The U.S. recently imposed a wide range of additional trade restrictions and economic sanctions against Russia as Moscow’s war against Ukraine enters its third year.
For more information on how these actions may affect your business, please contact Kristine Pirnia at (202) 730-4964 or via email.
Business Advisory
Several federal agencies issued Feb. 23 an advisory cautioning that those doing business in or engaging in transactions involving Russia or the Russian-occupied territories of Ukraine “increasingly risk severe civil and criminal penalties in navigating the raft of economic sanctions, export controls, and import restrictions imposed on Russia” by the U.S. and its allies and partners. This includes businesses, individuals, financial institutions, and other persons – including investors, consultants, non-governmental organizations, and due diligence service providers – that operate in or have value chains linked to these areas. The advisory encourages such entities to conduct heightened due diligence “incorporating both a robust review of compliance mechanisms … and heightened human rights due diligence” to help limit their exposure to the identified risks.
Export Controls
The Bureau of Industry and Security has issued a final rule that, effective Feb. 23, adds 93 entities to the Entity List, including 63 in Russia, 16 in Turkey, eight in China, four in the United Arab Emirates, two in the Kyrgyz Republic, and one each in India and South Korea.
Most of these entities are being added for actions related to the illegal procurement and export of controlled items to prohibited Russian end-users. At least one is being added for “repeatedly engaging in dilatory, evasive, or misleading behavior” regarding imports of U.S.-origin goods.
For all of these entities BIS is imposing a license requirement for exports of all items subject to the Export Administration Regulations and a license application review policy of denial or presumption of denial. BIS is also designating more than 50 of the newly-added entities as Russian or Belarusian military end-users, which subjects them to the associated foreign direct product rule.
Shipments of items removed from eligibility for a license exception or for export, reexport, or transfer (in-country) without a license (NLR) as a result of this rule that were en route aboard a carrier to a port of export, reexport, or transfer on Feb. 23 pursuant to actual orders for export, reexport, or transfer to or within a foreign destination may proceed to that destination under the previous eligibility before March 25. Any such items not actually exported, reexported, or transferred before midnight on March 25 will require a license in accordance with this rule.
For more information on restrictions on exports to persons on the Entity List or other lists, please contact Kristine Pirnia at (202) 730-4964 or via email.
High-Priority Items
Working with the European Union, Japan, and the United Kingdom, BIS has increased from 45 to 50 the number of common high-priority items that Russia seeks to procure for its weapons programs. This addition highlights that certain machine tools pose a heightened risk of being diverted illegally to Russia because of their importance to Russia’s war efforts.
Sanctions
The State Department has imposed financial sanctions on hundreds of additional individuals and businesses. All property and interests in property of these entities that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to the Treasury Department’s Office of Foreign Assets Control. Similar restrictions have been imposed on those that have 50 percent or more ownership, either directly or indirectly, by one or more of these blocked persons. As a result, 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.
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