Extension of General Licenses

On November 9, 2018, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) temporarily extended the expiration dates of four general licenses related to EN+ Group PLC (“EN+”), United Company RUSAL PLC (“RUSAL”), and GAZ Group (“GAZ”) from December 12, 2018 to January 7, 2019.  Please see our blog posts on the original designation of these companies and previous extensions of these general licenses here and here.  The Treasury Department press release indicates that EN+, RUSAL, and GAZ are proposing substantial corporate governance changes that could potentially result in significant changes in control and ultimately lead to these entities’ removal from the Specially Designated Nationals and Blocked Persons List (“SDN List”).

The affected general licenses are as follows:

  • General License 13F, authorizing certain transactions ordinarily incident and necessary to divest or transfer debt, equity, or other holdings in EN+, GAZ, and RUSAL, including where such debt, equity, or other holdings were issued by certain specified issuers, was reissued as General License 13G.
  • General License 14B, authorizing certain activities ordinarily incident and necessary to the maintenance or wind down of operations or existing contracts involving RUSAL or any entity 50% or more owned by RUSAL, was reissued as General License 14C.
  • General License 15A, authorizing certain activities ordinarily incident and necessary to the maintenance or wind down of operations or existing contracts involving GAZ or any other entity 50% or more owned by GAZ , was reissued as General License 15B.
  • General License 16A, authorizing certain activities ordinarily incident and necessary to maintenance or wind down of operations or existing contracts involving EN+ or JSC EuroSibEnergo or any entities 50% or more owned by EN+ or JSC EuroSibEnergo, was reissued as General License 16B.

Imposition of Secondary Sanctions

On November 8, 2018, OFAC announced the imposition of sanctions against three individuals and nine entities for engaging in activities related to Russia’s annexation of Crimea, including two individuals and one entity found to have engaged in “serious human rights abuses” and thus, designated as SDNs pursuant to secondary sanctions authorities in Section 228 of the Countering America’s Adversaries Through Sanctions Act (“CAATSA”).

As described in our prior blog post on CAATSA, CAATSA § 228 requires, in relevant part, the imposition of sanctions (designation on the SDN List and exclusion from the United States) on non-US parties determined to be responsible for, complicit in, or order, control, or otherwise direct the commission of, serious human rights abuses in any territory forcibly occupied by Russia.  The designation of these two individuals, Andriy Volodymyrovych Sushko and Aleksandr Basov, and one entity, Ministry of State Security of the Luhansk People’s Republic, marks the first time that OFAC has invoked secondary sanctions authority under CAATSA § 228 to impose sanctions.  According to OFAC’s press release issued in connection with these sanctions, all were found to have engaged in serious human rights abuses in Crimea and certain areas of the Donetsk and Luhansk regions.

The other eight entities and one individual were added to the SDN List pursuant to Executive Order 13685 for operating in Crimea.  One such SDN, Limited Liability Company Southern Project, was also designated pursuant to Executive Order 13661, for being owned or controlled by SDNs Bank Rossiya and Yuri Valentinovich Kovalchuk.  Limited Liability Company Southern Project was the purchaser of the shares of Novy Svet, one of Crimea’s largest and oldest wineries, in the first major privatization of former Ukrainian state property since Russia’s annexation of Crimea, according to the OFAC press release.

Author

Paul Amberg is a partner in Baker McKenzie’s Amsterdam 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.

Author

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.

Author

Andrea practices international commercial law with a focus on cross-border transactions including post-acquisition integration IP migrations and technology licensing. She also advises companies on export controls, sanctions, customs and international corporate compliance. Andrea also has an active pro bono practice, including helping organizations with international constitutional matters and victims of domestic abuse.