In the wake of
As this situation evolves, this alert will be updated or supplemented to include further developments.
EXECUTIVE ORDER
On
- new investment by a
U.S. person, wherever located, in theDNR or LNR or other regions ofUkraine as may be determined by the Secretary of theTreasury (the covered regions); -
importation into
the United States , directly or indirectly, of any goods, services, or technology from the covered regions; -
exportation, re-exportation, sale, or supply, directly or indirectly, from
the United States , or by aU.S. person, wherever located, of any goods, services, or technology to the covered regions; and -
any approval, financing, facilitation, or guarantee by a
U.S. person, wherever located, of a transaction by a foreign person where the transaction by that foreign person would be prohibited by this section if performed by aU.S. person or withinthe United States .
Additionally, the EO blocks all property and interests in property that are in
OFAC SANCTIONS
Beginning on
Directives
OFAC issued a series of directives prohibiting
- Sovereign Debt Restrictions: Under Directive 1A, OFAC extended existing sovereign debt prohibitions to cover participation in the secondary market for bonds issued after
March 1, 2022 , by theCentral Bank of theRussian Federation , theNational Wealth Fund of theRussian Federation , or the Ministry of Finance of theRussian Federation . Sberbank andVTB : Under Directive 2, OFAC imposed sanctions on all correspondent and payable-through account transactions with Public Joint Stock Company Sberbank of Russia (Sberbank ) and 25 of its subsidiaries as well as VTB Bank Public Joint Stock Company (VTB Bank ) and 17 of its subsidiaries.- Debt-Equity Prohibitions: OFAC expanded
Russia -related debt and equity restrictions under Directive 3 to prohibit transactions byU.S. persons or withinthe United States in new debt of longer than 14 days maturity and new equity with respect to 13 major Russian state-owned enterprises, entities that operate in the financial services sector of theRussian Federation economy, and other entities determined to be subject to Directive 3. - Certain Bank Transactions: Under Directive 4,
U.S. persons are prohibited from engaging in any transaction involving theCentral Bank of theRussian Federation , theNational Wealth Fund of theRussian Federation , or the Ministry of Finance of theRussian Federation .
SDN Designations
OFAC has also added designated individuals and other entities to its sanctions lists.
Russian Direct Investment Fund : OFAC designated three entities critical to managing one ofRussia's key sovereign wealth funds:Russian Direct Investment Fund (RDIF), its management companyJoint Stock Company Management Company of theRussian Direct Investment Fund (JSC RDIF), and one of the managing company's subsidiaries,Limited Liability Company RVC Management Company (LLC RVC).- VRB and PSB: OFAC sanctioned “two financial institutions that are crucial to financing the Russian defense industry,” the
Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB) andPromsvyazbank Public Joint Stock Company (PSB), along with 42 of their subsidiaries. - Otkritie, Novikom, and Sovcom: OFAC blocked three major Russian financial institutions: Otkritie and 12 subsidiaries, Novikom, and Sovcom, along with 22 of its subsidiaries.
- Russian Elites and Families Close to Putin: OFAC designated as SDNs certain Russian elites for their association with
President Putin as well as several associated corporate entities.
Russian Harmful Foreign Activities Sanctions Regulations
OFAC issued the Russian Harmful Foreign Activities Sanctions Regulations on
General Licenses
In order “to ensure that these sanctions and prohibitions have an impact on the intended targets and to minimize unintended consequences on third parties,” OFAC has also issued general licenses authorizing certain transactions, including but not limited to those involving agricultural and medical commodities and the COVID-19 pandemic; overflight and emergency landings; and certain dealings in certain debt or equity; among others.
BUREAU OF INDUSTRY AND SECURITY EXPORT CONTROLS/SANCTIONS
Russia EAR Sanctions
The
- Commerce Control List (CCL)-Based License Requirements: BIS imposed new license requirements for all Export Control Classification Numbers (ECCNs) in Categories 3-9 of the CCL, which covers items such as microelectronics, telecommunications items, sensors, navigation equipment, avionics, marine equipment, and aircraft components.
- Policy of Denial: While BIS will accept applications for the export, report, or transfer (in-country) of items that require a license, BIS will employ a policy of denial for such applications. Certain categories will be reviewed on a case-by-case basis, including those related to flight or maritime safety, humanitarian needs, government space cooperation, and government-to-government activities, among others.
- Military End Use/User Expansion: BIS expanded existing restrictions on Russian “military end users” and “military end uses” to cover all items subject to the EAR with exceptions for: (i) food and medicine designated as EAR99; and (ii) items classified as ECCN 5A992.c or 5D992.c, provided those items are not for Russian “government end users” or Russian state-owned enterprises.
- Russia Foreign Direct Product Rule/Military End User Direct Product Rule: BIS implemented new controls whereby certain foreign products items located outside
the United States are subject to the EAR when the items meet “product scope” and “destination scope” requirements. The rule does not apply to foreign-produced items that would be designated as EAR99. Such items are subject to additional requirements if an export is destined for certain Russian entities. DNR /LNR License Requirements: A license is required to export, re-export, or transfer within theDNR or LNR any item subject to the EAR other than food and medicine designated as EAR99 or “software necessary to enable the exchange of personal communications over the internet,” as defined in the regulations.- Oil Refinery Sector Sanctions: BIS expanded existing sanctions against the Russian oil refinery sector designed to “further limit revenue that could support the military capabilities of Russia.” The rule adds a new general prohibition that applies to additional Harmonized Tariff Schedule (HTS)-6 codes and Schedule B numbers for all exports, re-exports, and transfers (in-country) to or within
Russia . - Limited EAR License Exceptions: Limited license exceptions are available for
Russia exports, re-exports, and in-country transfers otherwise prohibited under the new EAR.
Belarus EAR Sanctions
Under the final rule titled “ Imposition of Sanctions Against Belarus Under the Export Administration Regulations,” BIS also amended the EAR to implement new license requirements and review policies for
CONCLUSION
The sanctions regulations and directives issued by OFAC and BIS are sweeping and changing rapidly by the day. Companies should be prudent in ensuring they understand the sanctions and export control developments that may apply to them and their businesses and take steps to reduce any potential liability for violations of
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Mr
PA 19103
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