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Alex Baj’s practice primarily involves export controls and economic sanctions laws and regulations, anti-corruption investigations and compliance, international trade, and security clearance issues. Alex advises clients on export control and economic sanctions laws and regulations, including the Export Administration Regulations (EAR), International Traffic in Arms Regulations (ITAR), US sanctions regulations administered by the Office of Foreign Assets Control (OFAC), and nuclear export controls under the jurisdiction of the Nuclear Regulatory Commission (NRC).  Alex specializes in the development and implementation of export and anti-corruption compliance policies and procedures and training, internal investigations and voluntary disclosures under the EAR, the ITAR, and OFAC rules, due diligence for mergers and acquisitions, and on encryption and cybersecurity export controls.  Her clients include companies involved in defense, aerospace, software, semiconductor, and uranium processing industries.

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Since February 21, 2022, the United States has joined a coalition of countries imposing sanctions in response to Russia’s invasion of Ukraine. New US sanctions and export controls are wide ranging and complex, significantly impacting trade and related financial transactions between the US and Russia, as well as Belarus.  They also affect transactions and exports from outside the United States in many areas of commerce. The following is a high-level overview of recent US legal developments as of March 8, 2022.

For more information on how these measures could impact your organization, contact a member of Steptoe’s Economic Sanctions and Export Controls teams.

Additional resources can be found on Steptoe’s “Sanctions against Russia: Implications for Business and International Trade” page.Continue Reading A Summary of New Ukraine-related US Sanctions and Export Controls on Russia and Belarus

The United States government has continued to impose numerous economic sanctions and export controls measures following Russia’s invasion of Ukraine.  On February 24, 2022, the US Commerce Department’s Bureau of Industry and Security (BIS) significantly expanded export controls applicable to Russia.  On February 25, 2022, the US Treasury Department’s Office of Foreign Assets Control (OFAC) added Russian President Vladimir Putin and others to the Specially Designated Nationals (SDN) List.  It also imposed significant economic sanctions measures targeting Russia’s financial system — including by imposing sanctions on Russia’s largest financial institutions and limiting the ability of certain Russian state-owned and private entities to raise capital.  Together, OFAC’s actions, which were taken pursuant to Executive Order (EO) 14024 following Russia’s invasion of Ukraine, are estimated to affect nearly 80 percent of all banking assets in Russia.

Finally, on February 26, 2022, the United States and European Union countries, together with the United Kingdom and Canada, announced an agreement to block certain Russian banks from access to SWIFT (with Japan also agreeing the following day), to impose sanctions on Russia’s Central Bank, and to limit the ability of certain Russian nationals connected to the Russian government to obtain citizenship in their countries. They further agreed to ensure effective transatlantic coordination in implementing sanctions, including by sanctioning additional Russian entities and persons, and by working together and with other governments around the world to identify and freeze sanctioned Russian assets.Continue Reading Biden Administration Imposes Sweeping Financial Sanctions, Export Controls after Russian Invasion of Ukraine

On February 23, 2022, the White House announced sanctions on the Nord Stream 2 pipeline following the announcement that Germany would halt certification of the project. Shortly after, the US Treasury Department’s Office of Foreign Assets Control (OFAC) named Nord Stream 2 AG and its managing director as Specially Designated Nationals (SDNs) pursuant to the Protecting Europe’s Energy Security Act (PEESA) and Executive Order (EO) 14039 of August 20, 2021. OFAC also issued General License No. 4 (GL-4) under EO 14039 authorizing US persons to engage in transactions that are ordinarily incident and necessary to the wind down of transactions involving Nord Stream 2 AG and any entity owned 50 percent or more by it, until March 2, 2022.

