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23 March 20227 minute read

Russian Sanction Update | New Zealand

New Zealand has now enacted legislation to impose sanctions on Russia.  These measures are being introduced while a number of different jurisdictions are also imposing progressive sanctions on Russia. In response, Russia has implemented countersanctions to target foreign ownership of Russian assets.  DLA Piper are working with colleagues around the globe to monitor the introduction of sanctions.

DLA Piper has summarised the latest sanctions here, in the Global Sanctions Alert.  

A summary of the New Zealand changes is outlined in the article below:

New Zealand

The New Zealand sanctions were introduced by the Russia Sanctions Act 2022 (Act).  This Act provides New Zealand with a framework to implement sanctions in response to the Ukraine conflict.  Last week, the first tranche of sanctions was issued under the Russia Sanctions Regulations 2022 (Sanctions). 

These sanctions provide a schedule of sanctioned individuals, entities and banks, and:

  • prohibit sanctioned individuals from travelling to, entering, or remaining in New Zealand (unless they are a citizen or resident);
  • prevent ships and aircrafts connected to sanctioned individuals or entities (including the registration of aircraft in Russia or Belarus) from entering New Zealand ports or territorial airspace;
  • prohibit New Zealanders from dealing with assets owned, controlled or otherwise closely connected with sanctioned individuals or entities (including assets located outside of New Zealand);
  • prohibit New Zealanders from dealing with services provided by or to a sanctioned individual.
In addition, New Zealand has introduced several domestic measures including the prohibition on the export of all goods intended for use by the Russian military/security/paramilitary/police/militia.  This applies to the end-user and dual-use technologies that might have military application.  

A full list of designations made under the Sanctions can be found here

Broadly speaking, the sanctions are intended to prevent business activities that support, deliberately or otherwise, Russia's actions in Ukraine.  It is important to note they apply to all New Zealand individuals and entities dealing with designated persons, services and assets (and dealing in assets on behalf of a sanctioned person).  While there are some exceptions, these primarily apply to conduct that precedes the conflict and otherwise do not relate to it.   

Overseas response

The United States, Canada, the European Union and several other nations have sanctions packages already in place. Restrictions include a move by the US and its allies to prevent some Russian banks from using the SWIFT international payments system. The United Kingdom has fast-tracked new legislation to strengthen its sanctions laws, and established a public register of the beneficial owners of overseas entities (including trusts) that own land and property in the United Kingdom. 

Australian sanctions now cover the majority of Russia's banking assets and all entities that deal with Russia's sovereign debt. Australia's Minister for Foreign Affairs has stated that Australia is continuing its 'close cooperation with key international partners' in continuing to increase sanctions.


In response, Russia too has introduced a suite of sanctions against 'unfriendly countries'. In summary, the countersanctions include:
  • Restrictions on transactions involving shares in Russian companies or immovable property, including the buy-back of shares in Russian public companies, and a complete ban on transactions with persons from 'unfriendly countries' that give rise to title to security and immovable property.
  • A ban on the provision of debt financing by Russian creditors to persons from 'unfriendly countries' without permission from the Government.
  • A ban on transfers from Russian bank accounts held by foreign individuals and entities from sanctioned countries, and other restrictions to transferring funds abroad.
  • Restrictions on the payment of dividends and other payments to Russian securities.
  • Permission for Russian users to use patents of right holders from 'unfriendly countries' without consent (or payment).
Outside of these sanctions, the Russian Government has also approved a draft law on 'external administration for Management of an Organisation', which provides for the possibility to appoint external management of a Russian company in certain circumstances.  This includes where a company is controlled or owned by at least 25 per cent 'Hostile State Parties'. 

Impact on financial services industry

The financial services industry is impacted by the sanctions.  For example, 'assets' is defined broadly enough to capture assets such as shares, stocks, bonds and cryptocurrency.  The Act will cover those dealing in assets on behalf of a sanctioned person, including the financial services participants.  An investment manager that controls an investment portfolio that includes a sanctioned person's assets is likely to be caught by the Sanctions, due to the ownership chain that gives it indirect control.

The restrictions do not apply in certain circumstances.  If you held restricted assets before the restrictions took effect, you may continue to hold (but not otherwise deal with) them.  You can also deal with restricted assets in order to preserve or maintain their value, or in connection with the enforcement of the Act.  While the application of these exceptions for dealing is still unclear, what is clear is that you will not breach the sanctions by continuing to hold those restricted assets.  In any case, we are seeing illiquid markets in Russia due to the raft of international sanctions and the removal of Russian listed equities by international stock exchanges. 

In some jurisdictions, side pocketing provisions in trust deeds are being implemented to side pocket these illiquid assets due to problems with pricing, and there being no market to sell.

The Act also imposes reporting obligations on 'duty holders'.  Currently, 'duty holders' are reporting entities under section 5(1) of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act).  If you are a duty holder and you suspect on reasonable grounds that you possess or control sanctioned assets or are providing services to a sanctioned person, you must provide a report to the Commissioner of Police as soon as practicable after forming the suspicion, but no later than  three working days.  The Police’s Financial Intelligence Unit (FIU) provides further guidance on the obligations of duty holders.

Looking forward

The New Zealand Government has clearly signalled its intention to announce more substantive sanctions in the coming weeks.  This is a developing area that will potentially impact a range of New Zealand companies and individuals.  

This article is intended to provide an overview of the Russian sanction regime, with sector specific updates to follow.  If you have any question in relation to the impact of these sanctions, please do not hesitate to contact one of our team.  


We recommend the following:

  1. Carefully review the Sanctions, and the key terms and provisions of the Act. This will help you to mitigate any risk of being affected before further sanctions are created.

  2. Put systems in place to monitor sanctions as they arise, and consider whether you have adequate detection, reporting and risk-mitigation processes in place to collect information on your organisation’s exposure to sanctions-related risk. 

  3. Check the list of sanctioned persons regularly to ascertain whether they are a customer of or otherwise associated with your business.

  4. If you are a fund manager, as an AML/CFT Act reporting entity, you are responsible for carrying out due diligence to understand the beneficial ownership of your clients and their legal arrangements to understand whether you are providing services to sanctioned persons. If you suspect that is the case, you will need to report that to the police. You should also check all existing sanctions before undertaking activities, to ensure continued compliance.

  5. If you are a licensed supervisor or a trustee of a restricted scheme, you should engage with your clients and third party investment managers.

Emma Moran, Alasdair McBeth, David Johnston and Suzanne Trounson