Australian Sanctions Regime
Australia has a dual sanctions regime consisting of sanctions measures imposed by the UN, together with Australian autonomous sanctions imposed by the Australian Government as a matter of its foreign policy. Australia's dual sanctions regime is administered by the Australian Government sanctions regulator, the Australian Sanctions Office, which sits within the Department of Foreign Affairs and Trade.
Australian restrictions and prohibitions arising from the sanctions laws apply broadly to:
- any person in Australia;
- any Australian anywhere in the world;
- any body corporate registered in Australia;
- companies incorporated overseas that are owned or controlled by Australians or persons in Australia;
- any person using an Australian flag vessel or aircraft to transport goods or transact services subject to UN sanctions;
- the activities of any person engaging in any activities in Australia; and
- any person engaged in dealings that involve products or services that are restricted under Australian export controls.
(collectively referred to as “Restricted Persons”)
A criminal offence is committed if a Restricted Person engages in conduct and the conduct contravenes a sanction law.
The Australian autonomous sanctions regimes are primarily implemented under the Autonomous Sanctions Act 2011 (Cth) (the "Act") and the Autonomous Sanctions Regulations 2011 (Cth) (the "Regulations"). The Act prohibits a person from engaging in conduct that contravenes sanctions laws. Part 3 of the Regulations specifies that Section 15.1 of the Criminal Code (being Schedule 1 to the Criminal Code Act 1995 (Cth)) applies to a person that makes an unauthorised sanctioned supply. This has the effect of making the offence extra-territorial if the alleged offence is perpetrated outside Australia by a person who is an Australian citizen or a body corporate incorporated under Australian law.
Economic Sanctions
According to the Prime Minister’s statement on 23 February 2022, Australia’s economic sanctions on Russia are intended to impose a sharp cost on Russia in response to its actions taken against Ukraine. The key change to Australia’s sanctions achieves this objective by empowering the Minister for Foreign Affairs (“Minister”) to designate:
- people and entities that the Minister is satisfied is, or has been, engaging in an activity or performing a function that is of economic or strategic significance to Russia;
- current or former ministers and senior officials of the Russian Government; and
- immediate family members of the above two categories of people.
The effect of this designation is that designated persons cannot enter, remain in or transit through Australia and Restricted Persons cannot:
- directly or indirectly make an asset available to (or for the benefit of) a designated person or entity; or
- use or deal with an asset (i.e. an asset or property of any kind, whether tangible or intangible, movable or immovable), or allow or facilitate another person to use or deal with an asset, owned or controlled by a designated person or entity.
Anyone holding an asset of a designated person or entity must freeze (hold) that asset and notify the Australian Federal Police as soon as possible.
Export Controls
The Australian Government has also extended existing export control sanctions, which are currently only applicable to Crimea and Sevastopol, to Donetsk, Luhansk and any region of Ukraine specified by the Minister under legislative instrument (“Specified Regions”). The corresponding explanatory statement implies that additional regions will be included based on whether they have been annexed by Russian forces. In turn, we expect that the territorial scope of the sanctions will extend to further Ukrainian regions as Russian forces continue their invasion of Ukraine.
The export control measures, which currently apply to Crimea and Sevastopol and will apply to the Specified Regions from 28 March 2022, include the following:
- the direct or indirect supply, sale or transfer to the Specified Regions, for use in the Specified Regions, or for the benefit of the Specified Regions, of specified items (“Sanctioned Goods”) relating to the creation, acquisition or development of infrastructure for:
- the transport, telecommunications or energy sectors
- the exploitation of oil, gas or mineral reserves in the Specified Regions.;
- the import, purchase or transport of any goods that originate in, or are exported from, the Specified Regions, except goods that have been verified by Ukrainian officials;
- granting loans or credit or establish joint ventures in the Specified Regions (“Sanctioned Activities”) relating to:
- the creation, acquisition or development of infrastructure in the transport, telecommunications or energy sectors; or
- the exploitation of oil or gas, or of specified mineral resources;
- the provision of services which relate to Sanctioned Goods or Sanctioned Activities, specifically the provision of:
- services which relate to the supply of Sanctioned Goods to the Specified Regions, or to the manufacture, maintenance or use of such goods for the Specified Regions;
- financial assistance or financial services which relate to goods originating in or exported from the Specified Regions; and
- services to the Specified Regions, or for use in the Specified Regions, which relate to engagement in a Sanctioned Activity for the Specified Regions;
- the use of or dealing with an asset that is owned or controlled by a 'designated person or entity' for the Specified Regions;
- making an asset available directly or indirectly to, or for the benefit of, a 'designated person or entity' for the Specified Regions; and
- the entry into or transit through Australia of a 'designated person' for the Specified Regions.
Next steps
We expect that this first tranche of sanctions will likely be extended in the near future and so it would be prudent for anyone engaged in trade in close proximity to Russia and Ukraine to continue monitoring this evolving situation, and verifying the legality of their existing sales operations, as the subject matter and territorial scope of Australian (and global) sanctions continue to expand.
In the meantime, Hogan Lovells is available to assist you in assessing your exposure and in ensuring compliance with Australian sanctions measures in your transactions. Please let us know if you have any questions and if we can assist with your sanctions review in any way.
In the current, rapidly changing landscape, keeping on top of international sanctions regimes is more challenging than ever. Our comprehensive Sanctions Navigator collates sanctions regimes from the European Union, France, the United Kingdom, United Nations, and United States in one place, to help our clients answer any questions or address any sanctions-related issues they may have. Explore the Sanctions Navigator here.
Authored by Scott Harris and Joshua Yan.
