This update is a continuation of our customer updates regarding Singapore’s implementation of sanctions against Russia: see our previous updates dated February 28, 2022 (available here) and March 2, 2022 (available here) .

On Saturday March 5, 2022, the Ministry of Foreign Affairs (“MFA“) issued a press release with two accompanying fact sheets (collectively, “MAE press release“) (available here) outlining how the Singapore government intends to implement sanctions against Russia. Broadly, the current and planned sanctions are as follows:

  1. A ban on the export, transit and transhipment to Russia of strategic military and high-tech goods that can be used for commercial and military purposes (“Export ban“); and
  2. Prohibitions imposed on financial institutions[1] in Singapore against dealings with, among others, four designated Russian banks as well as fundraising activities for the benefit of the Russian government (“Prohibition of financial transactions“).

On March 7, 2022, in response to the MFA’s press release, Singapore Exchange Limited (“SGX“) announced that the admission to trading of PJSC Gazprom GDR (Global Depositary Receipts) has been suspended. SGX noted that the Russian government is the ultimate controlling party of Gazprom and holds a majority stake (including direct ownership and indirect) of more than 50% in it.

Please find below a summary of these latest developments.

Scope of sanctions

The export ban

Singapore Customs will no longer approve any permits for the export, transit or transhipment to Russia of goods which are (a) listed as military goods under the Strategic Goods (Control) Order 2021 ) (“SGCO“); (b) falling under one of the category codes of Category 3 – Electronics, Category 4 – Computers and Category 5 – Telecommunications and “Information Security“, on the list of goods to dual-use under the SGCO These goods include electronics, computers and military weapons or their parts, as well as high-tech goods that can be used for both commercial and military purposes.

The ban on financial transactions

The Monetary Authority of Singapore (“SAM“) will issue instructions detailing the following prohibitions against financial institutions in Singapore:

  1. Conclude transactions or establish business relations with four Russian banks:
    1. VTB Bank Public Joint Stock Company (i.e. VTB);
    2. The Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (i.e. VEB);
    3. Promsvyazbank Public Joint Stock Company (i.e. PSB); and
    4. Rossia Bank,

(collectively, “Designated Russian banks“).

Financial institutions in Singapore must also freeze all assets and funds of any of the designated Russian banks.

  1. To provide financing or financial services related to the export from Singapore or any other jurisdiction of goods subject to the export ban.
  2. Provide financial services in connection with designated Russian non-bank entities that are involved in the activities described in point (b) above. Where there are existing business relationships, financial institutions must freeze the assets and funds of these designated entities. Details on the designation of non-bank entities have yet to be announced.
  3. Enter into transactions or arrangements, or provide financial services that facilitate fundraising by:
  1. the Russian government;
  2. the Central Bank of the Russian Federation;
  3. any entity owned or controlled by them or acting under their direction or on their behalf.

The prohibitions apply to the purchase and sale of new securities, the provision of financial services that facilitate new fundraising by, and the making or participation in the making of any new loans to entities above. The Singapore government and MAS will also stop investing in the newly issued securities of the aforementioned entities.

  1. Conclude transactions or provide financial services related to transport, telecommunications, energy and prospecting, exploration and production of oil, gas and mineral resources in the breakaway regions of Donetsk and Luhansk.
  2. Engage in or facilitate any transaction involving cryptocurrencies, to circumvent any of the prohibitions from (a) through (e) above. Prohibited cryptocurrency transactions cover all transactions involving cryptocurrencies and extend to payment and settlement of transactions related to digital assets (such as non-fungible tokens).

Final remarks

Singapore is the only Southeast Asian country to have imposed sanctions against Russia. Given the export bans, exporters and shippers can expect tighter controls from Singapore Customs and they should also inspect items that are to be exported to ensure they are described with clarification in any permit application.

In addition, given the extension of the ban on financial transactions to cryptocurrencies, financial institutions should closely examine all transactions with a typological connection to Russia, cease their investments in newly issued Russian securities backed by the Russian government or the Central Bank of the Russian Federation, and cease their dealings with any of the designated Russian banks.

In line with Ministerial Statement by Dr. Vivian Balakrishnan on February 28, 2022 (“Ministerial statement“), the export ban and the financial transaction ban each mirror, to some extent, existing sanctions imposed by other jurisdictions against Russia. For example, each of the designated Russian banks has already been sanctioned by the United States of America, the European Union, as well as the U.K. Singapore’s sanctions against Russia also reflect the reputational risk of doing business with Russia, which several companies have already decided to avoid. For example, three of the world’s largest shipping companies (MSC, Maersk and CMA CGM) have already announced that they will suspend cargo bookings to and from Russia until further notice.

The Foreign Ministry press release also suggests that Singapore may consider imposing additional sanctions against Russia. These additional sanctions may potentially include an asset freeze against designated Russian oligarchs with ties to the Russian government and a ban on processing and/or financing the purchase of Russian exports.

Issuers listed on the Singapore Stock Exchange Securities Trading Limited (“SGX-ST“) are advised to note the guidance “What SGX expects of issuers with respect to sanctions-related risk, subject matter or activity” issued by the Singapore Exchange Regulation (“SGX RegCo“) on March 7, 2022. The Guide sets out SGX’s expectations if an issuer, or any person or entity closely related to the issuer, is exposed to sanctions-related risks. These requirements also apply to subsidiaries and associated companies of the issuer. other things, the SGX guidelines emphasize that all issuers must assess whether they are exposed to or are linked to sanctions-related risks on an ongoing basis. subject to sanctions, the issuer must immediately disclose the inherent risk exposure on SGXNET, giving such details as SGX RegCo may require SGX to question or require the issuer to take action to address sanctions risk, including suspension of securities from the the issuer. the impact is material or affects the issuer’s ability to continue its activities, or where the risks of sanctions cannot be resolved within a reasonable period of time, the problem r should suspend trading in its securities . For the full text of the SGX RegCo guidelines which detail the requirements for a listed issuer to manage sanctions risk, click here.

In addition, the Russian Embassy in Singapore responded to the ministerial statement, describing Singapore’s decision to impose sanctions on Russia as a decision that “circumvent[s] UN Security Council »and that he “goes against friendly relations between Russia and Singapore”. Retaliation by Russia against Singapore and/or Singapore’s business interests in Russia cannot be ruled out.

To date, despite strong condemnation by the UN General Assembly, as well as a series of sanctions imposed by various jurisdictions, there is no sign of Russian forces withdrawing from Ukraine. Further military escalation therefore seems likely, and an extension of sanctions against Russia by Singapore and other countries cannot be ruled out. Financial institutions in Singapore, businesses as well as individuals with ties to Russia should therefore exercise caution in their dealings with Russia and/or Russian interests.

We will continue to monitor developments and provide further updates once relevant legislation has been enacted.