The day before, on February 22, 2022, OFAC named more than 40 entities, five individuals, and five vessels as SDNs under EO 14024 of April 15, 2021. The targets included two banks: Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB) and Promsvyazbank Public Joint Stock Company (PSB). US persons are prohibited from engaging in any transfer, transaction, export, import, withdrawal, or other dealing involving property or interests in property of SDNs, including the two banks and Nord Stream 2 AG, and if in the possession of a US person or otherwise in the United States, such property or interest in property must be blocked and reported to OFAC in no more than ten days. The prohibitions also apply to any legal entity owned 50 percent or more by one or more SDNs, even if not specifically named or included on the OFAC SDN list.Continue Reading Update: Biden Administration Announces Sanctions on Nord Stream 2, Russian Banks, Sovereign Debt and Other Targets

On February 21, 2022, the White House issued a new Executive Order (EO) imposing comprehensive sanctions on the disputed Donetsk and Luhansk regions of Ukraine following President Vladimir Putin’s announcement that Russia would recognize the independence of the so-called Donetsk People’s Republic (DNR) and Luhansk People’s Republic (LNR) and place Russian military forces in those territories for purported peacekeeping operations.

The new EO prohibits:

  • new investment in the DNR or LNR by US persons, wherever located;
  • the importation into the United States, directly or indirectly, of any goods, services, or technology from the DNR or LNR;
  • the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a US person, wherever located, of any goods, services, or technology to the DNR or the LNR; and
  • any approval, financing, facilitation, or guarantee by a US person, wherever located, of a transaction by a foreign person where the transaction by that foreign person would be prohibited if performed by a US person or within the United States.

Continue Reading White House Announces First Sanctions after Russia Enters Ukraine’s Donetsk and Luhansk Regions

Economic sanctions and export controls will form a core part of any multilateral response to an escalation of Russia’s military actions targeting Ukraine. While it is not possible to predict with certainty whether an escalation will occur or what form the responsive measures would take, this blog post outlines some of the current US sanctions proposals and authorizations to assist companies in taking preliminary steps to assess their potential exposure.

As of January 2022, none of the United States, the EU, or the UK have implemented any new, significant Russia-related sanctions or export control measures concerning Russia’s recent military buildup near the Russia-Ukraine border. Based on events in 2014 and the sanctions that ensued, companies could face rapid and potentially disruptive regulatory restrictions with wide-ranging impacts on a variety of industries. Some measures could be imposed within hours of a triggering event, or even prior to a specific triggering event. The US, EU, and UK are likely to coordinate a sanctions response to some extent, but some variations across different jurisdictions’ sanctions measures are also to be expected.  According to reports, policymakers have yet to agree on the triggers for new sanctions, and diplomatic efforts are ongoing.Continue Reading Preparing for New Russia-Related Sanctions and Export Controls

On April 15, 2021, the White House and the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced a package of economic sanctions targeting Russia, including expansive new legal authorities that would allow for the imposition of additional future sanctions on Russia in the technology sector and on Russian government bodies.  OFAC has also issued expanded restrictions on participation in the primary market for Russian sovereign debt, and lending to the Russian government, by US financial institutions.  In addition, OFAC blocked nearly 40 additional individuals and entities for “attempt[ing] to influence the 2020 [US] presidential election” and engaging in certain activities in Crimea.  At the same time, the US Department of State announced the expulsion of 10 Russian diplomats.

The centerpiece of the package is Executive Order (“E.O.”) 14024, which, according to an OFAC press release, “elevates the [US] government’s capacity to deploy strategic and economically impactful sanctions to deter and respond to Russia’s destabilizing behavior.”  As the first significant Russia sanctions action by the Biden Administration, E.O. 14024 appears to have been intended to send a strong signal to Russia, but without taking action at this stage that would be highly or disproportionately economically damaging.  In taking this approach, it appears that the Administration has left open the possibility of an improvement in relations with Russia.  Indeed, these sanctions were preceded by President Biden’s April 13th proposal of a possible summit with President Putin to “discuss the full range of issues facing the United States and Russia.”Continue Reading New Russia Sanctions Focused on the Technology Sector and Sovereign Debt Markets

