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April 5, 2022 – In response to Russia’s ongoing assault on Ukraine, the U.S. and its allies continue to build pressure on Russia through additional rounds of sanctions. Recent U.S. actions include additional designations of human rights violators, corrupt Belarusian government actors, Russian defense officials and companies, 328 members of the Russian State Duma, and numerous companies and individuals related to the Kremlin’s sanctions evasion networks and technology companies. Additionally, the U.S. determined that the aerospace, marine, and electronics sectors of the Russian economy are subject to sanctions, meaning the U.S. government may impose sanctions on any individual or entity determined to operate or have operated in any of those sectors. Finally, the U.S. issued several general licenses authorizing certain activity in the U.S. government’s interest and Frequently Asked Questions (FAQs) providing further guidance on recent actions.
Please see below for a detailed summary of the latest U.S. and EU Russia-related actions. Additionally, please see our prior client alerts for summaries of earlier tranches of U.S. and EU sanctions.
New U.S. Actions
1. March 15, 2022, Designations
On March 15, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) designated four individuals and one entity pursuant to the Sergei Magnitsky Rule of Law Accountability Act of 2012. These targets were determined to have been involved in concealing events surrounding the death of Russian whistleblower Sergei Magnitsky or were connected to violations of human rights against Russian human rights defender Oyub Titiev. Treasury also re-designated Alyaksandr Lukashenka, the President of Belarus, and newly designated his wife pursuant to Executive Order (“E.O.”) 13405. The Treasury Department’s corresponding Press Release reiterated the U.S.’s call on Russia to “cease its unprovoked and brutal war against Ukraine.” Additionally, the Department of State designated 11 senior Russian defense officials pursuant to E.O. 10424 for operating or for having operated in the defense and related materiel sector of the Russian Federation economy, resulting in their being added to OFAC’s Specially Designated Nationals (“SDN”) List.
2. March 18, 2022, Actions
On March 18, 2022, OFAC issued Ukraine-/Russia-related General License 24. This General License authorizes all transactions prohibited by E.O. 14065 related to the provision or receipt of civil maritime services performed by individuals who are ordinarily resident in the so-called Donetsk People’s Republic or Luhansk People’s Republic regions of Ukraine (collectively, the “Covered Regions”), subject to certain conditions. We assess OFAC likely issued this license to ensure the economic embargo on the Covered Regions does not negatively impact the local civilians’ ability to earn a living in the maritime sector. In addition, OFAC amended FAQ 1020, which provides guidance on the importation of Kazakh-origin crude oil of the Caspian Pipeline Consortium.
3. March 24, 2022, Actions
On March 24, 2022, OFAC issued four additional general licenses: General License 6A, General License 17A, General License 20, and Ukraine-/Russia-related General License 25. General License 6A authorizes transactions related to (1) the exportation or reexportation of agricultural commodities, medicine, and medical devices(including replacement parts and components, or software updates for them); (2) the prevention, diagnosis, and treatment of the COVID-19 pandemic, or related clinical trials; or (3) ongoing clinical trials or medical research in progress on March 24, 2022. General License 6A replaces and supersedes General License 6 to include clinical trials and other medical research activities and clarify that the General License does not authorize against subsequently issued Russia-related prohibitions. General License 17A authorizes under E.O. 14068 the importation, for a limited time, of certain items pursuant to pre-existing written contracts or written agreements. General License 17A replaces and supersedes General License 17 to extend the length of the authorization from March 25, 2022, to June 23, 2022, to import Russia-origin fish, seafood, and preparations thereof. General License 20 authorizes third-country diplomatic and consular funds transfers located in Russia that are prohibited by E.O. 14024 and E.O. 14068, likely to ensure the continuity of diplomatic missions within Russia. General License 25 authorizes certain journalistic activities and the establishment of news bureaus in Crimea and the Covered Regions, likely to ensure the continuity of free press within the comprehensively sanctioned regions. Additionally, OFAC updated FAQ 1,023 and FAQ 1,024 to provide further guidance on how U.S. persons can comply with the import ban under E.O. 14068.
Also on March 24, 2022, OFAC published FAQ 1,029, which provides guidance on transactions with the Central Bank of the Russian Federation involving gold. OFAC also sanctioned a number of “key enablers of the invasion”, including dozens of Russian defense companies, 328 members of the Russian State Duma, and the head of Russia’s largest financial institution and a close Putin associate, Herman Gref of Sberbank. The U.S. noted this action was aligned with similar actions taken by the European Union, the United Kingdom, and Canada, and reflects their continued agreement to hold Putin and his direct enablers accountable for his invasion of Ukraine.
4. March 31, 2022, Actions
On March 31, 2022, OFAC designated 21 entities and 13 individuals supporting the Kremlin’s sanctions evasion networks and technology companies, which are instrumental to Russia’s ability to prolong the war. Treasury also determined that three new sectors of the Russian Federation economy are subject to sanctions pursuant to E.O. 14024; specifically, the aerospace, marine, and electronics sectors in the Russian Federation. This determination allows Treasury to impose sanctions on any individual or entity determined to operate or have operated in any of those sectors.
New EU Actions
On March 15, 2022, the EU imposed further restrictive measures on Russia in response to its “brutal aggression against Ukraine and its people” through one EU Council Regulation and one Council Decision. The EU also provided adjustments on the functioning of the safeguard measure through the Commission Implementing Regulation.
These sanctions aimed at further ramping up economic pressure on the Kremlin and undercut its technological base and curtail its ability to finance its invasion of Ukraine.
1. Individual restrictive measures
These individuals are subject to an asset freeze and a prohibition from making funds and economic resources available as well as a travel ban in the EU as of March 16, 2022. In total, as of March 15, 2022, 877 individuals and 62 entities have been designated under the EU Ukraine/Russia-related sanctions program.
New general prohibition to engage with listed Russian state-owned entities
The EU introduced a new general restrictive measure targeting certain government-related transactions. It is now prohibited to engage in any transactions with specific Russian state-owned entity listed in Annex XIX (including United Aircraft Corporation, Rosneft and Gazprom Neft). This prohibition also applies to (i) any entity established outside the Union more than 50% owned by one of the listed entities, and (ii) entities acting on behalf of the mentioned companies.
2. Sectoral sanctions
Iron and Steel Sector
Luxury Goods Sector
3. New EU FAQs
Since March 16, 2022, the European Commission has issued 11 Frequently Asked Questions on its dedicated webpage. The following FAQs were published:
Other thematic questions are answered on the page, and in particular: