On 26 April 2022, a list of persons and entities subject to sanctions in connection with Russia’s aggression against Ukraine was published on the website of the Ministry of Interior and Administration. The list was compiled on the basis of the number of decisions issued by the Minister of the Interior and Administration against persons affiliated with Russia and Russian-controlled entities conducting business in Poland. The entry took into account not only connections with the authorities of the Russian Federation or Belarus, but also the fact that the income of a given person or entity obtained in Poland may translate into tax revenues from Russia or Belarus.
Types of imposed sanctions
The main reason for the inclusion in the sanctions list is article 3 par. 3 and 6 of the Law of 13 April 2022 on specific measures to prevent support for aggression against Ukraine and protection of national security (named also Specustawa). The range of sanctions applied varies depending on the entity or its activities. In some cases, they are reduced to adding a person to the list of foreigners whose stay in Poland is undesirable. This provides the possibility to refuse the entry of a given person into the territory of Poland.
With regard to individuals, legal persons, and non-corporate organizational entities, conducting an economic activity that could increase the tax revenues of the Russian Federation or Belarus, sanctions also include the freezing of funds and economic resources of a given person, connected with the prohibition to make them available directly or indirectly to such an entity. Practices aimed at circumventing these restrictions are also prohibited. Moreover, exclusion of the entities from public procurement procedures and, in the case of capital companies, freezing of shares, securities, and the right to receive dividend income, have also been commonly used restrictions.
Those sanctions do not deprive the ownership of such assets; their purpose is to exclude them of the use of those assets.
List of sanctions and EU regulations
The decisions and provisions of Specustawa described above are accompanied by sanctions imposed by the European Union through two regulations:
Council of the European Union of 17 March 2014 No. 269/2014 on restrictive measures with regard to actions undermining or threatening the territorial integrity, sovereignty, and independence of Ukraine
List of sanctions and EU regulations
The decisions and provisions of the Specustawa described above complement the sanctions imposed by the European Union with two regulations:
- Council of the European Union of 17 March 2014 number 269/2014 on restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine
- Council of the European Union of 18 May 2006 number 765/2006 on restrictive measures in view of the situation in Belarus and Belarus’ participation in Russia’s aggression against Ukraine (both regulations were supplemented after the February 2022 invasion).
Sanctions list and obligations of trading participants
The list of sanctions, published on the Ministry’s website, is extremely important from the perspective of participants in economic turnover in Poland. The Specustawa provides in Article 6 that entities that, contrary to the obligations imposed, do not freeze the property values of sanctioned persons or do not provide access to economic resources shall be subject to a fine in the maximum amount of 20 000 000 PLN. The Act also imposes an obligation on the above-mentioned entities to provide the Head of the National Fiscal Administration with information facilitating the freezing of property. The only exception is information covered by professional secrecy. Failure to comply with this obligation may also result in the imposition of the high fine mentioned above.
The publication of the sanctions list in combination with the provisions of the Specustawa induces Polish entrepreneurs to be particularly cautious when establishing business contacts with entities related to Russia and Belarus. Until now, the obligation to identify in detail, verify the client’s conduct for possible links to criminal activity, and – if necessary – freeze assets rested mainly with obliged institutions within the meaning of the AML/CFT Act of 1 March 2018. The Specustawa shifts this obligation to the entrepreneur. Before entering into a business relationship with an entity, business owners must first check the sanctions lists and ensure that their potential partners have the right to use their assets.