On October 16, 2018, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) designated certain Iranian entities and banks as Specially Designated Nationals (“SDNs”) pursuant to Executive Order (“EO”) 13224, which targets terrorists and those providing support to terrorism. A full list of those entities designated as part of this action is available here. US Persons (i.e., entities organized under US laws and their non-US branches; parties physically located in the United States; US citizens and permanent resident aliens wherever located or employed) are prohibited from dealing directly or indirectly with SDNs. Under the Iranian Transactions and Sanctions Regulations (“ITSR”), non-US entities owned or controlled by US Persons are also prohibited from dealing with SDNs that are located or based in Iran (regardless of their reason for designation) or owned or controlled by the Government of Iran (regardless of where they are located).
Today, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) further extended by one month until December 12, 2018 the expiration dates of three general licenses related to EN+ Group plc and United Company RUSAL PLC (“RUSAL”). RUSAL is one of the world’s largest aluminum producers and was previously designated as a Specially Designated National (“SDN”) on April 6, 2018 for being owned or controlled, directly or indirectly, by the EN+ Group and the Russian oligarch, Oleg Deripaska. Please see our blog post on the original designation here. The Treasury Department press release indicates that the extension reflects still ongoing discussions with EN+ and RUSAL regarding substantial corporate governance changes that could significantly reduce Deripaska’s control. Today’s move is a welcome further temporary reprieve for the global aluminum industry as RUSAL seeks to extricate itself from the impact of US sanctions.
In the past week, the US Government took several significant steps related to the US sanctions against Russia. These included imposing sanctions pursuant to Section 231 of the Countering America’s Adversaries Through Sanctions Act (“CAATSA”) for the first time and expanding the list of persons and entities identified as being part of the Russian defense or intelligence sectors under CAATSA Section 231. The US Government also clarified the scope of a sanctions waiver impacting foreign subsidiaries in Russia under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (the “CBW Act”). Finally, the US Government extended the expiration dates for several general licenses related to United Company RUSAL PLC (“RUSAL”) and EN+ Group PLC (“EN+ Group”).
On September 12, 2018, President Trump issued a new Executive Order, “Imposing Certain Sanctions in the Event of Foreign Interference in a United States Election” (the “Order”). The Order authorizes the designation as Specially Designated Nationals (“SDNs”) of parties that engage in foreign interference in US elections. While the Order provides the authorization and criteria for such designations, it does not designate any additional parties as SDNs at this time. The Order also requires additional review of the nature and extent of any foreign interference in each US federal election, including the upcoming midterm Congressional elections. Although it is not targeting any particular country or government, the Order comes as the US Congress debates additional sanctions on Russia’s largest banks and energy companies and the purchase of Russian sovereign debt in response to alleged Russian interference in the 2016 US elections.