Russia Sanctions

Are personal effects of Russian origin able to be imported if they are on the list of prohibited luxury goods?

Yes, importing prohibited luxury goods of Russian origin is allowed if they are personal effects. Personal effects are considered:

• Things accompanying you when travelling, e.g., clothing.
• Household goods as part of a consignment if you are relocating, e.g., moving to New Zealand.

Can personal effects be imported into New Zealand from Russia without attracting the 35% import tariff?

If certain criteria are met, people coming to live in New Zealand are permitted to import their used domestic and personal goods free of duty. This is outlined in reference 80 in Part II (Concessions) of the Working Tariff Document of New Zealand, which can be found on the New Zealand Customs Service website. This website also includes information on how to make an application for a concession.

Why are Russian pensions not being paid to individuals?

We have issued guidance to New Zealand banks to make it clear that individuals in New Zealand who previously received a Russian pension can continue to receive their payments under our sanctions regime. However, we understand that because of the nature of international banking, payments are not arriving into New Zealand. We continue to work with other relevant government agencies to find a practical solution.

Is travel between Russia and New Zealand affected by the sanctions?

Sanctioned individuals and their associates may not travel to New Zealand. Non-sanctioned Russian passport holders may travel to New Zealand if the relevant visa requirements are met.

New Zealand passport holders require a visa to visit Russia. However, travel by New Zealanders to Russia is strongly discouraged at this time. As at 7 November 2022, New Zealanders are advised ‘Do not travel’ to Russia due to the impacts the armed conflict with Ukraine has had on commercial flight availability and access to financial services. There is also potential for the security situation to deteriorate with little warning.

Please check the Safe Travel website to see the New Zealand Government’s most up to date travel advice.

What sanctions apply to Belarus?

A number of Belarusian individuals and entities have been sanctioned and export prohibitions apply to Belarus as well as Russia (the HS codes and descriptions for prohibited items can be found in the sanctions register). However, the 35% import tariff only applies to goods of Russian origin.

 

What are the implications of New Zealand’s sanctions on foreign companies in Russia?

As at 22 March, in response to these measures by New Zealand, Russia has put New Zealand on a list of 43 countries that commit so-called unfriendly acts against Russia. Measures include:

• Debts from Russians to creditors from these countries can now only legally be paid in Rubles rather than foreign currency.
• Citizens and companies from these countries face higher barriers when moving their capital out of Russia.

Business deals, with these countries will require approval from a commission for monitoring foreign investment, managed by the Russian Ministry of Finance.

The Russia Sanctions Act imposes obligations on ‘duty holders’ as reporting entities under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the AML/CFT Act) or any other person declared a duty holder by subsequent regulations.

The Regulations have declared a number of people as duty holders. See Regulation 19 for details.

Summary of obligations for duty holders

There are three types of obligation imposed on duty holders: freezing obligations, reporting obligations and due diligence/monitoring obligations.

Freezing obligations	If you are a duty holder currently and have a sanctioned asset under your control or you are currently providing services to a sanctioned person, you must cease all activity by either freezing the assets and/or stopping any transactions or services involving the sanctioned entity.
Reporting obligations	Under the AML/CFT Act, duty holders are required to report certain suspicions to the Police in relation to certain assets, services and persons. The list of designated assets, services and persons are set out in the Regulations and in the sanctions register. AML/CFT duty holders report suspicious sanctions activity in the same way as AML/CFT suspicious activity reports via goAML. If you are not a duty holder for AML/CFT purposes report using the process outlined on the Police 105 website.
Due diligence obligations	While duty holders have specific obligations in the Act, all New Zealand persons who may deal with restricted persons, assets and services need to satisfy themselves that they will not breach the sanctions. This will involve some level of due diligence checks, depending on the type and risk of activity, to ensure the individuals or entities connected with a proposed activity are not subject to relevant sanctions.

