New Multilateral Belarus Sanctions May Escalate Risks for Companies, Firms Say

Several countries this month broadly expanded sanctions against Belarus for corruption and human rights violations, which could affect business and trade activities for companies operating in the region, law firms said. The restrictions -- imposed by the U.S., the United Kingdom, the European Union, Canada and Switzerland -- “significantly escalated” sanctions against Belarus and the Alexander Lukashenko regime, Baker McKenzie said Aug. 27.

The U.S. and U.K. measures may have the most impact. President Joe Biden issued an executive order that significantly expanded U.S. sanctions authority against the country (see 2108090033), authorizing designations against Belarusian government officials, oligarchs, entities and private companies, including those operating in the defense, energy, security, potassium chloride, transportation and construction sectors. In addition, the U.S. can sanction any party “considered to have materially assisted, sponsored, or provided financial, material, or technological support” for the government, Baker McKenzie said.

“It is likely that the sanctions imposed by the United States will prove the more impactful,” ReedSmith said in an August post. “Those familiar with the U.S. sanctions imposed on the Venezuelan oil economy will be well-acquainted with the extra-territorial nature of the sanctions now imposed” on Belarusian entities. The firm expects to see “other key players in the Belarus economy targeted over the coming months.”

Although the U.S. measures may have an outsized impact, the U.K.’s measures also imposed a “broad range of restrictions,” Baker McKenzie said, including prohibitions on trade in technology, software, dual-use goods, tobacco goods and petroleum. The firm also noted that the restrictions block a “variety” of financial service activities.

New EU measures are also expected to have a large impact, including recently imposed aviation restrictions, prohibitions of trade in certain technologies, and new export license requirements, Hogan Lovells said. The firm provided a list of items that now require an EU export license before shipping to Belarus, including certain artificial intelligence technology and software. “These new sanctions are expected to have a significant impact on E.U. and U.K. companies trading with Belarus,” the firm said. ReedSmith said companies doing business in Belarus should “ensure they have robust contractual protections and a clear mechanism to withdraw from contracts that may expose them to the fluid sanctions landscape.”

Canada also strengthened restrictions against Belarus, including surrounding transferable securities and money market instruments as well as certain trade, Baker McKenzie said. The firm said Canadians are blocked from importing, buying or shipping certain petroleum products exported from Belarus, regardless of where they are “situated.”

Canadian companies and investment funds with ties to Belarus should review their existing controls and procedures,” McMillan said, and probably consider “proactive measures” to cease activities that may violate the new restrictions. The firm warned that violators could be fined up to $25,000 or face up to five years in prison.

Switzerland also took steps to sanction Belarus, including introducing new controls on trade in certain goods and financial sector restrictions, Baker McKenzie said. The country also added to an existing embargo on arms and equipment used for “internal repression” by also including goods used to “monitor or intercept the internet and telephone communications,” the firm said. Other restrictions target trade in dual-use goods, dual-use technologies, petroleum and tobacco products.