The U.S. announced May 19 an expansion of export controls and other economic sanctions against Russia in response to its invasion of Ukraine.

For more information on these actions and how they may impact your business, please contact Kristine Pirnia at (202) 730-4964 or via email.

Export controls. A final rule issued by the Bureau of Industry and Security builds on the substantial export controls already in place on a variety of inputs for Russia’s industrial and commercial, chemical and biological, and other sectors by making the existing Russian and Belarusian Industry Sector Sanctions stronger, more effective, and easier to understand and comply with. Specifically, this rule:

- controls exports of all remaining HTS-6 numbers under three entire chapters (84, 85, and 90; now over 2,000 total entries), including a variety of electronics, instruments, and advanced fibers for the reinforcement of composite materials, including carbon fibers;

- controls exports of certain additional chemicals that may be useful for Russia’s industrial capability or may be diverted from Belarus to Russia for specified activities of concern;

- expands the list of foreign-produced items that require a license when destined to Russia, Belarus, and Iran; and

- expands the destination scope of the Russia/Belarus foreign direct product rule to the Crimea region of Ukraine.

Entity List. A separate BIS final rule adds 71 new entities to the Entity List – 69 in Russia and one each in Armenia and Kyrgyzstan – primarily for supporting Russia’s military and defense sectors. The Russian entities are also being designated as Russian or Belarusian military end-users and will therefore be subject to the restrictions imposed under the Russia/Belarus military end-user FDP rule.

The Russian entities are added with a license requirement for exports of all items subject to the EAR and a license review policy of denial for all items subject to the EAR apart from food and medicine designated as EAR99, which will be reviewed on a case-by-case basis. The other two entities are added with a license requirement for exports all items subject to the EAR and a license review policy of presumption of denial.

Financial alert. A supplemental joint alert issued by BIS and the Financial Crimes Enforcement Network (1) provides financial institutions additional information with respect to new BIS export controls relating to Russia, (2) details evasion typologies, (3) highlights nine high-priority HTS numbers to inform customer due diligence, and (3) identifies additional transactional and behavioral red flags to help financial institutions identify suspicious transactions relating to possible export control evasion.

Sanctions. The State Department has (1) imposed economic sanctions on more than 120 entities and individuals, including dozens of third-country actors connected to sanctions evasion activities, (2) issued a new determination identifying the architecture, engineering, construction, manufacturing, and transportation sectors of the Russian economy under Executive Order 14024, which authorizes sanctions on any person determined to operate or to have operated in any named sectors, and (3) issued a determination pursuant to EO 14071 prohibiting the exportation, re-exportation, sale, or supply, directly or indirectly, from the U.S. or by a U.S. person wherever located, of architecture services or engineering services to any person located in Russia.

Further, State has imposed economic sanctions against or identified as blocked property more than 200 entities, individuals, vessels, and aircraft, including (1) targets across Russia’s defense and related materiel, advanced technology, and metals and mining sectors, (2) those involved in expanding Russia’s future energy production and export capacity across a range of industries where Russia has strategic dependencies, (3) those engaging in the theft and transportation of stolen grain from Ukraine, and (4) an international network of entities engaged in the procurement of components for the Russia-based entity responsible for the manufacture of a drone currently being employed against Ukraine.

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