The Biden administration has announced a number of measures to further restrict the supply of items to Russia, including by targeting efforts to circumvent global export controls.
For more information on restrictions on exports to Russia and ensuring your company is in compliance, please contact Kristine Pirnia at (202) 730-4964 or via email.
The Department of Commerce’s Bureau of Industry and Security has issued a final rule that (1) expands the scope of the Russia/Belarus military end-user and procurement foreign direct product rule to target the transshipment of microelectronics and other items that bear the brand of a U.S.-headquartered company, even if manufactured outside the U.S. (effective Aug. 27) and (2) imposes additional license requirements on certain software needed to operate computer numerically-controlled machine tools to prevent the provision of software updates to controlled tools in Russia and Belarus (effective Sept. 16).
BIS has issued a separate final rule that, effective Aug. 27, adds 63 entities in Russia, 42 in China, 11 in Iran, eight in Türkiye, and one each in Canada, Cyprus, Kazakhstan, Kyrgyzstan, Ukraine, and the United Arab Emirates to the Entity List for shipping U.S.-origin and U.S.-branded items to Russia in contravention of U.S. export controls or for engaging in other activities contrary to U.S. national security and foreign policy interests.
Finally, BIS has provided (1) guidance and recommendations to U.S. exporters on language in sales contracts or other export documents involving items subject to the Export Administration Regulations to prevent diversion to Russia or Belarus and (2) guidance to corporate service providers, which provide their clients with an address they can use for billing or receiving goods, to help them avoid providing services to bad actors who use them to mask their identities and divert items to embargoed destinations or restricted parties.
The Treasury Department’s Office of Foreign Assets Control and the State Department’s Directorate of Defense Trade Controls have imposed sanctions on nearly 400 additional individuals and entities in Russia, Asia, Europe, and the Middle East whose products and services enable Russia to sustain its war effort and evade sanctions.
OFAC is targeting (1) transnational networks (including exporters, importers, and producers in China, Hong Kong, and elsewhere) involved in procuring ammunition and military materiel for Russia, facilitating sanctions evasion for Russian oligarchs through offshore trust and corporate formation services, evading sanctions imposed on Russia’s cyber actors, laundering gold for a sanctioned Russian gold company, and supporting Russia’s military-industrial base by procuring sensitive and critical items, (2) entities involved in Russia’s metals and mining sector, including steel, iron, and coal mining firms, and (3) Russian financial technology companies that provide necessary software and information technology solutions for Russia’s financial sector.
Under OFAC’s actions, all property and interests in property of the designated entities that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. All entities and individuals that have ownership, either directly or indirectly, 50 percent or more by one or more blocked persons are also blocked. All transactions by U.S. persons or within (or transiting) the U.S. that involve any property or interests in property of designated or otherwise blocked persons are prohibited unless authorized by a general or specific license issued by OFAC or exempt.
DDTC is targeting entities and individuals involved in Russia’s future energy, metals, and mining production and exports; sanctions evasion; Russia’s military-industrial base, including armed unmanned aerial vehicle production, Belarusian support for Russia’s war effort, and air logistics entities; additional subsidiaries of State Atomic Energy Corporation Rosatom; and malign actors involved in the attempted, forcible “re-education” of Ukraine’s children.
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