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On 18 February 2020, the Office of Financial Sanctions Implementation (OFSI), which sits within Her Majesty’s Treasury, fined Standard Chartered Bank £20.47 million for violating EU sanctions restricting EU persons from making loans or credit available to designated Russian entities.

Authors: Leigh T. Hansson Brett Hillis Ray-Shio Ho Eli Rymland-Kelly Deena Smith

The law

Article 5(3) of EU Council Regulation 833/2014 (the Regulation) prohibits any EU person from making or being part of any arrangement to make a loan or credit with a maturity of over 30 days with (i) a sanctioned entity, or (ii) amongst others, a non-EU incorporated entity whose proprietary rights are directly or indirectly owned more than 50 per cent by a sanctioned entity. 

Notwithstanding this, the Regulation exempts “loans or credit that have a specific and documented objective to provide financing for non-prohibited imports or exports of goods and non-financial services” between the EU and any non-EU state. The purpose of this exemption is to ensure that legitimate EU trade is not harmed and requires that any financed trades relate to goods coming into or out of the EU.