As of March 20, 2022, a new Executive Order (EO) prohibited certain imports, exports, the transfer of US dollar banknotes to Russia, and new investments involving certain sectors of the Russian economy.  The US Office of Foreign Assets Control (OFAC) also issued new General Licenses and Frequently Asked Question (FAQ) guidance. Additionally, the US Department of Commerce’s Bureau of Industry & Security (BIS) announced new regulations to control the export, reexport, and transfer (in country) of certain luxury goods to or within Russia and Belarus. BIS also identified numerous aircraft subject to US export controls jurisdiction that had flown to Russia without a license, and issued a reminder regarding the restrictions under General Prohibition 10 under the Export Administration Regulations (EAR) of servicing such aircraft.

Key points of these US sanctions developments and export controls are summarized below.

For a summary of US sanctions and export controls adopted between February 21 and March 8, 2022, see this Steptoe blog post.Continue Reading Update: New US Sanctions on Russia Target Certain Imports, Exports, Dollar Banknotes, and Investments

On March 7, 2022, the Financial Crimes Enforcement Network (FinCEN) of the US Department of the Treasury published guidance (Guidance) for US financial institutions warning about: (1) efforts of foreign actors to evade expanding US economic sanctions and trade restrictions related to the Russian Federation and Belarus and (2) increased risk of malicious cyber-attacks and related ransomware campaigns, following the invasion of and continued military action in Ukraine.  The Guidance provides instructive red flags and related advice for all US financial institutions to evaluate, and provides information of particular relevance for Money Services Businesses (MSBs) and other FinCEN-regulated institutions undertaking transactions in what the agency calls “convertible virtual currency” (CVC).

Most notably, FinCEN strongly encourages US financial institutions that have information about CVC flows, including exchangers or administrators of CVC to: (1) be mindful of efforts to evade expanded US sanctions and export controls related to Russia and Belarus, summarized by Steptoe here; (2) submit Suspicious Activity Reports (SARs) as soon as possible regarding such conduct; (3) undertake appropriate risk-based due diligence of customers, and where required, enhanced due diligence; (4) voluntarily share information with other financial institutions consistent with Section 314(b) of the USA PATRIOT Act; and (5) consider using tools to identify assets that must be blocked or frozen under applicable sanctions.Continue Reading What US Financial Institutions Need to Know about FinCEN’s Russian Sanctions Evasion and Ransomware Guidance

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

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 December 29, 2021, the PRC State Council’s Information Office (the Information Office) published a white paper on export controls, providing a comprehensive picture of China’s current legal and regulatory regime for export controls and potential future changes in export control governance. The document is China’s first white paper on export controls and comes approximately one year after the implementation of the PRC Export Control Law in December 2020.

On the same day, the PRC Ministry of Commerce (MOFCOM), which plays a central role in administering China’s export control regime for non-military items, issued a statement giving more information about the White Paper, while an unnamed MOFCOM official gave an interview to Chinese state-owned media discussing the White Paper in the context of PRC government policy with respect to multilateral export controls as well as China’s national security and development interests.Continue Reading China’s First White Paper on Export Controls Summarizes Legal Developments, Opposes “Abuse” of Export Controls

On December 22, 2021, the US Treasury Department’s Office of Foreign Assets Control (OFAC) issued three general licenses (GLs) to authorize additional activities involving the Taliban and the Haqqani Network in Afghanistan that would otherwise be prohibited under the Global Terrorism Sanctions Regulations, 31 CFR part 594 (GTSR), the Foreign Terrorist Organizations Sanctions Regulations, 31

On December 15, 2021, the White House issued Executive Order (EO) 14059, “Imposing Sanctions on Foreign Persons Involved in the Global Illicit Drug Trade.”  The new EO, which implements aspects of the Fentanyl Sanctions Act of 2019 (21 U.S.C. § 2301 et seq.), could bring a significant expansion in the US government’s use of sanctions to combat narcotics trafficking.  It also builds on more than 25 years of efforts including Clinton-era sanctions against Colombian drug trafficking networks and the identification of drug trafficking organizations under the Foreign Narcotics Kingpin Designation Act.  The new EO includes innovative designation criteria geared toward the Biden administration’s goal “to modernize and update our response to drug trafficking,” as stated in the EO’s preamble.
Continue Reading US Government Expands Counter-Narcotics Sanctions with New Executive Order on Global Illicit Drug Trade

On December 9, 2021, the US government announced an arms embargo on Cambodia, driven by a litany of issues, including concerns about the country’s military cooperation with China and human rights abuses.  The arms embargo is implemented through the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR), under amendments made by the Department of State’s Directorate of Defense Trade Controls (DDTC) and the Department of Commerce’s Bureau of Industry and Security (BIS), respectively.

The State Department final rule adds Cambodia to Section 126.1 of the ITAR, which imposes a unilateral US arms embargo. The BIS final rule similarly adds Cambodia to EAR Country Group D:5 (US arms-embargoed countries).  The BIS rule also imposes a more restrictive review policy for license applications for dual-use items controlled for national security reasons and subjects Cambodia to the EAR’s broad military and military-intelligence end-use and end-user restrictions.Continue Reading US Imposes Arms Embargo on Cambodia Over China Concerns