Guidance and useful links

• Guidance note: Duty holder reporting under the Act
• Guidance note: Banking transactions
• Guidance note: Understanding Evasion Risk and Due Diligence in the Russia Sanctions Context
• Guidance note: Impact of Russia Sanctions on AML/CFT reporting entities – AML/CFT supervisors
• Sanctions Alert – March 2022: Russia Sanctions Act passed under urgency - Police
• Sanctions Alert – March 2022: Russia Sanctions Regulations 2022 enacted – Police
• Access GoAML – Financial Intelligence Unit (FIU) | New Zealand Police

Trade sanctions and tariffs are having an impact on a variety of New Zealand export and import businesses. As sanctions from other countries also increase, it’s possible that Russian businesses might look to New Zealand for opportunities to do business.

To ensure you are able to comply with New Zealand's sanctions regime you should think about the exposure to sanctions risks your business may encounter during the ordinary course of business and how you could manage those risks. Risks vary from business to business, as will the best ways to mitigate them. You understand your business better than anyone else, so you are best placed to identify the vulnerabilities and risks faced from sanctions and how to develop appropriate strategies to manage and control those risks.

We recognise that assessing the risks faced by your business from sanctions related activity and mitigating those risks will take time and effort, so we have developed this guidance to help you understand some key concepts and suggested best practice. It provides a starting point for understanding your sanctions obligations. This guidance is not mandatory.

If you are thinking of exporting or importing goods, you may wish to ask yourself the following questions:

Exporters

• Am I comfortable that the final recipient is not a sanctioned individual or entity or acting on behalf of one?
• Have I checked whether my export is on the list of prohibited exports?
• Is this a new client or is it someone I know well? If they are new, why have they come to me now?
• How is this customer intending to pay me? Am I confident that this will work? Have I spoken to my bank?

Importers

• What is the country of origin of the goods?
• If the country of origin is not Russia, am I comfortable that the goods originate from where it is said they come from?
• Have I checked whether the good is on the list of prohibited imports of Russian origin?
• If the good is a prohibited import and you wish to apply for an exemption, do this before the goods are paid for or shipped.
• How is this customer suggesting I pay them? Have I spoken to my bank?

Services

• If you intend to provide services to someone in Russia, or receive services from Russia, you also need to consider the implications of sanctions and ensure you are not dealing with a restricted individual or entity.
• You should ask similar questions of your client or provider as noted for exporters above.

Guidance and useful links

• Guidance note: Trade measures
• Guidance note: Russian energy products
• Guidance note: Export Prohibitions for dual use items
• Guidance note: Understanding Evasion Risk and Due Diligence in the Russia Sanctions Context
• Guidance note: Update to Exporters
• Watch update for exporters webinar: An Update for Exporters on the Ukraine Crisis - Zoom
• Impact of the Russian invasion of Ukraine for NZ exporters - NZTE
• Ask questions via a helpdesk run by MFAT, NZTE, MBIE, Customs and MPI - Trade Barriers Export Helpdesk

The Ministry of Transport has created specific guidance for the transport sector.

Among other points, the guidance details which ships would be considered ‘restricted ships’, but notes that not all ships flagged to Russia or Belarus are considered as ‘restricted ships’. In contrast, all aircraft registered in Russia or Belarus are ‘restricted aircraft’.

Guidance and useful links

Guidance note: Sanctioned Ships and Aircraft | Ministry of Transport

New Zealand-Russia Trade relationship

How much trade does New Zealand have with Russia?

Before the invasion, Russia made up 0.13% of New Zealand’s total goods imports; and 1% of overall New Zealand exports. Crude oil was our main import until the closure of Marsden Point, and dairy was our single largest export product.

Since Russia’s invasion, there has been a significant decrease in imports from, and exports to Russia, as New Zealand’s trade sanctions have taken effect and businesses have made their own decisions about whether to remain in the Russian market.

From April to December 2022, exports were down 80% compared to the same three quarters in 2021, from NZ$196.8 million to NZ$39.7 million as we largely decoupled our economy from Russia’s.

Since the imposition of the 35% import tariff in April 2022, goods imports from Russia have dropped by 99%. Imports from Russia in April 2022 were NZ$4.8 million, and in February 2023 they were just NZ$62,000.

