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

The EU added 15 individuals and 9 entities to the EU restricted parties list pursuant to Council Decision 2022/429. The listed individuals include oligarchs, businessmen and propagandists.

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.

This prohibition does not apply to transactions (i) which are strictly necessary for the purchase, import or export of fossil fuels and certain metals (including titanium and aluminum), and (ii) related to energy projects outside Russia in which an entity listed in Annex XIX is a minority shareholder.
This prohibition does not apply to the performance until May 15, 2022, of contracts concluded before March 16, 2022.

2. Sectoral sanctions

Energy Sector

Extension of export bans on energy-related goods — It is now prohibited to sell, supply, transfer or export, goods or technology listed in Annex II to any person in Russia, or for use in Russia (including its Exclusive Economic Zone and Continental Shelf). It is also prohibited to provide technical assistance, brokering services, financing, or financial assistance or other services related to these items. Previously, the export of items listed in Annex II only required an authorization form the national competent authorities except for certain, categories of oil exploration and production projects in Russia (deep water, offshore and shale projects) for which any exports were prohibited. Hence, this amendment represents a significant strengthening of the restrictions targeting the Russian energy sector. Additionally, before March 25, 2022, the EU only prohibited the provision of specific services (drilling, well testing, logging, etc.) related to the aforementioned oil exploration and production projects in Russia. Therefore, the scope of new article 3 is wider.
- These prohibitions do not apply to the performance until September 17, 2022, of an obligation arising from a contract concluded before March 16, 2022, or ancillary contracts necessary for the performance of such a contract, provided that the competent authority has been informed at least five working days in advance.
- These prohibitions do not either apply to:
  - the exportation, or the provision of services related to the above-mentioned items provided they are necessary for (i) the transport of fossil fuels, in particular coal, oil and natural gas, from or through Russia into the Union, or (ii) the urgent prevention or mitigation of an event likely to have a serious and significant impact on human health and safety or the environment; and
  - the provision of insurance or reinsurance to any entity incorporated or constituted under the law of a Member State with regard to its activities outside the energy sector in Russia.
- The competent authorities may authorize such prohibited transactions provided it is (i) necessary to ensure critical energy supply within the EU, or (ii) intended for the exclusive use of entities owned, or solely or jointly controlled, by an entity incorporated or constituted under the law of a Member State.

New export authorization prohibitions – The competent national authorities shall not grant an authorization to export dual-use items or items listed in Annex VII to any person in Russia or for use in Russia if they have reasonable grounds to believe that these items are intended for the energy sector, unless allowed under the exceptions referred to in article 3 of Council Regulation 833/2014.

New financial and commercial restrictions targeting the Russian energy sector – It is now prohibited (i) to acquire any new or extend any existing participation, (ii) to grant or be part of any arrangement to grant any new loan or credit or otherwise provide financing, (iii) to create any new joint venture with, or (iv) to provide investment services related to these activities to any entity incorporated or constituted under the law of Russia or any other third country if such entity operates in the energy sector in Russia.
- The competent authorities may authorize such prohibited transactions provided that (i) it is necessary to ensure critical energy supply within the EU, as well as the transport of fossil fuels, in particular coal, oil and natural gas, from or through Russia into the Union, or (ii) if it exclusively concerns an entity operating in the energy sector in Russia owned by an entity incorporated or constituted under the laws of a Member State.

Iron and Steel Sector

Import, Purchase, Transport ban – It is prohibited to directly or indirectly import, purchase, transport and provide technical assistance, brokering services, financing or financial assistance, related to iron and steel products listed in Annex XVII if they originate in, have been exported from, are located in or are being exported from Russia.
- This prohibition does not apply to the performance until June 17, 2022, of contracts concluded before March 16, 2022.
- The EU also provided adjustments on the functioning of the safeguard measure to prevent the Union market from suffering shortages or disadvantaging steel users in the EU due to import bans through the Commission Implementing Regulation 2022/434. To avoid any shortage of supply in the Union and ensure fair treatment of items originating from different member states, the Commission decided to proportionally redistribute the volumes of the product category where Belarus and Russia had country-specific tariff rate quotas (CSTRQs), among other exporting countries subject to the safeguard measure based on their share of overall imports in 2021.

Luxury Goods Sector

Export ban – It is now prohibited to sell, supply, transfer or export luxury goods with a value exceeding 300 euros per item (unless specified otherwise in the annex) as listed in Annex XVIII to any person in Russia, or for use in Russia.The EU Commission specified that the 300 euros value is to be assessed based on the statistical value of the goods in the export declaration as defined in section 10 of Annex V of Commission Implementing Regulation (EU) 2020/1197.
- This prohibition does not apply to goods which are necessary for the official purpose of diplomatic missions of the Member States or partner countries in Russia or of international organizations enjoying immunity under international law.

Defense Sector

New addition to Annex IV – 81 Russian entities have been added to Annex IV of Council Regulation 833/2014 as amended. Consequently, the competent authority shall not grant an authorization to export or provide targeted services related to dual-use items or items listed in Annex VII when the buyer or end-user is listed in Annex IV.

Finance Sector

Credit ranking prohibition – With the aim of further limiting Russia’s access to EU’s financial markets, as of April 15, 2022, it will be prohibited to provide credit ranking services or access to any subscription services in relation to credit rating activities to Russian nationals or entities, or to any person residing or established in Russia.
- This prohibition will not be applicable for nationals of a Member State or natural persons having a residence permit in a Member State.

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:

On March 16, 2022, one FAQ on Export-related restrictions;
On March 21, 2022, one FAQ on Aviation;
On March 23, 2022, three FAQs were issued on Trading, Insurance and reinsurance and Restrictions on Russian State-owned media;
On March 24, 2022, one FAQ on Customs related matters;
On March 30, 2022, one FAQ on Donetsk and Luhansk oblasts;
On March 31, 2022, three FAQs were issued on General Questions, Deposit and Financial assistance; and
On April 4, 2022, four FAQs were issued on Crypto-assets, Circumvention and due diligence, Deposits and Euro-denominated banknotes.

Other thematic questions are answered on the page, and in particular:

Questions about Central banks, updated on March 16, 2022;
Questions about several topics, which are Circumvention and due diligence, Crypto assets, Euro-denominated securities, SWIFT system, Refinancing restrictions and Intellectual property rights, updated on March 20, 2022;
Questions about Luxury goods, updated on March 24, 2022; and
Questions about Assets freeze and prohibition to provide funds or economic resources, updated on March 28, 2022.

U.S. and EU Announce Subsequent Rounds of Sanctions in Response to Russia’s Ongoing Aggression Against Ukraine

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