Sanctions on Russia and Belarus – the law has been adopted by the Polish Parliament

Polish Parliament has adopted the Act on special solutions in the scope of counteracting support for the invasion of Ukraine and serving the protection of national security (“Act”). The Act introduces national sanctions and specifies key aspects related to applying the sanctions on Russia and Belarus imposed by European Union (“EU”) regulations. The law will take effect as of the day following the date of its promulgation in the Journal of Laws.

General information

The Act regulates, at the national level, aspects of applying only certain EU sanction regulations, which apply to Russia and Belarus. These are:

• Council Regulation (EU) No 269/2014 of 17 March 2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine (“Regulation No 269/2014”);
• Council Regulation (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine (“Regulation No 833/2014”); and
• Council Regulation (EC) No 765/2006 of 18 May 2006 concerning restrictive measures in view of the situation in Belarus and the involvement of Belarus in the Russian aggression against Ukraine (“Regulation No 765/2006”);

(Regulation No. 765/2006, Regulation No. 765/2006 and Regulation No. 765/2006 will be hereinafter referred to collectively as “Regulations”).

Moreover, the Act partially relates to Council Regulation (EU) 2022/263 of 23 February 2022 concerning restrictive measures in response to the recognition of the non-government controlled areas of the Donetsk and Luhansk oblasts of Ukraine and the ordering of Russian armed forces into those areas (“Regulation No 2022/263”).

This means that in the case of the remaining EU regulations imposing sanctions (e.g. against Iran), there will still be a lack of appropriate legislative solutions at the national level.

Authority competent to issue authorisations and information obligations

The Head of the National Treasury Administration (“NTA Head”) will have the task of issuing authorisations to not comply with specific provisions of the Regulations (if such a possibility is provided for in the Regulations). This applies, among others, to authorisations to release frozen funds or economic resources or to make them available to the persons or entities included on the sanction lists constituting annexes to the Regulations. The NTA Head will also be competent for the information obligations (notifications) referred to in the Regulations.

Body authorised to carry out inspections

The National Treasury Administration will, in turn, be authorised to carry out customs-tax inspections in the scope of application of certain (listed in the Act) sanctions (i.a. prohibitions concerning funds and economic resources).

The following will also carry out such inspections as part of the exercised supervision or inspection:

• The General Inspector of Financial Information - with respect to obligated institutions, referred to in the Act of 1 March 2018 on Preventing Money Laundering and Financing of Terrorism (“AML Act”); and
• The Financial Supervision Authority - with respect to those obligated institutions supervised by it.

Penalties for not complying with the Regulations and with Regulation No 2022/263

The Act provides for administrative liability or criminal liability for the breach of the certain provisions of the Regulations and of Regulation No 2022/263.

Above all the NTA Head will be able to impose a fine of up to PLN 20,000,000 in the following cases:

• a failure to fulfil the obligation to freeze funds or economic resources or a breach of the prohibition on making them available, as referred to in Regulation No 765/2006 and Regulation No 269/2014;
• a breach of certain (listed in the Act) prohibitions regarding types of goods, technologies, services or transactions set out in Regulation No 765/2006 (e.g. the prohibition on transactions related to the management of reserves, as well as of assets of the Central Bank of Belarus, including transactions with any legal person, entity or body acting on behalf of, or at the direction of, the Central Bank of Belarus) and Regulation No 833/2014 (e.g. the prohibition on imports and exports of iron and steel products specified in the annex to that regulation);
• ·non-fulfilment of certain (listed in the Act) obligations to immediately convey the information set out in Regulation No 765/2006 and Regulation No 269/2014; and
• a failure to comply with the prohibition on knowing and intentional participation in activities the object or effect of which is to circumvent specific (listed in the Act) sanctions provided for in the Regulations.

Additionally, in accordance with the text of the Act, a breach of certain (listed in the Act) prohibitions regarding types of goods, technologies, services or transactions, set out in Regulation No 765/2006, Regulation No 833/2014 and Regulation No 2022/263, as well as engaging in actions the aim or effect of which is the circumvention of these prohibitions, as well as a breach of the ban on the import of coal referred to below, may result in a penalty of imprisonment of a minimum of 3 years. In the case of business entities, the perpetrator of an illegal act is deemed to be the person responsible for concluding a commercial transaction. The courts will be able to rule on the forfeit of goods that are the subject of an illegal act.

National sanctions

1. Sanctions concerning funds and economic resources

The Act introduces also a separate, Polish sanctions regime. The minister in charge of internal affairs (“Minister”) will keep a list of persons and entities (“List”) with respect to whom measures concerning funds and economic resources provided for in Regulation No 765/2006 and Regulation No 269/2014 will be applied respectively, i.e.:

• Freezing all funds and economic resources belonging to, owned, held or controlled by any natural or legal persons, entities or bodies, or natural or legal persons, entities or bodies associated with them;
• A prohibition on making available funds and economic resources available, directly or indirectly, to or for the benefit of natural or legal persons, entities or bodies, or natural or legal persons, entities or bodies associated with them;
• A prohibition on knowing and intentional participation in activities the object or effect of which is to circumvent the measures listed in the above points.