What impact will the trade measures have on Russia?

Placing a punitive tariff of 35% on goods of Russian origin denies foreign exchange to the Russian Federation to help finance their aggression. It also closes off New Zealand from the possibility of Russian products being unloaded on New Zealand and undermining other similar efforts by our partners.

While our trade with Russia is relatively small, and has decreased significantly since we first imposed trade measures in April 2022, these measures send a strong signal of our condemnation of the Russian Government’s actions in Ukraine.

What impact will the trade measures have on New Zealand?

Prior to the invasion, Russian products made up just 0.13% of total goods imports to New Zealand, being NZ$90 million in the year to December 2021. This was largely made up of crude oil which New Zealand stopped importing upon the closure of Marsden Point oil refinery (a decision that was made prior to Russia’s invasion).

New Zealand imports of Russian products mainly consist of fertilisers, building materials and copper wire. Within these sectors, trade with Russia made up less than 10% of total imports before the invasion.

Can we supply services to Russia?

You must not provide any services to a sanctioned individual or entity, or their associates. There are limited exceptions – please see Regulation 12. You can search the sanctions register on the MFAT website to find whether an individual or entity has been sanctioned.

We encourage you to complete your own due diligence to ensure you are not dealing with an associate of a sanctioned individual or entity. If you are unsure, we recommend you seek legal advice.

You may provide services to individuals or entities that are not sanctioned. However, you may face practical challenges in receiving payment for your services. We recommend you speak to your bank about receipt of payments.

We have recently sold goods to Russia. Can we provide follow-up services to assist commissioning of these goods?

The rule above applies: you must not provide any services to a sanctioned individual or entity or their associates. This includes the provision of follow up services, trouble shooting and any requests for assistance or advice. You may provide services to customers who are not sanctioned.

Can we provide financial services to Russia?

The rule above applies: you must not provide services to a sanctioned individual or entity or their associates. You may provide services to customers who are not sanctioned.

Imports

What can be imported from Russia?

Most goods of Russian origin can still be imported but will be subject to a 35% tariff if they are included in a consignment of total value over NZ$1,000.

All Russian origin gold, oil, coal, gas and certain luxury goods (including caviar, vodka, cigars, perfumes, jewels, and precious metals ), are not able to be imported.

Other luxury goods with a per item value over NZD$1,000 are also not able to be imported.

The full list of prohibited imports is contained in the sanctions register. If these items are imported, they will be seized by Customs and attract a 35% tariff.

You should also check the sanctions register to ensure that you are not dealing with a sanctioned individual or company or their associates.

It’s worth noting that you may face practical challenges in trading with Russia, related to international shipping and making/receiving payments.

Imports arriving in a consignment under NZ$1,000 will not attract the tariff (de minimis). What about the prohibited imports?

Prohibited imports will be seized by Customs and will also be subject to the 35% tariff, even where the consignment value is less than $1,000 (see s70 of the Customs and Excise Regulations 1996).

Will imports that left Russia but had not arrived in New Zealand by 25 April 2022 attract the 35% tariff on entry?

Product of Russian origin that was en route to New Zealand from Russia prior to 25 April will be exempt from the 35% tariff, otherwise the 35% tariff will apply.

If the good is on the list of prohibited imports that entered into force on 4 November (see the sanctions register), is of Russian origin, and it was en route to New Zealand from Russia prior to 4 November, it will be exempt from the import prohibition but the 35% tariff will apply. This does not apply to the gold import ban.

What does “en route to New Zealand” in the context of the 35% tariff mean?

“en route to New Zealand” means:

• The decision to transport the goods to an importer in New Zealand was made prior to 25 April 2022 AND
• The goods commenced the journey to the importer in New Zealand prior to 25 April 2022.

The goods may still be physically in the country of export however must have departed the point of supply.

Importers with goods “en route to New Zealand” prior to 25 April 2022 can apply to Customs for an exemption from the 35% import tariff, unless their product is prohibited from import from 4 November (check the sanctions register).

