On March 11, 2022, the U.S. government Posted a number of additional sanctions against Russia. The latest measures include the issuance of (i) a new agreement relating to Russia Executive Decree 14068, “Executive Order on the Prohibition of Certain Imports, Exports and New Investments with Respect to Continued Aggression by the Russian Federation” (“EO 14068”) and (ii) four new General Licenses (“GL”) linked to Russia and Ukraine. These measures include a ban on exports and sales of a range of luxury goods to complement a Department of Commerce export ban on these items imposed the same day, as detailed in our previous blog. here. OFAC has also added several individuals and entities to the list of Specially Designated Nationals and Blocked Persons (“SDN list“). OFAC issued a press release providing further guidance regarding the additional penalty measures, available here.
- the importation into the United States of fish and seafood of Russian origin and their preparations, alcoholic beverages and non-industrial diamonds;
- the export, re-export, sale or supply, directly or indirectly, of luxury goods as determined by the Department of Commerce (see below) from the United States or by a US person to any person located in Russia;
- new investments by US persons in any sector of the Russian economy, to be determined by the Secretary of the Treasury;
- the export, re-export, sale or supply, directly or indirectly, of US dollar denominated banknotes from the United States or by a US person, to the Russian government or to any person located in Russia;
- any approval, financing, facilitation or guarantee by a US Person of a transaction by a foreign person where such transaction would be prohibited if carried out by a US Person (for example, payment in US dollars or the use of a US bank to facilitate any of the prohibited transactions above).
EO 14068 also reserves the authority for the Departments of Commerce, State, and Treasury to prohibit the import, export, or re-export of other goods, as needed and appropriate.
OFAC has also released several new Frequently Asked Questions (“FAQs”) related to the new EO, which can be found here. Of particular note are the following points from OFAC’s new FAQ:
- FAQs 1,027 defines the terms “Russian Federation origin”, “fish, seafood and their preparations” and “alcoholic beverages” by referring to the United States Harmonized Tariff Schedule classifications. With respect to the luxury goods export ban, OFAC refers to the Department of Commerce, Bureau of Industry and Security (“BIS”) for guidance. As stated in our previous Blog, the BIS also issued a final rule on March 11 amending the Export Administration Regulations (“EAR”) to prohibit exports, re-exports and transfers (within the country) by any person to or within Russia (and to certain Russian/Belarusian SDNs) of certain luxury goods subject to EAR and by reference to an expanded and detailed list of “luxury goods” by Schedule B number. these include various types of alcoholic beverages, tobacco and tobacco products, perfumes and cosmetics, handbags, works of art, furs, silks, carpets, garments, ‘sports equipment, ceramics, jewelry, gems and jewelry, passenger vehicles, watches, musical instruments, etc. While EO 14068 prohibition on U.S. persons exporting, re-exporting, selling, and supplying luxury goods refers to luxury goods described on the Commerce Department’s list, it does not appear to be limited to luxury goods. covered that are subject to EAR.
- FAQs 1,024 confirms that US persons are not prohibited from finding a new buyer and/or redirecting shipments containing prohibited goods en route to the US to another country under EO 14068.
- FAQs 1,021 clarifies that the prohibitions of former EO 14024 and other Russia-related sanctions apply regardless of whether a transaction is conducted in traditional fiat currency or virtual currency, and therefore apply to virtual currency exchanges , hosts of virtual wallets and service providers of nested services for foreign exchange and virtual currency transactions in which blocked persons have an interest. In addition, US Persons are generally prohibited from engaging in or facilitating prohibited transactions, including virtual currency transactions involving the Central Bank of Russia, the Russian National Wealth Fund and/or the Russian Ministry of Finance. .
General Licenses 17, 18 and 19 related to Russia
GL 17 authorizes transactions until 12:01 a.m. Eastern Daylight Time, March 25, 2022, which are usually incidental and necessary for the importation of fish, seafood and their preparations of Russian origin, beverages alcoholic beverages and non-industrial diamonds in accordance with written contracts entered into before March 11, 2022.
GL 18 authorizes transactions usually incidental and necessary to the transfer of personal non-commercial funds denominated in US dollars from (i) the United States or a US person to an individual in Russia, or (ii) a US individual located in Russia. FAQs 1,028 clarifies that GL 18 allows payment methods, including withdrawals of US dollar-denominated notes through ATMs and hand-carrying of US dollar-denominated notes.
GL 19 authorizes United States individuals located in Russia to engage in certain transactions that are ordinarily incidental and necessary for personal maintenance, including payment of housing costs, acquisition of goods or services for personal use , the payment of taxes or fees, and the purchase or receipt of permits, licenses or public utilities.
GL 23 linked to Ukraine
GL 23 permits certain activities involving the so-called Donetsk People’s Republic or Lugansk People’s Republic regions of Ukraine (“Covered Regions”). Non-governmental organizations are permitted to engage in transactions usually incidental and necessary for humanitarian projects to meet basic human needs, including the provision of drought and flood relief, the distribution of food, nutrition and medicines, the provision of health services, assistance to vulnerable or displaced populations, including people with disabilities and the elderly, and environmental programmes. GL 23 also allows certain activities to support democracy, education, non-commercial projects, and the protection of the environment and natural resources. This authorization extends to the processing and transfer of funds, the payment of taxes, fees and import duties, and the purchase or receipt of permits, licenses or public utility services in the regions covered.
Additional parts added to SDN list
OFAC also added 35 individuals and three entities to the SDN list, the list of which is available here. US Persons are generally prohibited from dealing directly or indirectly with SDNs, entities 50% or more owned by one or more SDNs, and their real property or interests. Non-U.S. persons may be held liable for causing violations by U.S. persons involving SDNs and may also be subject to risks of secondary sanctions (which would include, in particular, the risk of being designated as SDNs themselves). ) for providing “hardware support” to SDNs. .
the Publish “U.S. Government Imposes Sanctions Prohibiting Import of Russian Energy Products and New Investments in Russia’s Energy Sector,” first published on our sanctions blog on March 14, 2022, further describes the restrictions under the EO 14066, including bans on importing energy of Russian origin. the Publish “BIS Imposes Ban on Exports of Luxury Goods to Russia and Belarus and Russian and Belarusian Oligarchs and Malicious Actors” outlines US restrictions on luxury goods exports imposed by the Commerce Department.
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