US AND EU SANCTIONS: WHAT YOU SHOULD KNOW Moscow – RUSSIA CONSULTING has been receiving many questions from our clients on how to maintain compliance with the sanctions that the US and EU recently introduced due to the conflict situation in the Crimea. The first thing you should know is that the both US and EU sanctions together list only 46 people and two companies. Although both the US and EU sanctions forbid any economic interactions (for example, buying or selling goods, offering financial services, etc.) with listed persons and their related companies, it is good to know that this restriction only applies to companies where the listed person has a direct or indirect interest of 50% or more. For example, if the listed person holds 50% or more in shares or can otherwise execute control over the company, the sanctions are applicable. But if the listed person owns less than 50% of a company then, in general, an economic exchange with this company is legal. Of course, caution is still needed and any business partner should be carefully checked for his or her relationships with listed persons as unexpected trouble can occur. A US company, its branch or representative office (as well as US citizens and residents) must conform to the US sanctions independently of where they act. An EU company, its branch or representative (as well as an EU citizen or resident) should also conform to the EU sanctions independently of where in the world they act. If a company of any origin, including foreign subsidiaries of US or EU companies (which are considered to be non-US and non-EU companies, respectively) or a national of any state that acts in the US or EU, then the US or EU sanction lists, respectively, are applicable. The EU sanctions allow the receipt of payments from listed persons on contracts that were concluded before the persons or entities were put on the sanction lists, but prohibit payments to individual or for goods or services. The US sanctions prohibit any activity on contracts that were concluded before the individuals or entities were placed on the sanctions list. In this case, special licenses are required for fulfilling such contracts. RUSSIA CONSULTING advises companies on how to maintain compliance in a complicated and changing environment and provides services to ensure your company steers clear of any listed company or individual. Please visit us at www.russia-consulting.eu for more information.

Moscow, April 21, 2014

US and EU Sanctions: What you should know Recently, we at RUSSIA CONSULTING have been repeatedly asked by our clients, what the consequences of the US and EU sanctions, introduced due to the conflict situation in Crimea, would mean for their business with Russian counterparts. RUSSIA CONSULTING gladly offers this overview on the sanctions and their possible consequences. The sanctions introduced by the US and the EU adversely affect specific Russian and Ukrainian citizens (both the US and EU lists) and some legal entities (only the US list). The sanction lists of the US and the EU are not identical, but similar (see below “Overview of persons affected by the US and the EU sanctions due to the Crimea crisis”). Apart from this, there is also a separate EU sanctions list affecting 22 Ukrainians who are accused of the violence during the mass protests on the “Maidan” in Kiev. Please contact us, if you want to learn more about this list as well. Both the US and the EU sanctions forbid any economic interactions (for example, buying or selling goods, offering financial services, etc.) with listed persons as well as with all companies in which a listed person is in possession of 50% or more of the proprietary rights or has the power or right to exercise dominant influence (EU wording) or owns, directly or indirectly, a 50% or greater interest (US wording). In any case, caution is needed and any business partner should be thoroughly checked for his or her connections with the listed persons. In the following table, you can find out how the sanctions are implemented based on the origin of the individual or company.

EU company*, or  its foreign branch  its foreign representative office or an EU citizen or resident

US company*, or  its foreign branch  its foreign representative office; or a US citizen or resident

Non-EU and Non-US company

Non-EU and Non US-citizen, who resides neither in the US nor in EU**

EU list applies

EU list applies

EU list applies

EU list applies

US list does not apply

US list applies

US list does not apply

US list does not apply

EU list applies

EU list does not apply

EU list does not apply

EU list does not apply

US list applies

US list applies

US list applies

US list applies

EU list applies

EU list does not apply

EU list does not apply

EU list does not apply

US list does not apply

US list applies

US list does not apply

US list does not apply

and acts in the EU

and acts in the US

and acts in a third country (for example, in Russia)

* Subsidiaries of EU or US companies registered outside of the EU or US, respectively, are not regarded as EU or US companies, but as non-EU and non-US companies. ** For example: a Russian national residing in Russia wants to sell his house that is located in the US or EU to a listed person.

RUSSIA CONSULTING ul. Bakhrushina 32/1, 115054 Moscow, Russia Phone: +7 / 495 / 956 55 57; +49 / (0)40 / 226 33 760 [email protected] www.russia-consulting.eu

