On May 1, 2024, the US Department of the Treasury’s Office of Foreign Assets Controls (“OFAC”) and the US Department of State designated nearly 300 individuals, entities, and vessels to the List of Specially Designated Nationals and Blocked Persons (“SDN List”) mainly targeting Russia’s military capacity. On the same day, OFAC also issued three new general licenses (“GLs”) authorizing limited transactions involving certain SDNs. We summarize these developments below.
SDN Designations
According to OFAC’s press release, the primary goal for the additional SDN designations is to further curtail Russia’s military capacity. SDNs designated by OFAC fall under the following categories:
- Parties located in Azerbaijan, Belgium, the PRC, Russia, Slovakia, Türkiye, and the United Arab Emirates (UAE) that have facilitated Russia’s acquisition of technology and equipment for its war machine;
- Parties that have operated in the defense and related materiel, manufacturing, technology, or transportation sectors of the Russian Federation economy;
- Parties located in Russia and the PRC that have facilitated Russia’s acquisition of explosives precursors; and
- Parties located in Russia that support or are otherwise associated with Russia’s chemical and biological weapons programs.
In addition to OFAC designations, the US Department of State also designated over 80 entities and individuals, including those
- Associated with Russia’s chemical and biological weapons programs;
- Involved in the development of Russia’s future energy, metals, and mining production and export capacity;
- Supporting Russia’s military industrial base and defense industry;
- Engaged in sanctions evasion and circumvention activities; and
- In connection with the death of opposition politician and anticorruption activist Aleksey Navalny.
Please see the Fact Sheet published by the US Department of State about these designations.
As a result of these designations, US Persons are generally prohibited from dealing directly or indirectly with SDNs, entities that are owned 50% or more by one or more SDNs, and their property or property interests. Non-US persons can be held liable for “causing” violations by US Persons involving transactions with SDNs and can also be subject to secondary sanctions risks (which would include, in particular, the risk of designation as an SDN themselves) for providing “material support” to SDNs.
New General Licenses
OFAC issued three new general licenses, as follows:
- General License No. 95 authorizes US Persons to engage in all transactions otherwise prohibited under Executive Order 14024 (“EO 14024”) that are ordinarily incident and necessary to (1) the provision, exportation, or reexportation of goods, technology, or services to ensure the safety of civil aviation involving Limited Liability Company Aviakompaniya Pobeda (“Pobeda”) through 12:01 a.m. eastern daylight time, July 30, 2024, provided that the goods, technology, or services that are provided, exported, or reexported are for use on aircraft operated solely for civil aviation purposes and (2) the wind-down of any transaction involving Pobeda through 12:01 a.m. eastern daylight time, July 30, 2024. Any payment to Pobeda must be made into a blocked account in accordance with the Russian Harmful Foreign Activities Sanctions Regulations (“RuHSR”). This general license does not authorize any transactions prohibited by Directive 2 or 4 under EO 14024 or transactions otherwise prohibited by the RuHSR.
- General License No. 96 authorizes US Persons to engage in all transactions otherwise prohibited under EO 14024 that are ordinarily incident and necessary to limited safety and environmental transactions involving any vessels (the “Blocked Vessels”) in which the following SDNs have a property interest: (1) Red Box Energy Services PTE LTD; (2) CFU Shipping Co Limited; and (3) Transstroy Limited Liability Company (“GL 96 SDNs”).
This general license does not authorize (1) the entry into any new commercial contracts involving the property or interests in property of the GL 96 SDNs or other SDNs; (2) the offloading of any cargo onboard any of the Blocked Vessels, except to the extent ordinarily incident and necessary to address authorized vessel emergencies; (3) any transactions related to the sale of crude oil or petroleum products of Russian origin; (4) any transactions prohibited by Directive 2 or Directive 4 under EO 14024; or (5) any transactions otherwise prohibited by the RuHSR.
- General License No. 97 authorizes US Persons to engage in all transactions otherwise prohibited under EO 14024 that are ordinarily incident and necessary to the wind-down of any transaction through 12:01 a.m. eastern daylight time, June 17, 2024, involving (1) LLC Sibcapital; (2) Yantai Iray Technology Co Ltd; or (3) any entity owned 50% or more by (1) and/or (2). This general license does not authorize any transactions prohibited by Directive 2 or 4 under EO 14024 or transactions otherwise prohibited by the RuHSR.