On March 2, 2021, the US Departments of Treasury, State, and Commerce announced the coordinated imposition of sanctions and other restrictive measures on Russia and Russian officials and entities for the “poisoning and subsequent imprisonment of Russian opposition figure Aleksey Navalny.” The Department of the Treasury added seven Russian officials and entities to the Specially Designated Nationals and Blocked Persons List (the SDN List) pursuant to Executive Order (EO) 13661 and EO 13382, thereby blocking their property or interests in property that come within the possession of US persons or the jurisdiction of the United States. US persons are now prohibited from engaging in transactions with these SDNs. The State Department designated seven entities under its own authority, including four that were already on the SDN List. Treasury further expanded the sanctions applied to Russia in 2018 after the poisoning of Sergei Skripal in the UK, and named six entities as operating for the Russian defense sector, triggering sanctions. The Commerce Department announced the addition of fourteen entities to the Entity List, which triggers a licensing requirement for exports, re-exports, and in-country transfers to those entities of all items subject to the US Export Administration Regulations (EAR).
Continue Reading US Applies Wide Range of Sanctions to Russian Officials and Entities

On August 27, 2020, the US Department of Defense (“DoD”) published a second tranche to its list of “Communist Chinese military companies,” pursuant to Section 1237 of the of the National Defense Authorization Act for Fiscal Year 1999 (the “DoD List”).

The announcement follows the DoD’s June 24, 2020, publication of a letter to Senator Tom Cotton enclosing a list of twenty companies headquartered in the People’s Republic of China (“PRC”) which DoD determined are operating directly or indirectly in the United States and are “Communist Chinese military companies.”

(Click here for Steptoe’s blog post following the June 24, 2020 publication of the DoD letter.)Continue Reading Update: US Department of Defense Publishes Update to List of “Communist Chinese Military Companies”

On July 16, 2020, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued two new Ukraine-/Russia-related general licenses:  General License 15I, Authorizing Certain Activities Involving GAZ Group, which replaces General License 15H; and General License 13O, Authorizing Certain Transactions Necessary to Divest or Transfer Debt, Equity, or Other Holdings in GAZ Group, which replaces General License 13N.  OFAC also updated nine related FAQs – 570, 571, 586, 588, 589, 590, 591, 592, and 625 – on July 22.

Most notably, General License 15I expands the scope of the pre-existing authorization (covering only maintenance, wind-down and a very limited set of additional activities involving GAZ Group) to include new activities relating to the manufacture and sale of vehicles and related products.  Although many activities were able to continue under the prior GAZ Group general licenses (due to the expansive definition of “maintenance” in FAQ 625), this appears to be an important development for GAZ Group and for prospective or new business partners of GAZ Group.  OFAC has not disclosed any specific developments triggering this change, such as with respect to the ownership or control of Oleg Deripaska in GAZ Group, although the new license does provide for new reporting obligations related to ownership and control of GAZ Group.

General License 15I authorizes certain activities, subject to numerous limitations stated therein, for 190 days – from July 16, 2020 through 12:01 a.m. eastern standard time, January 22, 2021 – which is over a month longer than any of its predecessors.Continue Reading OFAC Authorizes Additional Activities Involving GAZ Group

On July 15, 2020, the U.S. Department of State updated its public guidance on Section 232 of the Countering America’s Adversaries Through Sanctions Act (“CAATSA”), which authorizes (but does not require) the president to impose sanctions on “a person” that “knowingly” invests in Russian energy export pipelines, or that sells Russia goods, technology or services for such pipelines where certain monetary thresholds are met.

The Department of State announced that the purpose of the updated guidance is “to expand the focus of implementation of Section 232 to address certain growing threats to U.S. national security and foreign policy interests related to Russian energy export pipelines, particularly with respect to Nord Stream 2 and the second line of TurkStream.” This is a significant change, as the prior public guidance stated “The focus of implementation of Section 232 sanctions would be on . . . [Russian] energy export pipeline projects initiated on or after August 2, 2017 . . . For the purposes of Section 232, a project is considered to have been initiated when a contract for the project is signed. Investments and loan agreements made prior to August 2, 2017 would not be subject to Section 232 sanctions.”  This prior guidance had suggested that the focus of implementation of Section 232 would not be on Nord Stream 2 or Turkstream (either line), because these projects were “initiated” before August 2, 2017.Continue Reading US Clarifies Secondary Sanctions on Nord Stream 2