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The EU sanctions allow the receipt of payments from listed persons due to contracts that were concluded before the persons or entities were placed on the sanction lists. However, payments to listed persons for goods or services are prohibited regardless of when the contract was concluded. The US sanctions go further and prohibit any activity even when the contracts were concluded before the persons or entities were placed on the sanction lists. In this case, special licenses are required for fulfilling such contracts. An interesting situation could occur if an EU or US citizen runs a company in Russia which is not a subsidiary or a branch or a representative office of an EU or US company. Such a company is legally a Russian company and does not need to comply with the EU or US regulations while acting in Russia. But if the owner or the General Director of the Russian company is an EU or US citizen, the company has to comply with the sanctions. Therefore, it should be considered that all deals that require a signed contract must conform to the EU or US regulations, respectively, even if were made by a Russian employee. In general, selling goods or services that do not foresee a customer’s identity check could obviously be an exception as long as the owner or General Director (EU or US national) does not willingly and knowingly violate the sanctions. In addition to the legal consequences for companies obviously dealing with persons or entities appearing on the EU and US sanctions lists, there might also be reputational risks for those companies that are publicly named as sanction violators by EU or US authorities or by the mass media, regardless of whether such allegations are even legitimate. RUSSIA CONSULTING advises companies on how to maintain compliance in a complicated and changing environment and provides services to ensure your company steers clear of any listed company or individual.

For further questions, please contact Sergej Sumlenny, Head of PR [email protected] Dmitry Kononenko, Senior Project Manager [email protected]

Kind regards,

RUSSIA CONSULTING Group

Appendix (1): Overview of persons concerned by sanctions by the US and the EU (as of April 21, 2014)

RUSSIA CONSULTING ul. Bakhrushina 32/1, 115054 Moscow, Russia Phone: +7 / 495 / 956 55 57; +49 / (0)40 / 226 33 760 [email protected] www.russia-consulting.eu

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Overview of persons concerned by sanctions by the US and the EU due to the Crimea crisis (as of April 21, 2014) №

Name and Russian spelling

US sanctions

EU sanctions

Prime Minister of Crimea

Yes

Yes

Deputy Chairman of the Russian Federation Council

Yes

Yes

De-facto Mayor of Sevastopol (23.02.-14.04.2014)

Yes

Yes

Deputy Chairman of a Committee of the Russian Federation Council

Yes

Yes

Aide to the Russian President

Yes

No

Advisor to the Russian President

Yes

Yes

First Deputy Head of the Russian Presidential Administration

Yes

No

Head of the Russian Presidential Administration

Yes

No

Yes

No

Yes

Yes

Chairman of the Crimean parliament

Yes

Yes

Head of the Russian Presidential Property Management Department

Yes

No

Head of the Crimean electoral commission

Yes

Yes

Yes

Yes

Yes

No

Head of the Sevastopol electoral commission

Yes

Yes

Member of the Executive Council of the Russian State Duma

Yes

Yes

Chairwoman of a Committee of the Russian State Duma

Yes

Yes

Chairman of the Russian State Duma

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Member of a Committee of the Russian Federation Council

Yes

Yes

Chairman of a Committee of the Russian State Duma

Yes

Yes

Aide to the Russian President

Yes

Yes

Position/function Politicians/bureaucrats

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

AKSENOV, Sergei Valeryevich АКСЁНОВ Сергей Валерьевич BUSHMIN, Evgeny Viktorovich БУШМИН Евгений Викторович CHALY, Alexei Mikhailovich ЧАЛЫЙ Алексей Михайлович DZHABAROV, Vladimir Mikhailovich ДЖАБАРОВ Владимир Михайлович FURSENKO, Andrey Aleksandrovich ФУРСЕНКО Андрей Александрович GLAZYEV, Sergei Yuryevich ГЛАЗЬЕВ Сергей Юрьевич GROMOV, Alexei Alekseevich ГРОМОВ Алексей Алексеевич IVANOV, Sergey Borisovich ИВАНОВ Сергей Борисович IVANOV, Viktor Petrovich ИВАНОВ Виктор Петрович KLISHAS, Andrey Aleksandrovich КЛИШАС Андрей Александрович KONSTANTINOV, Vladimir Andreevich КОНСТАНТИНОВ Владимир Андреевич KOZHIN, Vladimir Igorevich КОЖИН Владимир Игоревич MALYSHEV, Mikhail Grigoryevich МАЛЫШЕВ Михаил Григорьевич MATVIENKO, Valentina Ivanovna МАТВИЕНКО Валентина Ивановна MEDVEDCHUK, Viktor Vladimirovich МЕДВЕДЧУК Виктор Владимирович MEDVEDEV, Valery Kirillovich МЕДВЕДЕВ Валерий Кириллович MIRONOV, Sergei Mikhailovich МИРОНОВ Сергей Михайлович MIZULINA, Elena Borisovna МИЗУЛИНА Елена Борисовна NARYSHKIN, Sergei Evgenyevich НАРЫШКИН Сергей Евгеньевич OZEROV, Viktor Alekseevich ОЗЕРОВ Виктор Алексеевич PANTELEEV, Oleg Evgenyevich ПАНТЕЛЕЕВ Олег Евгеньевич ROGOZIN, Dmitry Olegovich РОГОЗИН Дмитрий Олегович RYZHKOV, Nikolai Ivanovich РЫЖКОВ Николай Иванович SLUTSKY, Leonid Eduardovich СЛУЦКИЙ Леонид Эдуардович SURKOV, Vladislav Yuryevich СУРКОВ Владислав Юрьевич

