On October 14, 2022, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the Department of Commerce’s Bureau of Industry and Security (“BIS”), and the Department of State, issued the Russia-related Alert: Impact of Sanctions and Export Controls on Russia’s Military-Industrial Complex (“the Alert”).  OFAC also published one new Russia-related frequently asked question (“FAQ”). 

The Alert outlines impacts of the coordinated sanctions and export controls that have led to shortages of supplies for Russian forces and a sharp decline in semiconductors necessary for military use being imported into Russia.  The Alert credits sanctions and export controls for the closures of plants manufacturing defense items, forcing the Russian military to use Soviet-era defense stocks.  The Alert also says sanctions have prompted global banks and companies to curtail or suspended operations in Russia. 

The Alert highlights how existing sanctions authorities have allowed OFAC and the Department of State to impose sanctions on deceptive, structured transactions or dealings to circumvent US sanctions.  Evasions of these sanctions and export controls imposed by BIS have included a range of techniques, including front companies and fraudulent end-user licenses.  The Alert references BIS’ June 2022 joint alert with the Financial Crimes Enforcement Network (“FinCEN”) as a resource for US Persons to identify such evasion.  We blogged about the BIS-FinCEN joint alert here

New FAQ 1092 confirms that non-US companies risk exposure to sanctions for providing military goods to Russia or for supporting Russia’s military-industrial complex.  OFAC may block (i.e., designate as a Specially Designated National (“SDN”)) any person determined to operate or have operated in the defense and related materiel sector of the Russian economy pursuant to Executive Order 14024 (“EO 14024”), “Blocking Property With Respect To Specified Harmful Foreign Activities of the Government of the Russian Federation.”  OFAC may also block persons determined to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of certain sanctionable activities enumerated in EO 14024 or SDNs blocked pursuant to EO 14024.

The authors acknowledge the assistance of Ryan Orange with the preparation of this blog post.


Terry Gilroy is a partner in the New York office of Baker McKenzie and a member of the Compliance and Investigations Practice Group. Prior to joining the Firm in 2018, Terry served as Americas Head of the Financial Crime Legal function at Barclays. Terry advises businesses and individuals on white collar and financial crime issues and has significant experience conducting investigations relating to compliance with the US Foreign Corrupt Practices Act (FCPA) and related bribery and corruption statutes, economic sanctions regulations as administered by the US Department of the Treasury's Office of Foreign Assets Control (OFAC), and the Bank Secrecy Act and related anti-money laundering (AML) regulations and statutes. Terry spent six years on active duty in the United States Army as a Field Artillery officer.


Alex advises clients on compliance with US export controls, trade and economic sanctions, export controls (Export Administration Regulations (EAR); International Traffic in Arms Regulations (ITAR)) and antiboycott controls. He counsels on and prepares filings to submit to the US Government's Committee on Foreign Investment in the United States (CFIUS) with respect to the acquisition of US enterprises by non-US interests. Moreover, Alex advises US and non-US companies in the context of licensing, enforcement actions, internal investigations, compliance audits, mergers and acquisitions and other cross-border transactions, and the design, implementation, and administration of compliance programs. He has negotiated enforcement settlements related to both US sanctions and the EAR.