On September 30, 2022, the US Government imposed additional sanctions against Russia in response to Russia’s annexation of the Ukrainian provinces of Donetsk, Kherson, Luhansk, and Zaporizhzhya following referenda.
New SDN Designations and OFAC FAQ
The US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced hundreds of new Russia-related designations to the Specially Designated Nationals and Blocked Persons List (“SDN List”). According to an accompanying press release, the designations include 14 individuals involved in Russia’s military-industrial complex, three leaders of Russia’s financial infrastructure, immediate family members of certain senior Russian officials, and 278 members of Russia’s legislative bodies. The US Department of State is imposing visa restrictions against more than 900 individuals in concert with this OFAC action. Information on the new SDN List designations is available here.
OFAC also released a Frequently Asked Question (“FAQ”), FAQ 1091. FAQ 1091 warns that OFAC is ready to act against persons providing political or economic support for Russian efforts to annex Ukrainian territory. FAQ 1091 provides the following examples of activities that would attract OFAC scrutiny:
- providing material support for the organization of Russia’s referenda or annexation, as well as economic or other activity that seeks to legitimize Russia’s referenda or annexation;
- providing material support to Russia’s military and defense industrial base, including significant transactions by entities in third countries that provide material support to Russia’s military, defense industrial base, and designated entities and persons operating in Russia’s defense industrial base;
- attempting to circumvent or evade US sanctions on Russia and Belarus; and
- providing material support to Russian entities or individuals subject to certain blocking sanctions.
FAQ 1091 reiterates that OFAC sanctions do not prohibit transactions related to the sale or transport of crude oil, petroleum product, liquefied natural gas, and coal products of Russian origin, unless such products are imported into the US.
New Entity List Designations and BIS FAQ
The US Department of Commerce’s Bureau of Industry and Security (BIS) issued a final rule adding 57 entities to the Entity List for acquiring and attempting to acquire US-origin items in support of Russia’s military. According to the accompanying BIS press release, 50 of the 57 entities will be subject to the Russia/Belarus Military End User Foreign Direct Product Rule, i.e., will have a footnote 3 designation. BIS also issued an FAQ clarifying that BIS is prepared to add entities located in third countries to the Entity List with a footnote 3 designation when such entities seek to provide material support for Russia and Belarus’ military industrial sectors, including support to replenish technologies and goods prohibited by the United States and the 37 other jurisdictions imposing similar controls.
The authors acknowledge the assistance of Rob O’Brien with the preparation of this blog post.