On September 14, 2023, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the Department of State, and the Department of Commerce’s Bureau of Industry and Security (“BIS”) announced new sanctions designations and export control guidance related to Russia. These developments are the latest updates in the U.S. government’s ever-evolving response to Russia’s war in Ukraine through economic sanctions and export controls.
Russia/Ukraine Sanctions
UK Publishes Guidance on the Scope of Sanctions Targeting Russian Iron and Steel Products Processed in Third Countries
By Alexandra Melia on
Posted in Russia/Ukraine Sanctions, UK Sanctions
On September 8, 2023, the UK Departments for Business and Trade and International Trade jointly published guidance on the scope of the sanctions on certain Russian iron and steel products processed in a third country that will come into effect under Part 5, Chapter 4CA of The Russia (Sanctions) (EU Exit) Regulations 2019 (“Russia Regulations”) on September 30, 2023 (“Guidance”). The measure seeks to reduce circumvention of sanctions on the covered Russian iron and steel products by limiting market participants’ ability to conceal the Russian origin of these items through third country processing. The Guidance confirms that there will be no exceptions or transitional period in relation to the goods covered by the prohibition that was introduced in The Russia (Sanctions) (EU Exit) (Amendment) Regulations 2023 in April 2023, making it important for impacted companies to promptly assess the Guidance to determine the likely impact of the sanctions on their business activities and put in place controls to ensure compliance with the new restrictions timely.…
UK High Court Rejects First Delisting Challenge Under the UK’s Russia Sanctions Regime
By Elliot Letts & Alexandra Melia on
Posted in Russia/Ukraine Sanctions, UK Sanctions
On August 18, 2023, the UK High Court issued a judgment in the first sanctions designation challenge pursuant to the UK’s Russia sanctions regime under Section 38 of the Sanctions and Anti-Money Laundering Act 2018 (“SAMLA”). The challenge was brought by Eugene Shvidler (“Mr. Shvidler”), a UK-US dual national businessman, following an unsuccessful ministerial review in which Mr. Shvidler sought to reverse his UK designation. The High Court rejected the challenge on the grounds that the decision to maintain Mr. Shvidler’s designation was proportionate and non-discriminatory. Mr. Justice Garnham’s judgment addressed both the threshold for a UK listing and the balance that must be struck between the rights of a designated person and the public interest when assessing a designation decision under Section 38 of SAMLA, points which will have broader relevance to future UK delisting cases.…
UK Issues New Russia Trade Sanctions Circumvention Guidance
By Alexandra Melia on
Posted in Russia/Ukraine Sanctions, UK Sanctions
On May 22, 2023, the Department for Business and Trade’s Export Control Joint Unit published new guidance on trade sanctions circumvention under the UK’s Russia sanctions regime (the “Guidance”). While direct trade between the UK and Russia reportedly has fallen significantly since the introduction of a broad package of trade sanctions in response to Russia’s invasion of Ukraine, there is a growing associated risk of displacement of trade and diversion of goods to Russia via indirect routes.
The Guidance seeks to prevent the trade sanctions, export controls, and other measures implemented in response to Russia’s invasion of Ukraine being undermined by raising awareness of the risks associated with trade in goods subject to UK trade sanctions and export controls and the obligations that trade in such goods places on those subject to UK jurisdiction to conduct appropriately robust due diligence that considers certain key risks associated with the product, customer, and destination.…
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BIS Expands Export Controls on Russia and Belarus and Issues New Joint Alert with FinCEN
By Ryan Pereira, Jack Hayes & Wendy Wysong on
Posted in Export Controls, Russia/Ukraine Sanctions
On May 19, 2023, in conjunction with the G7, Australia, and other international partners, the US government announced a range of new export controls and sanctions and added 71 entities to the Entity list, primarily for supporting Russia’s military and defense sectors. The new export controls – and new sanctions, which are the subject of a separate blog post – reflect the continued efforts of the US (in coordination with international allies) to target those attempting to circumvent or evade sanctions or export controls against Russia and Belarus. The new measures are intended to further undermine the Russian and Belarusian industrial bases and counteract their ability to continue to support the war in Ukraine and to further limit Russia’s energy revenue and future extractive capabilities.
Also on May 19, 2023, the Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) and the Department of Commerce’s Bureau of Industry and Security (“BIS”) issued a Joint Supplemental Alert entitled “FinCEN and the U.S. Department of Commerce’s Bureau of Industry and Security Urge Continued Vigilance for Potential Russian Export Control Evasion Attempts” (the “Supplemental Alert”), which is intended to assist financial institutions in the risk-based screening of export-related financial transactions in order to determine whether customers and transactions may be connected to export controls evasion.…
OFAC and State Department Significantly Expand Russia-Related Sanctions
By Ryan Pereira, Jack Hayes, Wendy Wysong & Dave Stetson on
Posted in Economic Sanctions, Russia/Ukraine Sanctions
On May 19, 2023, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) and the US Department of State announced a new round of multifaceted sanctions against Russia. These sanctions actions were announced alongside additional export controls imposed by the US Commerce Department’s Bureau of Industry and Security (“BIS”) and the publication of a new joint alert by BIS and the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”), which are the subject of a separate blog post.