The List will cover exclusively persons and entities that were not included on the sanction lists constituting annexes to the Regulations, and who directly or indirectly support: (i) the Russian invasion of Ukraine, or (ii) serious violations of human rights or repression against civil society and democratic opposition or whose activity represents another serious threat to democracy or the rule of law in Russian or Belorussia, or persons and entities directly linked to such persons or entities (amongst others, in view of personal, organisational, economic or financial links) or with respect to whom there exists a likelihood of their using the funds or economic resources in their disposition for this purpose. The List will be available in the Public Information Bulletin on the Minister’s website. Entities and persons will be entered on the List or deleted from it on the basis of a decision taken by the Minister.

With regard to the persons indicated on the List, authorisations to release frozen funds or economic resources or to making them available will be granted by the NTA Head. The NTA Head will also be competent in the information obligations indicated in Regulation No 765/2006 and Regulation No 269/2014 (applied accordingly).

A failure to apply the sanctions against entities or persons contained on the List will be subject to a fine of up to PLN 20,000,000, imposed by the NTA Head.

2. Exclusion from public procurement proceedings or competitions

The Act provides that the following will be excluded from public procurement proceedings or competitions conducted on the basis of the Act of 11 September 2019 – Public Procurement Law:

• contractors and participants in competitions on the List and with regard to whom this measure has been imposed on the basis of a decision to enter them on the List or who are included on sanctions lists constituting annexes to Regulation No 765/2006 and Regulation No 269/2014;
• contractors and participants in competitions whose actual beneficiary, in the meaning of the AML Act, is a person included on the sanctions list constituting annexes to Regulation No 765/2006 and Regulation No 269/2014, or included on the List or being such actual beneficiary since 24 February 2022, insofar as a measure has been applied to that person in the form of exclusion on the basis of a decision to enter him/her on the List.
• contractors and participants in competitions whose dominant unit in the meaning adopted in the Accounting Act of 29 September 1994 is a unit included on the sanctions lists constituting annexes to Regulation No 765/2006 and Regulation No 269/2014 or included on the List or being such dominant unit since 24 February 2022, insofar as a measure has been applied to that entity in the form of exclusion on the basis of a decision to enter it on the List.

The President of the Public Procurement Office will be able to impose a fine of up to PLN 20,000,000 on sanctioned persons or entities in a situation where in the period of exclusion from public procurement proceedings or a competition such persons or entities seek to be granted public procurement contracts or seek to take part in a competition or take part in such proceedings.

3. Ban on imports of coal from Russia and Belorussia

Moreover, the Act introduces a ban on the import into the Polish territory and movement between two states through the territory of Poland, which starts and ends outside that territory, as well as from the territory of an EU Member State other than Poland to the territory of Poland, of coal covered by item 2701 or 2704 of the Combined Nomenclature (CN)[1] that originates from the territory of Russia or Belorussia. The authorisation to inspect imported coal is held by the head of the customs-tax office, who, in the event of a suspicion of falsification of the origin of coal, will be able to order appropriate tests be carried out. In the case of a breach of this ban, the head of the customs-tax office that has jurisdiction for the location in which the breach of the ban was disclosed will be able to seize the coal and apply for its forfeiture in favour of the State Treasury. What is important is that the NTA Head will be able impose a fine of up to PLN 20,000,000 on a person or entity that breaches the ban. In addition, business entities importing or moving coal to the territory of Poland will be obliged to have documentation, as specified in the Act, which confirms, among other things, the country of origin of the coal, which the Voivodship Trade Inspection inspectors [pl. wojewódzcy inspektorzy Inspekcji Handlowej] will be able to check. A breach of the provisions concerning the documentation may result in a fine being imposed by a Voivodship Trade Inspection inspector of up to PLN 10,000,000. Certain obligations concerning the documentation have also been imposed on business entities that store or market the coal. One can also expect the adoption of a separate legal act specifying the procedure for calculating compensation of damage actually incurred as a result of the entry into force of the ban, the amount of this compensation, and the group of entitled entities.

4. Entry on the list of foreigners whose presence in the territory of Poland is undesired

With regard to the persons included on the List, it will also be possible to apply an additional measure in the form of entering them on a list of foreigners whose presence in the territory of Poland is undesired. Entry on that list entails a range of inconveniences for the foreigner, including a refusal to allow them to enter the territory of Poland.

Moreover, the Act also provides for a ban on applying, using or propagating symbols or names supporting the Russian invasion of Ukraine under pain of a fine, punishment of a limitation of freedom or imprisonment of up to 2 years.

To receive further information about the Act, please contact your partner at CMS or the following CMS experts: Ewa Świderska, Sylwia Raszplewicz-Czyżewska, Patrycja Sikorska-Tuğcu.

[1] In accordance with Council Regulation (EEC) No 2658/87 dated 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff.