On October 30, 2024, the US Government imposed sanctions on hundreds of entities and individuals across the globe, primarily in response to Russia’s continued war in Ukraine, and amended US export controls related to Russia and Belarus. Below, we describe the key actions taken by the US Departments of the Treasury, State, and Commerce.
1. OFAC Actions
With the aim of disrupting global sanctions evasion networks and domestic suppliers to Russia’s military-industrial base, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) designated 275 entities and individuals across 17 jurisdictions as Specially Designated Nationals (“SDNs”). The list of parties designated (including those designated by the State Department, which are discussed below) can be found here and is notable for its inclusion of more than a dozen India-based entities and individuals.
OFAC also issued three new general licenses (“GLs”) (GLs 110, 111, and 112), amended two existing GLs (GLs 8K and 25G), issued one new frequently asked question (“FAQ”) (FAQ 1198), and amended two existing FAQs (FAQs 976 and 1040).
OFAC Targets Third-Country Sanctions Evasion Networks and Domestic Russian Military-Industrial Supply Chains
OFAC designated more than 120 individuals and entities for facilitating Russia-related sanctions evasion and supporting Russia’s military-industrial base. In addition to designations of over 150 Russia-based companies, these designations target Russian defense procurement networks and apply to entities operating in countries such as Türkiye, Hong Kong and mainland China, India, Kazakhstan, Uzbekistan, Thailand, Benin, Montenegro, Switzerland, Serbia, and Russia. Furthermore, OFAC designated two Swiss nationals for providing trust and corporate formation services to Russian clients, including sanctioned individuals.
As a result of these new designations, US Persons are generally prohibited from engaging in virtually all transactions involving such designated parties, including entities owned 50% or more by such designated parties. These designations require all property and interest in property of these designated parties within the United States or in the possession or control of US Persons to be blocked and reported to OFAC.
New and Amended GLs and FAQs
OFAC issued three new GLs authorizing certain transactions in connection with the entities designated on October 30:
- GL 110 – “Authorizing the Wind Down of Transactions Involving Certain Entities Blocked on October 30, 2024.” Subject to certain conditions, this GL authorizes transactions that are ordinarily incident and necessary to the wind down of any transaction involving seven sanctioned entities, including entities in which these sanctioned entities own a 50% or more interest. GL 110 authorizes wind-down activities through 12:01 a.m. EST on December 14, 2024.
- GL 111 – “Authorizing Certain Transactions Related to Debt or Equity of, or Derivative Contracts Involving, Certain Entities Blocked on October 30, 2024.” Subject to certain conditions, this GL authorizes transactions that are ordinarily incident and necessary to: (i) the divestment or transfer of debt or equity issued or guaranteed by five sanctioned entities and their 50% or more-owned subsidiaries (“Covered Debt or Equity”); (ii) as well as to the facilitation, clearing, and settling of trades in Covered Debt or Equity made before 4:00 p.m. EDT on October 30, 2024; and (iii) the wind down of derivative contracts with the sanctioned entities that are linked to Covered Debt or Equity and were entered into before 4:00 p.m. EDT on October 30, 2024. GL 111 authorizes wind-down activities through 12:01 a.m. EST on December 14, 2024.
- GL 112 – “Authorizing Civil Aviation Safety and Wind Down Transactions Involving Shaurya Aeronautics Private Limited.” Subject to certain conditions, this GL authorizes transactions that are ordinarily incident or necessary to the supply of goods, technology, or services to ensure the safety of civil aviation involving Shaurya Aeronautics Private Limited (“Shaurya”), an India-based company designated for shipping high-priority dual-use items to Russia, including radar and radio navigational apparatus. This authorization extends to entities 50% or more owned by Shaurya. The GL also authorizes transactions ordinarily incident and necessary to the wind down of transactions involving Shaurya and entities it owns 50% or more. GL 112 authorizes activities through 12:01 a.m. EST on December 14, 2024.
OFAC amended two previously issued GLs:
- GL 8K – “Authorizing Transactions Related to Energy.” The GL was amended to extend its validity period from November 1, 2024 until April 30, 2025.
- GL 25G – “Authorizing Transactions Related to Telecommunications
- and Certain Internet-Based Communications.” This GL was amended to add two entities, XH Smart Tech China Co Ltd. and CJSC Perspective Technologies Agency, to the list of entities to which the authorizations in GL 25G do not apply without separate OFAC authorization.