The new sanctions include expanded secondary sanctions authorities targeting additional sectors of the Russian economy; designations of more individuals and entities on the List of Specially Designated Nationals and Blocked Persons (“SDN List”); the inclusion of additional services among those that are prohibited for export to Russia; and new reporting requirements for US holders of property in which Russia’s Central Bank, Finance Ministry, or National Wealth Fund have an interest.
US persons, and others doing business that involves US jurisdiction, should continue to be vigilant against transacting with SDNs or entities that are owned by 50% or more by SDNs. US and non-US persons alike should also carefully consider whether any of their business could constitute operations in one of the newly sanctioned sectors of Russia’s economy.…
Continue Reading OFAC and State Department Significantly Expand Russia-Related Sanctions
UK Expands Designations of All Subject to Asset Freeze Sanctions Under the Russia Regime to Include a Ban on the Provision of Trust Services
By Alexandra Melia & Elliot Letts on
Posted in Russia/Ukraine Sanctions, UK Sanctions
On March 21, 2023, HM Treasury’s Office of Financial Sanctions Implementation (“OFSI”) designated all individuals and entities that currently are subject to an asset freeze under the Russia (Sanctions) (EU Exit) Regulations 2019 (the “Regulations”) for the additional purpose of the trust services sanctions measures outlined in Regulation 18C(1) of the Regulations. As a result, persons subject to UK sanctions jurisdiction are now prohibited from providing trust services to, or for the benefit of, those UK designated persons absent an available exception or licence. OFSI also has issued a wind down General Licence and updated its Russia Sanctions Guidance (“OFSI Guidance”) to address the interaction between the asset freeze, trust services, and professional and business services prohibitions.
In a blog post announcing the measure, OFSI indicated that the move represents a conscious effort close off perceived loopholes in the existing trust services prohibitions in response to intelligence from enforcement agencies suggesting that UK-based trust service providers have been offering their services to persons for the purpose of reducing the impact of sanctions in the event that they become subject to them. …
EU adopts 10th package of sanctions
By Renato Antonini, Eva Monard, Byron Maniatis & Elli Zachari on
Posted in EU Sanctions, Russia/Ukraine Sanctions
After weeks of going back and forth, the Council of the European Union (“Council”) was finally able to adopt the 10th package of sanctions against Russia in time to coincide with the first anniversary of Ukraine’s invasion on Friday, 24 February. Since a unanimous decision by the Member States is required in order to move forward with the sanctions, the adoption of the tenth package was delayed due to differences between certain countries over parts of the package.
The new set of measures include additional designations, trade and financial restrictions, reporting obligations, and further restrictions on Russian nationals. Most of the rules entered into force on 26 February 2023, the day following their publication in the Official Journal of the EU. The key measures described below can be found in the following documents:
US Imposes Additional Export Controls, Sanctions, and Tariffs targeting Russia, Belarus, and Iran On First Anniversary of Russia’s War Against Ukraine
On February 24, 2023, the US government announced a range of new export controls, sanctions, and tariffs to coincide with the first anniversary of Russia’s ongoing war against Ukraine. These actions by the US Department of Commerce, Bureau of Industry and Security (BIS), the US Department of the Treasury, Office of Foreign Assets Control (OFAC), the US Department of State, and the White House reflect the continued efforts of the US – in coordination with its allies – to impose costs on Russia for the war.
Each successive round of US export controls and sanctions presents new compliance challenges, against the backdrop of heightened enforcement risk resulting from aggressive, well-coordinated US government actions. US and non-US entities and individuals who engage in transactions related to Russia or Belarus should pay close attention to this complex and evolving regulatory framework. Additionally, entities and individuals exporting to Iran should take note of the expanded scope of the US Export Administration Regulations (EAR) under a new Iran Foreign Direct Product (FDP) Rule.…
[UPDATED] OFAC Publishes Determinations and Guidance on Implementing the Price Cap Policy for Russian Crude Oil and Petroleum Products
By Wendy Wysong, Ali Burney, Bo Yue, Wilson Zhao, Dave Stetson, Ed Krauland & Zoey Hong on
Posted in Price Cap, Russia/Ukraine Sanctions
In this blog post, we update our earlier post regarding OFAC’s determination and guidance on implementing the price cap policy for Russian crude oil (see link), by incorporating the recently released determinations regarding the price cap policy for Russian petroleum products and the updated guidance on implementing the price cap policy for Russian-origin crude oil and petroleum products.
On November 22, 2022, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) published a determination targeting Russian-origin crude oil pursuant to section 1(a)(ii) of Executive Order 14071 (EO 14071), and guidance on the implementation of the price cap policy for Russian-origin crude oil. These followed OFAC’s preliminary guidance released on September 9 (see Steptoe’s earlier blog post here).
Further, on February 3, 2023, OFAC published a determination targeting Russian-origin petroleum products pursuant to section 1(a)(ii) of EO 14071, and updated guidance on the implementation of the price cap policy for Russian-origin crude oil and petroleum products (the Updated Guidance).
The two determinations (the Determinations) set forth the categories of services relating to the maritime transport of Russian-origin crude oil and petroleum products (Covered Services) that US persons are prohibited from providing directly or indirectly to a person located in Russia, unless these items are purchased at or below relevant price cap. The Updated Guidance addresses issues relating to the implementation of the price cap policy for Russian-origin crude oil and petroleum products.…