assistance or service to, or transfer any assets or resources to, any of the following entities:

  • Designated Banks”. This refers to the following entities:
    • VTB Bank Public Joint Stock Company;
    • The Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank;
    • Promsvyazbank Public Joint Stock Company;
    • Bank Rossiya; and
    • all entities owned or controlled by, directly or indirectly, or acting on behalf of or under the direction of, any of the above entities.
  • Designated Entities”. This refers to entities involved in activities related to any Military Goods or Specified Dual-use Goods, which will be identified in an Annex to Notice SNR-N01 subsequently, and all entities owned or controlled by, directly or indirectly, or acting on behalf of or under the direction of, such identified entities.

Where there are existing business relationships, financial institutions must freeze any assets and funds of these Designated Banks and Designated Entities.

Notice SNR-N02 provides, however, that the above measures do not apply to:

  • payments for basic expenses and reasonable fees for certain services;
  • transactions to facilitate a person’s withdrawal of funds, financial assets or economic resources pursuant to the termination of existing business relations between the person and the Designated Bank, for the benefit of the person, where such person is not a Designated Bank; and
  • transactions in relation to any funds, financial assets or economic resources which are necessary for the performance of the functions of the Embassy of the Russian Federation in Singapore.

B. Prohibition against entering into financial transactions or providing financial assistance or services, etc., in relation to the delivery of certain items

Under Notice SNR-N01, a financial institution must not, directly or indirectly (including through any provider of any brokering or other intermediary services), enter into any financial transaction with, provide any financial assistance or service to, or transfer any assets or resources to, any person, if the financial transaction, financial assistance or service, or transfer relates to the export from, transhipment in or transit through, Singapore or any other jurisdiction to Russia of Military Goods and Specified Dual-use Goods.

C. Prohibition against entering into financial transactions or providing financial assistance or services, etc. in relation to the raising of new funds for the Russian government and the Central Bank of the Russian Federation

Notice SNR-N01 further provides that a financial institution must not, directly or indirectly, purchase, sell, provide financial services for or assist in the issuance of, or otherwise deal with, securities or certificates of deposit issued by any of the following persons on or after 14 March 2022:

  • the Russian government;
  • the Central Bank of the Russian Federation; or
  • a legal person or legal arrangement that is owned or controlled by, directly or indirectly, or acts on behalf of or under the direction of, any of the above entities

(collectively, “Designated Persons”).

In addition, a financial institution must not, directly or indirectly, make or be part of any arrangement to make any new loans or credit to any Designated Person on or after 14 March 2022. However, this prohibition does not apply to loans or credit that have a specific and documented objective of making funds available for trade which does not involve the export from, transhipment in or transit through, Singapore or any other jurisdiction to Russia of any Military Goods or Specified Dual-use Goods.

D. Prohibition against entering into financial transactions or providing financial assistance or services, etc. in relation to the breakaway regions of Donetsk and Luhansk

A financial institution must not, directly or indirectly (including through any provider of any brokering or other intermediary services), enter into any financial transaction with, provide any financial assistance or service to, or transfer any assets or resources to, any person in relation to any activity, including any sale, transfer or export of goods or technology, relating to any of the following sectors in Donetsk or Luhansk:

  • transport;
  • telecommunications;
  • energy; and
  • prospecting, exploration and production of oil, gas and mineral resources.

E. Prohibition against digital payment token transactions

A financial institution must not enter into or facilitate any digital payment token transaction where the proceeds or benefits from such transaction may be used to facilitate any of the transactions or activities prohibited in sections A to D above.

Entering into or facilitating a prohibited digital payment token transaction includes but is not limited to:

  • offering the purchase, sale or exchange of digital payment tokens;
  • brokering transactions between counterparties on digital payment tokens;
  • offering or arranging financing for digital payment token transactions;
  • offering the borrowing or lending of digital payment tokens; and
  • making or arranging any primary and secondary market offerings of digital payment tokens that make available any of the above services to other persons.

Background

On 28 February 2022, Singapore’s Minister for Foreign Affairs announced that Singapore would impose appropriate sanctions and restrictions against Russia in response to its invasion of Ukraine. This was followed by a statement issued by the Ministry of Foreign Affairs on 5 March 2022 which outlined the export controls and financial measures it would impose.

Reference materials

The Regulation of Imports and Exports (Amendment) Regulations 2022 are available on the Singapore Statutes Online website sso.agc.gov.sg.

The following materials are available from the MAS website www.mas.gov.sg via the Targeted Financial Sanctions webpage:

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