What does “en route to New Zealand” in the context of prohibited imports of luxury goods and oil, coal and gas products mean?

“en route to New Zealand” means:

• The decision to transport the goods to an importer in New Zealand was made prior to 4 November 2022 AND
• The goods commenced the journey to the importer in New Zealand prior to 4 November 2022.

Importers with prohibited imports “en route to New Zealand” prior to 4 November 2022 can apply to Customs for an exemption from import prohibition. These imports will still attract the 35% tariff.

What does “en route to New Zealand” in the context of prohibited imports of Russian origin gold mean?

The import ban on gold of Russian origin came into force on 25 July. The transition provision contained in Schedule 1 of the Regulations (namely the “en route to New Zealand” rule), does not apply to the import of gold of Russian origin.

Will prohibited imports of luxury goods and oil, coal and gas products of Russian origin that left another country but not arrived in New Zealand by 4 November be prohibited?

If products of Russian origin, that are included in the list of prohibited imports, were en route to New Zealand from another country prior to 4 November, they will not be prohibited even if they arrive after 4 November. This does not apply to the gold import ban.

These products will attract the 35% import tariff.

What is the purpose of the tariff increases on Russian imports? Why raise the tariff and not impose an outright ban?

The increased tariff is part of a series of economic actions we have taken against Russia under the Russia Sanctions Act. 35% represents a high tariff barrier, particularly for the kind of products that New Zealand has imported from Russia in the past, most of which formerly attracted zero tariff. So, Russian products are unlikely to be competitive in the New Zealand market any longer.

This is consistent with the approach a number of our partners have taken. In practice, the effect of the tariff has meant a significant drop in imports coming from Russia (from April to September 2022 imports were down by 75.3% in dollar value).

New Zealand has also applied import bans on certain goods of Russian origin, such as gold, oil, coal, gas and luxury goods (including caviar, vodka, cigars, perfumes, jewels, and precious metals).

Can you ensure the oil we import from other countries isn’t mixed with Russian oil?

New Zealand’s oil largely comes from Asia. When oil is sufficiently transformed its origin is considered to be the place where it underwent transformation. For example, Russian oil, further processed in a third country would be considered to have originated from that third country.

The intent is not to stop Russia producing or selling oil, but to reduce Russia’s overall profit from its sales of oil and to ensure New Zealand is not adding to this profit.

For more information, see MFAT’s guidance on Russian energy products.

What does the ban on luxury goods mean?

We have imposed a ban on the import of some luxury goods of Russian origin. This includes caviar, vodka, cigars, perfumes, jewels, precious metals and other items valued over NZ$1000 , and applies to Russian origin products no matter where they are imported from.

Other food products of Russian origin are still able to be imported, but will attract the 35% import tariff if they are valued over $1,000.

Prohibited exports

What can still be sold into Russia (and other sanctioned countries including Belarus)?

The sanctions register contains a list of prohibited exports to Russia, which include items of strategic importance, oil exploration and oil production products, and luxury goods like wine and seafood.

A range of strategically important items are also banned for export to Belarus and listed in the sanctions register.

New Zealand’s export bans to Russia and Belarus are applied broadly, including where goods are received in a third country for on-forwarding to, or for the benefit of, Russia or Belarus.

You should check the sanctions register to ensure that you are not dealing with a sanctioned individual or company or their associates.

Also prohibited are strategic items under our export controls regime. Please ensure that you are not violating sanctions or export control laws. If you are unsure about a specific product, we recommend you seek legal advice.

Be aware of shipping delays and difficulties in completing transactions. Speak to your freight forwarder about shipping, contact your bank to understand possible complications of completing transactions and seek qualified legal advice.

Will seafood exported to Belarus as a final destination be affected as a part of possible or existing sanction measurements?

At this time you can sell items to Belarus provided you are not dealing with an individual or entity identified in the Regulations (see the sanctions register), if the items are not listed in the prohibited exports to Belarus (as outlined in the sanctions register), or covered by current export controls, and provided the final destination of the goods is not Russia.

