On 5 March 2022, the Singapore Government provided details of the “appropriate sanctions and restrictions” it had announced it will impose on Russia (see our previous blog).
SINGAPORE’S FINANCIAL MEASURES IN RELATION TO RUSSIA
The Singapore Government will impose financial measures targeted at designated Russian banks, entities and activities in Russia, and fund-raising activities benefiting the Russian government. Digital payment token service providers will be specifically prohibited from facilitating transactions that could aid the circumvention of the financial measures.
All financial institutions in Singapore, including banks, finance companies, insurers, capital markets intermediaries, securities exchanges, and payment service providers in Singapore, will be prohibited from the following:
(a) Entering into transactions or establishing business relationships with the following 4 Russian banks:
- VTB Bank Public Joint Stock Company;
- The Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank;
- Promsvyazbank Public Joint Stock Company; and
- Bank Rossiya.
Where there are existing business relationships, financial institutions must freeze any assets and funds of these four banks.
(b) Providing financing or financial services in relation to the export from Singapore or any other jurisdiction of goods subject to Singapore’s export controls on Russia. These goods comprise all items in the list of military goods and specified categories in the list of dual-use goods under the Strategic Goods (Control) Order 2021 (“SGCO“). We elaborate upon this in the export control measures section below.
(c) Providing financial services in relation to designated Russian non-bank entities which are involved in activities in (b). Where there are existing business relationships, financial institutions must freeze any assets and funds of these designated entities. Details on the designation of these non-bank entities will be provided subsequently.
(d) Entering into transactions or arrangements, or providing financial services that facilitate fund raising by:
- the Russian government;
- the Central Bank of the Russian Federation; or
- any entity owned or controlled by them or acting on their direction or behalf.
Transactions and providing financial services that facilitate fund raising to the Russian government and the Central Bank of the Russian Federation, as well as any entity owned or controlled by them or acting on their direction or behalf, will be prohibited. These prohibitions apply to the buying and selling new securities, providing financial services that facilitate new fund raising by, and making or participate in the making of any new loan to the above entities. The Singapore Government (including its sovereign wealth funds such as GIC) and Monetary Authority of Singapore (Singapore’s central bank and financial regulatory authority) will also cease investing in newly issued securities of the above entities.
(e) Entering into transactions or providing financial services in relation to the following sectors, in the breakaway parts of the Donetsk and Luhansk regions of Ukraine:
- energy; and
- prospecting, exploration and production of oil, gas and mineral resources.
Financial institutions will not be allowed to do business with certain sectors in the breakaway parts of the Donetsk and Luhansk regions of Ukraine. The sectors are transport, telecommunications, energy and prospecting, and the exploration and production of oil, gas and mineral resources.
(f) Entering into or facilitating any transactions involving cryptocurrencies, to circumvent any of the above prohibitions in (a) to (e).
Digital payment token service providers are specifically prohibited from facilitating transactions that could help to circumvent these financial measures. The prohibited cryptocurrency transactions cover all transactions that involve cryptocurrencies and extend to the payment and settlement of transactions that relate to digital assets (such as non-fungible tokens).
The Monetary Authority of Singapore will issue directions to all financial institutions shortly, setting out the details of the above measures (a)-(f).
SINGAPORE’S EXPORT CONTROLS MEASURES ON RUSSIA
The Singapore Government will impose export controls on items that can be “directly used as weapons to inflict harm on or to subjugate the Ukrainians”, as well as items that can contribute to offensive cyber operations.
In order to “constrain Russia’s capacity to conduct war in Ukraine and cyber aggression”, all permit applications to Russia involving (a) all items on the list of military goods (Part 1 of the Schedule to the SGCO) and category codes under Category 3 – Electronics, Category 4 – Computers and Category 5 – Telecommunications and “Information Security” on the list of dual-use goods (Part 2 of the Schedule to SGCO) will be rejected. Please refer to the SGCO for the descriptions of the items in the affected category codes.
Singapore’s Strategic Goods Control regime regulates the transfer (export, transit, and transshipment) 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 SGCO.
According to the Ministry of Trade and Industry, in 2021, Singapore’s trade in goods with Russia was S$5 billion and its top exports to Russia were electronics and apparatus.
Due to ongoing developments, the Singapore Government may announce further measures and clarifications in in the coming days. We will publish additional articles as measures are announced in an official capacity.
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