On June 2, 2022, the US Government increased sanctions against Russia in stated response to Russian attempts to evade US sanctions, including targeting additional government officials, business leaders and luxury assets. The US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced a new round of Russia -related designations to the Specially Designated Nationals and Blocked Persons List (“SDN List”). OFAC also amended one existing general license (“GL”), issued two wind-down general licenses, and a separate general license related to pension payments to US persons.
New SDN Designations
The SDN designations announced by OFAC on June 2 include: top Russian government officials; Russian oligarchs, elites, and associated family members and entities; a custodian of President Putin’s offshore wealth; yachts and aircraft in which sanctioned Russian elites maintain interests; and a Kremlin-aligned yacht brokerage. According to OFAC’s press release, these actions are taken to “degrade the key networks used by Russia’s elites, including President Vladimir Putin, to attempt to hide and move money and anonymously make use of luxury assets around the globe.”
Russia-Related OFAC General Licenses
GL 25B (Telecommunications and Certain Internet-Based Communications)
GL 25B was amended to add new SDN Limited Liability Company Algoritm (linked to another new SDN, Alexey Mordashev) as one of the companies excluded from the scope of GL 25B. This GL authorizes all transactions ordinarily incident and necessary to the receipt or transmission of telecommunications involving Russia, as well as the exportation, reexportation, sale, or supply of services, software, hardware, or technology incident to the exchange of communications over the internet, such as instant messaging, videoconferencing, chat and email, social networking, sharing of photos, movies, and documents, web browsing, blogging, web hosting, and domain name registration services, directly or indirectly, from the United States or by US persons, wherever located, to Russia to the extent otherwise prohibited by the Russian Harmful Foreign Activities Sanctions Regulations.
GL 36 (Severstal)
GL 36 authorizes all transactions ordinarily incident and necessary to the wind down of transactions involving the newly-designated Public Joint Stock Company Severstal (“Severstal”) or any entity 50% or more owned, directly or directly, by Severstal, provided that any payment to Severstal or any other SDN must be made into a blocked account. Severstal was one of the companies designated as an SDN on June 2. GL 36 specifically excludes certain transactions, such as any transactions prohibited by Directive 2 and Directive 4 of Executive Order (“EO”) 14024. GL 36 expires at 12:01 a.m. eastern daylight time on August 31, 2022.
GL 37 (Nord Gold)
GL 37 authorizes all transactions ordinarily incident and necessary to the wind down of transactions involving Nord Gold PLC (“Nord Gold”) or any entity 50% or more owned, directly or indirectly, by Nord Gold, provided that any payment to Nord Gold or any other SDN must be made into a blocked account. Nord Gold was also designated as an SDN on June 2, 2022. GL 37 specifically excludes certain transactions, such as any transactions prohibited by Directive 2 and Directive 4 of EO 14024. GL 37 expires at 12:01 a.m. eastern daylight time on July 1, 2022.
GL 38 (US Person Pension Payments)
GL 38 authorizes all transactions ordinarily incident and necessary to the processing of pension payments to US Persons to the extent otherwise prohibited by EO 14024, provided that the involvement of any SDNs in such transactions is limited to the processing of funds by SDN financial institutions blocked under EO 14024. GL 38 specifically excludes certain transactions, such as the opening or maintaining of a correspondent account or payable-through account for or on behalf of any entity subject to Directive 2 of EO 14024.