Be aware of shipping delays and difficulties in completing transactions. Speak to your freight forwarder about shipping, contact your bank to understand possible complications of completing transactions and seek qualified legal advice.

We export food to Russia, can we continue to export in future, if we get paid before shipping?

You can sell goods into Russia if they are not going to an individual or entity (or their associates) sanctioned by New Zealand (see the sanctions register), if the goods are not listed in the prohibited exports to Russia (as outlined in the sanctions register) or covered by current Export controls. Some luxury food is now prohibited from export under the luxury goods ban, e.g., wine and some seafood.

Be cognisant of shipping delays and difficulties in completing transactions. Speak to your freight forwarder about shipping, contact your bank to understand possible complications of completing transactions and seek legal advice.

You said you wouldn’t stop the export of food, but you have now. Why is that?

We have imposed a ban on the export of luxury food and beverages to Russia. This includes high-end products like wine and certain types of seafood like lobster. Other food products are still able to be exported to Russia.

Exports of prohibited items will be permitted if they are made in good faith for a humanitarian purpose and doing so is consistent with the purposes of the Russia Sanctions Regulations 2022 (regulation 14).

Why have you stopped the export of wine to Russia?

We have imposed a ban on the export of luxury goods to Russia. This includes high-end products like truffles, caviar and lobster, as well as wine.

Exports of prohibited items will be permitted if they are made in good faith for a humanitarian purpose and doing so is consistent with the purposes of the Russia Sanctions Regulations 2022 (regulation 14).

Payments

My business is not able to make/receive payments to Russia because my bank is complying with sanctions.

Due to the nature of financial transactions, institutions such as banks are also required to comply with sanctions imposed by other countries, including the United States, United Kingdom and Australia. This means that if an individual or entity (or in some cases, entire jurisdictions) is sanctioned by another country, it is possible that banks in New Zealand will refuse to engage in transactions related to them, or that transactions will be stopped before they arrive in New Zealand. We encourage you to seek legal advice on your specific situation and speak to your bank well in advance of any transactions.

What if you are still owed payment for exported goods? What if outstanding debts can’t be transacted due to measures through SWIFT? What options are there to deal with this?

Getting paid for exported goods is more difficult. Continue to talk to your Russian partners in market, many Russian businesses will be experiencing similar issues with completing transactions and may have some practical advice.

Additionally, contact your bank to discuss if it is possible to send or receive payments within the constraints imposed by the New Zealand and international sanctions regimes. You should seek qualified legal advice if necessary.

We have clients in Russia and former Soviet States. It would appear that many companies have bank accounts outside of Russia or their country.

The impact of SWIFT restrictions will depend very much on the precise payment arrangements in place.  Banks in many countries will face similar limits as banks here do on their ability to do business with Russian banks.  We suggest exporters contact their banks for advice on if, and how, payments can be received legally and within the spirit of the sanctions.

Is it possible that payments made to, and received by, New Zealand banks but are held-up in New Zealand or even returned by a New Zealand bank, despite no Government sanction on the goods traded? Is this legal?

Banks are required to comply with relevant sanctions imposed by New Zealand under the Russia Sanctions Act. Banks may also comply with sanctions imposed by other countries. This means that if an individual or entity is sanctioned by another country, it is possible that banks in New Zealand will refuse to engage in transactions related to them. SWIFT restrictions imposed on Russian banks can also make international payments very challenging.

In these instances we encourage you to speak to your bank in the first instance about why a payment has been blocked and seek legal advice on options. You may also contact the Banking Ombudsman for any complaints.

Exemptions, amendments or revocations

I have a legitimate need to engage with sanctioned individuals or entities, what can I do?

Regulation 12 of the Russia Sanctions Regulations 2022 details situations in which dealing with sanctioned persons, assets or services is allowed. Additionally, you can request an exemption, in relation to particular events or dealings with individuals, assets or services. Find out how to apply for an exemption.