OFAC released one new FAQ 1198 to clarify that, pursuant to OFAC GL 6D, US Persons are authorized to continue engaging in transactions related to pharmaceutical and other humanitarian-related goods involving Shreya Life Sciences Private Limited (“Shreya”) and its 50% or more owned subsidiaries. OFAC designated Shreya for sending US-trademarked technology, including advanced servers for artificial intelligence and machine learning, to Russia.
2. US Department of State Actions
In coordination with OFAC, the US Department of State (“State Department”) designated more than 120 individuals and entities across numerous jurisdictions, including China, India, Malaysia, Thailand, Türkiye, and United Arab Emirates. According to the State Department press release and fact sheet, these designations aim to disrupt Russian procurement of items critical to its military-industrial base from third countries, including microelectronics and computer numerical control items on the BIS Common High Priority List. In addition, the State Department imposed sanctions on members of the Russian Ministry of Defense and subsidiaries of State Atomic Energy Corporation Rosatom (though Rosatom itself remains undesignated). The State Department designated entities in connection Belarus’s support for Russia’s war against Ukraine. The parties designated by the State Department are identified on the SDN List.
3. BIS Actions
On October 30, 2024, the US Commerce Department’s Bureau of Industry and Security (“BIS”) announced and subsequently published a final rule amending the Export Administration Regulations (“EAR”) to expand export controls against Russia and Belarus by adding controls on nine EAR99 chemical precursors for riot control agents. Furthermore, BIS adjusted certain exclusions, license exceptions, and licensing policy related to certain non-US government end users, and clarified the scope of the three Entity List-related Foreign Direct Product (“FDP”) rules’ license requirements. On the same day, BIS announced another final rule adding over 40 entities and addresses to the Entity List and modifying over 50 existing entries on the Entity List.
Expansion of Russian and Belarusian Industry Sector Sanctions (Supplement No. 6 to EAR Part 746)
BIS expanded the scope of the Russian and Belarusian Industry Sector Sanctions by adding controls on nine chemical precursors used in riot control agents and a chemical weapon, chloropicrin, on the basis that Russia has deployed such agents and weapon against Ukraine. With these additions, BIS aims to prevent the misuse of these chemicals in furtherance of Russia’s military efforts.
BIS recognizes that there are many legitimate civilian applications for these chemicals and therefore has narrowly tailored these controls to apply only to exports, reexports, and in-country transfers of these chemical precursors to or within Russia or Belarus. BIS will use a case-by-case licensing policy (rather than presumption of denial) for license applications for these items where they are predominantly agricultural or medical in nature.
Adjustments for Government Entities
BIS also made the following changes to the exclusions, license exceptions, and licensing policies in EAR § 746.8 to reduce the licensing burden on certain government end users in Russia and Belarus:
- Exclusions for Diplomatic Missions: A new provision under EAR § 746.8(a)(12)(ii)(F) excludes exports, reexports, and in-country transfers of mass market encryption commodities and software and EAR99 enterprise management software and design and manufacturing software from the license requirement that would otherwise apply, provided that they are for the official business of diplomatic or consular missions of governments in Country Group A:5 and A:6 destinations.
- Case-by-Case Licensing Policy: The rule adds a new paragraph to EAR § 746.8(b)(3)(vi) to include the official business of governments of Country Group A:5 and A:6 destinations in the case-by-case license review policy.
- License Exception ENC Eligibility: The rule expands the eligibility to use License Exception ENC under EAR § 746.8 where the items are for the official business of diplomatic or consular missions of governments from Country Group A:5 and A:6 destinations operating in Russia or Belarus.
Clarification of Entity List-Related FDP Rules
In an effort to ensure restrictions are applied consistently and comprehensively, BIS amended the EAR to clarify that the license requirements under the three Entity List-related FDP rules extend to or within any destination or to any end user or party when the product and end-user scope criteria of the applicable Entity List-related FDP rule are met. This change applies to Footnote 1 entities (e.g., Huawei entities), Footnote 4 entities (e.g., Chinese semiconductor fabs), and Footnote 3 entities (Russia/Belarus military end users).
Key Additions to the Entity List
BIS added entities from countries including China, India, Malaysia, Russia, Singapore, and Turkey. The reasons behind the designations include:
- Diversion or attempted diversion of US-origin items to Russia, including for use in the Russian defense industry or intelligence services;
- Procuring or attempting to procure US-origin items for supply in support of Russia’s military or defense industrial base;
- Research, production, and/or attempted procurement of materials in support of Russia’s chemical and biological weapons warfare program; and
- Supplying US-origin items to Chinese entities on the Entity List.
