This post provides an update regarding further Russia-related sanctions measures in the United States.
New General Licenses
On June 28, 2022, the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") issued several new General Licenses ("GLs"):
- GL 39 authorizes certain transactions
ordinarily incident and necessary to the wind down of any
transaction involving State Corporation Rostec, or any entity
blocked on or after June 28, 2022 that is owned 50% or more by
State Corporation Rostec, through August 11, 2022, provided that
any payment to a blocked person must be made into a blocked
account.
- GL 40 authorizes certain transactions
ordinarily incident and necessary to the provision, exportation, or
reexportation of goods, technology, or services to ensure the
safety of civil aviation involving one or more of the blocked
entities listed in the Annex to the GL, provided that: (1) the
aircraft is registered in a jurisdiction solely outside of Russia;
and (2) the goods, technology, or services that are provided,
exported, or reexported are for use on aircraft operated solely for
civil aviation purposes.
- GL 41 authorizes certain transactions
ordinarily incident and necessary to the manufacture, sale, and
maintenance, including the provision and receipt of warranty and
maintenance services, of agricultural equipment, components, and
spare parts produced by Nefaz Publicly Traded Company
("Nefaz") or Public Joint Stock Company
Tutaev Motor Plant ("Tutaev Motor
Plant"), or any entity owned 50% or more by Nefaz or
Tutaev Motor Plant, through December 22, 2022, provided that any
payment to a blocked person must be made into a blocked
account.
- GL 42 authorizes certain transactions involving
the Federal Security Service (a.k.a. Federalnaya Sluzhba
Bezopasnosti) (a.k.a. FSB), provided that such transactions and
activities are ordinarily incident and necessary to:
- Requesting, receiving, utilizing, paying for, or dealing in
licenses, permits, certifications, or notifications issued or
registered by the Federal Security Service for the importation,
distribution, or use of information technology products in Russia,
provided that (i) the exportation, reexportation, or provision of
any goods or technology that are subject to the Export
Administration Regulations (15 CFR parts 730 through 774), is
licensed or otherwise authorized by the Department of Commerce; and
(ii) the payment of any fees to the Federal Security Service for
such licenses, permits, certifications, or notifications does not
exceed $5,000 in any calendar year;
- Complying with law enforcement or administrative actions or
investigations involving the Federal Security Service; and
- Complying with rules and regulations administered by the
Federal Security Service.
- Requesting, receiving, utilizing, paying for, or dealing in
licenses, permits, certifications, or notifications issued or
registered by the Federal Security Service for the importation,
distribution, or use of information technology products in Russia,
provided that (i) the exportation, reexportation, or provision of
any goods or technology that are subject to the Export
Administration Regulations (15 CFR parts 730 through 774), is
licensed or otherwise authorized by the Department of Commerce; and
(ii) the payment of any fees to the Federal Security Service for
such licenses, permits, certifications, or notifications does not
exceed $5,000 in any calendar year;
- GL 43 authorizes certain transactions ordinarily incident and necessary to the divestment or transfer of debt or equity of Public Joint Stock Company Severstal ("Severstal") or Nord Gold PLC ("Nord Gold"), or any entity owned 50% or more by Severstal or Nord Gold, purchased prior to June 3, 2022 ("covered debt or equity"), through August 31, 2022, provided that any divestment or transfer, or facilitation of divestment or transfer, of covered debt or equity must be to a non-U.S. person. In addition, GL 43 authorizes certain transactions ordinarily incident and necessary to the wind down of derivative contracts entered into prior to June 2, 2022 that (i) include as a counterparty Severstal or Nord Gold, or any entity owned 50% or more by Severstal or Nord Gold; or (ii) are linked to covered debt or equity, through August 31, 2022, provided that any payments to a blocked person are made into a blocked account.
Sanctions on Imports of Gold of Russian Origin
On the same date, OFAC issued a "Determination ("Determination") Pursuant to Section 1(a)(i) of Executive Order ("E.O.") 14068" (the "E.O. 14068 Determination"). E.O. 14068 sets forth a framework by which the Secretary of the Treasury, in consultation with the Secretary of State and the Secretary of Commerce, may prohibit the importation into the United States of any products of Russian origin. Pursuant to the E.O. 14068 Determination, the Director of OFAC, in consultation with the Department of State and the Department of Commerce, has determined that E.O. 14068 now applies to gold of Russian origin. As a result, the importation into the United States of gold of Russian origin is now prohibited, except to the extent provided by law or unless licensed or otherwise authorized by OFAC. This Determination excludes gold of Russian origin that was located outside of Russia prior to the effective date of the Determination. This Determination became effective upon publication.
Additional Guidance Clarifications
OFAC also issued additional guidance related to the sanctions measures announced. In particular, OFAC updated existing Frequently Asked Question ("FAQ") 1,029 to clarify that gold-related transactions involving Russia may be sanctionable under E.O. 14024 and other Russia-related sanctions authorities, including pursuant to the E.O. 14068 Determination prohibiting the importation into the United States of certain gold of Russian origin.
In addition, OFAC issued new FAQ 1,070, which clarifies the prohibitions and exclusions set forth in the E.O. 14068 Determination.
New Sanctions Designations
Finally, OFAC designated 70 entities, "many of which are critical to the Russian Federation's defense industrial base, including State Corporation Rostec, the cornerstone of Russia's defense, industrial, technology, and manufacturing sectors," as well as 29 Russian individuals. The OFAC press release, which can be found here, explains that the sanctions measures imposed on June 28, 2022 "strike at the heart of Russia's ability to develop and deploy weapons and technology used for Vladimir Putin's brutal war of aggression against Ukraine."
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