The sanctions do not apply in relation to humanitarian organisations carrying out their humanitarian activities (Regulation 18) and the export prohibition does not apply if there is a humanitarian purpose for the export (Regulation 14).

I have a legitimate need to export or import prohibited goods, what can I do?

Regulation 12 of the Russia Sanctions Regulations 2022 details situations in which dealing with sanctioned persons, assets or services is allowed. Additionally, you can request an exemption, in relation to particular events or dealings with individuals, assets or services. Find out how to apply for an exemption.

The sanctions do not apply in relation to humanitarian organisations carrying out their humanitarian activities (Regulation 18) and the export prohibition does not apply if there is a humanitarian purpose for the export (Regulation 14).

Can a listing be amended or revoked?

Possibly. You can request an amendment or revocation of a regulation or a designation notice on the basis of humanitarian need or for any other reason. Find out how to apply for an amendment or revocation.

An application may not be considered if it is in relation to the same matter as an application already submitted within the last six months. 

Other jurisdictions sanctions’ laws

What do US and other foreign sanctions laws mean for New Zealand businesses?

It is important you consider the wider legal and commercial context of your trade and investments. It may be necessary to seek your own legal advice on the sanctions laws of other countries, including the United States, which might apply to your specific context. You may also wish to consult with your financial institution to ensure that any payments from Russia can be accepted, as some banks have restricted dealing with Russia due to US sanctions law. The New Zealand Government is not in a position to provide advice on the implications of US sanctions law.

International trade rules and the World Trade Organisation

How do the trade measures fit within World Trade Organisation rules?

World Trade Organisation (WTO) rules include a national security exception which enables WTO Members to take ‘any action’ they consider necessary to protect their essential security interests ‘in time of war or other emergency in international relations’.

As with other members of the international community who have taken such action, we consider these trade measures are warranted in response to Russia’s war of aggression in Ukraine.

Supply chains and shipping routes

What impact do sanctions have on supply chains and shipping routes?

Many of the major shipping lines have suspended deliveries of non-essential goods to Russia itself. Essential goods, such as humanitarian goods like food, are still being shipped.

While freight connections for essential goods may still be functioning, there are blockages elsewhere in the system. Measures imposed by others like sanctions, restrictions on financial transfers, and restrictions at ports may impede flows of freight. There may also be disruptions where shipping routes go via Russia. Businesses are encouraged to find alternative routes in this case, for example, through Asia or Eastern Europe.

We ship ‘free on board’ (FOB) to all export markets, so don't have great visibility over shipping routes/destinations. Are goods still being delivered/shipped to Russia and/or increasingly unlikely?

Many of the major shipping lines have suspended deliveries of non-essential goods to Russia itself. Essential goods, such as humanitarian goods like food, are still being shipped.

While freight connections for essential goods may still be functioning, there are blockages elsewhere in the system. Measures imposed by others like sanctions, restrictions on financial transfers, and restrictions at ports may impede flows of freight.

There may also be disruptions where shipping routes have gone via Russia. Businesses are encouraged to find alternative routes in this case if possible.

Markets outside Russia

What European markets could end up most at risk for New Zealand exporters if the conflict continues?

New Zealand companies should think about future-proofing cost structures and the cost of the market models. You need to consider that, not just from a Russia/Ukraine perspective, but also in a European context and globally. With much of Europe not being significantly impacted, exporters are advised to engage regularly with their clients and also with NZTE.

What sanctions apply to Belarus?

A number of Belarusian individuals and entities are sanctioned (check the sanctions register).

Certain export prohibitions apply to Belarus as well as Russia. This is detailed in the sanctions register.

The 35% import tariff, import prohibitions, export prohibitions on certain oil exploration and oil production goods, and the export prohibitions on luxury goods only apply to Russia.

Why has New Zealand sanctioned Belarus?

A number of Belarusian individuals and entities are sanctioned (check the sanctions register).

Certain export prohibitions apply to Belarus as well as Russia. This is detailed in the sanctions register.

These sanctions recognise that Belarusian leaders and defence entities are supporting Russia’s actions in Ukraine.