Background

The White House announced on June 2 additional actions to further tighten the current U.S. sanctions on Russia and Belarus. For more information on the wide range of trade restrictions the U.S. has imposed on Russia and how to ensure your company is in compliance, please contact attorney Kristine Pirnia at (202) 730-4964 or via email.

A White House fact sheet states that the Department of Treasury is targeting prominent Russian government officials and business leaders, the luxury property of elites, and luxury asset management and service companies key to Russian attempts to evade the sanctions, as well as additional Russian oligarchs and elites close to President Putin.

As a result, all property and interests in property of any designated persons that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to the Office of Foreign Assets Control. In addition, any entities that are owned, 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. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

In addition, the Department of Commerce’s Bureau of Industry and Security is further restricting the Russian military’s ability to obtain technologies and other items it needs to sustain its aggression and project power by adding 71 entities located in Russia and Belarus to the Entity List. Sixty-six of these entities will be subject to the Russia/Belarus direct product rule – which imposes controls on exports of goods made outside the U.S. with certain U.S. technology that, if exported from the U.S., would require a license – because they have been identified as Russian or Belarusian military end users.

BIS states that this rule imposes a license requirement for exports, reexports, or transfers (in-country) to and within Russia/Belarus for covered goods and specifies that applications for such licenses will generally be reviewed under a policy of denial.

For the changes being made in this 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 action that were en route aboard a carrier to a port of export, reexport, or transfer on June 2 pursuant to actual orders for export, reexport, or transfer to or within a foreign destination may proceed to that destination under the previous eligibility.

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