RUSSIA CONSULTING ul. Bakhrushina 32/1, 115054 Moscow, Russia Phone: +7 / 495 / 956 55 57; +49 / (0)40 / 226 33 760 [email protected] www.russia-consulting.eu

Director of the Russian Federal Narcotics Service Chairman of a Committee of the Russian Federation Council

Chairwoman of the Russian Federation Council Leader of the pro-Russian/anti-EU Ukrainian Party “Ukrainian Choice”

Chairman of a Committee of the Russian Federation Council Deputy Chairman of a Committee of the Russian Federation Council Deputy Prime Minister of the Russian Federation

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№ 26 27 28 29 30 31

Name and Russian spelling TOTOONOV, Aleksandr Borisovich ТОТООНОВ Александр Борисович TEMIRGALIEV, Rustam Ilmirovich ТЕМИРГАЛИЕВ Рустам Ильмирович TSEKOV, Sergey Pavlovich ЦЕКОВ Сергей Павлович YANUKOVICH, Viktor Fedorovich ЯНУКОВИЧ Виктор Фёдорович ZHELEZNYAK, Sergei Vladimirovich ЖЕЛЕЗНЯК Сергей Владимирович ZHEREBTSOV, Yury Gennadyevich ЖЕРЕБЦОВ Юрий Геннадьевич

Position/function

US sanctions

EU sanctions

Member of a Committee of the Russian Federation Council

Yes

Yes

Deputy Prime Minister of Crimea

Yes

Yes

First delegate from the Crimea to the Russian Federation Council

Yes

Yes

Ousted de-jure President of Ukraine

Yes

No

Deputy Chairman of the Russian State Duma

Yes

Yes

Counsellor to the Chairman of the Crimean Parliament

Yes

Yes

No

Yes

No

Yes

No

Yes

Deputy Commander of the Russian Black Sea Fleet

No

Yes

Lieutenant General, Chief of the GRU of the Russian General Staff

Yes

No

No

Yes

No

Yes

Commander of the Russian Black Sea Fleet

No

Yes

Head of the Crimean SBU branch (Security Service of Ukraine)

Yes

Yes

No

Yes

Chairman of the board of directors and co-owner of the Bank “Rossiya”

Yes

No

Co-owner and member of the board of directors of the “SMP Bank”

Yes

No

Co-owner and member of the board of directors of the “SMP Bank”

Yes

No

Owner of the private investment group “Volga Group”

Yes

No

President of the Russian State Railways company “RZhD”

Yes

No

Russian private bank, chaired by Yury Kovalchuk

Yes

No

Crimean state oil and gas company

Yes

No

Military/security staff 32 33 34 35 36 37 38 39 40

BEREZOVSKY, Denis Valentinovich БЕРЕЗОВСКИЙ Денис Валентинович GALKIN, Aleksandr Viktorovich ГАЛКИН Александр Викторович KULIKOV, Valery Vladimirovich КУЛИКОВ Валерий Владимирович NOSATOV, Aleksandr Mikhailovich НОСАТОВ Александр Михайлович SERGUN, Igor Dmitrievich СЕРГУН Игорь Дмитриевич SIDOROV, Anatoly Alekseevich СИДОРОВ Анатолий Алексеевич TURCHENYUK, Igor Nikolaevich ТУРЧЕНЮК Игорь Николаевич VITKO, Aleksandr Viktorovich ВИТКО Александр Викторович ZIMA, Petr Anatolyevich ЗИМА Пётр Анатольевич

Chief of the Ukrainian Navy, swore his oath to the Crimean government Commander of Russia's Southern Military District Deputy Commander of the Russian Black Sea Fleet

KISELEV, Dmitry Konstantinovich КИСЕЛЁВ Дмитрий Константинович

Head of the Russian Federal State News Agency “Rossiya Segodnya”

Commander of Russia's Western Military District Commander of the Russian troops deployed on the ground in Crimea

Journalists 41

Businessmen 42 43 44 45 46

KOVALCHUK, Yury Valentinovich КОВАЛЬЧУК Юрий Валентинович ROTENBERG, Arkady Romanovich РОТЕНБЕРГ Аркадий Романович ROTENBERG, Boris Romanovich РОТЕНБЕРГ Борис Романович TIMCHENKO, Gennady Nikolaevich ТИМЧЕНКО Геннадий Николаевич YAKUNIN, Vladimir Ivanovich ЯКУНИН Владимир Иванович

Legal Entities 47 48

AKTSIONERNY BANK ROSSIYA OAO АКЦИОНЕРНЫЙ БАНК РОССИЯ ОАО CHERNOMORNEFTEGAZ GAO ЧЕРНОМОРНЕФТЕГАЗ ГАО

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