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BIS Adds Russian Parties to Entity List in Response to Alleged Election-Related Hacking

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On January 4, 2017, the US Commerce Department’s Bureau of Industry and Security (“BIS”) added five Russian parties to its Entity List.  The move follows the issuance of amended Executive Order 13694 (“Cyber EO2”) on December 29, 2016 and the subsequent designation of five Russian entities and four individuals on the US Treasury Department’s Office of Foreign Assets Control’s (“OFAC”) Specially Designated Nationals and Blocked Persons List (“SDN List”) (see prior blog post here). 

The Entity List identifies entities and other persons that the US Government reasonably believes to be involved in, or pose a significant risk of becoming involved in, activities that are contrary to the national security or foreign policy of the United States. Parties on the Entity List are subject to additional restrictions and limitations on receiving exports, reexports, and transfers (in-country) of items subject to the Export Administration Regulations.

The parties added to the Entity List are the five entities identified in the Annex of Cyber EO2 as being responsible for tampering, altering, or causing the misappropriation of information for the purpose or effect of interfering with or undermining election processes or institutions. The five additions to the Entity List are:

  1. The Main Intelligence Directorate
  2. The Federal Security Service (FSB)
  3. The Special Technology Center
  4. Zorsecurity Center
  5. Autonomous Noncommercial Organization Professional Association of Designers of Data Processing Systems

BIS has imposed a license requirement for exports, reexports, or transfers (in-country) of all items subject to the EAR to these entities, subject to a license review policy of presumption of denial. No license exceptions are available for exports, reexports, or transfers (in-country) to these entities.

These parties are the same five entities that were added to the SDN List on December 29, 2016 pursuant to Cyber EO2.

As we described in our prior blog post, these additions to the Entity List expand the reach of Cyber EO2 by prohibiting all persons (US and non-US) from supplying the five entities listed above with certain US-origin items or non-US made items with greater than de minimis levels of controlled US content.

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Inessa Owens is an associate in the Washington, D.C. office and member of the Firm’s International Trade practice group. She focuses on outbound trade compliance issues, including compliance with the Export Administration Regulations, anti-boycott rules, and economic sanctions administered by the US Treasury Department’s Office of Foreign Assets Control, including those targeting Cuba, Iran, North Korea, Syria, and Russia. She has worked with clients in diverse industries that include finance, pharmaceuticals, and energy.

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Joseph Schoorl is an associate in the Washington, DC office. Prior to joining the Firm, he worked as a clerk in the spring of 2012 and as a summer associate in 2011 at Baker McKenzie. In addition, he interned with the Department of Commerce’s Office of Chief Counsel for Industry and Security. He advises US and non-US companies on licensing, enforcement actions, internal investigations and compliance audits, mergers and acquisitions and other cross-border transactions, and on the design, implementation, and administration of compliance programs. Mr. Schoorl's practice focuses on international trade. He advises clients on compliance with US export controls, trade and economic sanctions, and anti-boycott controls.

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Paul Amberg is a partner in Baker McKenzie’s Madrid office, where he handles international trade and compliance issues. He advises multinational companies on export controls, trade sanctions, antiboycott rules, customs laws, anticorruption laws, and commercial law matters. Paul helps clients assess and address compliance risks presented by export controls, trade sanctions, antiboycott rules, customs laws, and anticorruption laws. His practice especially focuses on internal reviews, voluntary disclosure filings, and enforcement actions brought by, the US Government in relation to the Export Administration Regulations (EAR), International Traffic in Arms Regulations (ITAR), trade and economic sanctions programs, and US customs laws.

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