Background

The Biden administration announced May 8 additional sanctions on exports of goods and services to Russia.

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.

Industry Sanctions

The Bureau of Industry and Security has issued a final rule that, effective May 9, further expands the scope of the Russian industry sector sanctions to another 205 six-digit HTSUS numbers and 478 corresponding ten-digit Schedule B numbers. Information from the White House indicates that covered items include auto parts, chemicals, wood products, industrial engines, boilers, motors, fans, ventilation equipment, bulldozers, and many other items with industrial and commercial applications.

BIS states that this rule imposes a license requirement for exports, reexports, or transfers (in-country) to and within Russia 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 final 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 May 9 pursuant to actual orders for export, reexport, or transfer to or within a foreign destination may proceed to that destination under the previous eligibility.

Services

The Office of Foreign Assets Control has identified accounting, trust and corporation formation, and management consulting as categories of services that are subject to a prohibition on the export, reexport, sale, or supply, directly or indirectly, from the U.S. or by a U.S. person, wherever located, to any person located in Russia. This prohibition will take effect June 7.

OFAC has also identified these sectors pursuant to section 1(a)(i) of executive order 14024, which allows for sanctions to be imposed on any individual or entity determined to operate or have operated in any of these sectors. Other sectors previously so identified include aerospace, marine, electronics, financial services, technology, and defense and related materiel.

Shipping Companies

The State Department has designated eight Russian maritime-related companies under EO 14024, and 69 vessels in which these companies have an interest will be added to OFAC’s list of specially designated nationals and blocked persons. As a result, 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 OFAC. 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.

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