On December 5, 2023 and December 6, 2023, respectively, the US and UK Governments announced new sanctions and export control measures targeting Russia focused on persons and entities in third countries supporting Russia’s military and defense industrial base and its war in Ukraine.
US Sanctions and Export Control Updates
The US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced sanctions targeting a network led by Belgium-based individual, Hans De Geetere, as well as nine entities and five individuals in Russia, Belgium, Cyprus, Sweden, Hong Kong, and the Netherlands forming his procurement network related to electronics with military applications for Russian end-users. Concurrently, the US Department of Commerce’s Bureau of Industry and Security (“BIS”) added De Geetere and five entities to the Entity List. Further, the US Department of Justice (“DOJ”) unsealed two separate indictments against De Geetere related to his involvement in exporting sensitive, military-grade technology from the United States to end users located in China and Russia. On the same day, Belgian authorities arrested De Geetere and others in connection with his global procurement scheme and related arrests were made in the Netherlands. Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson affirmed, “Today’s coordinated action reflects our collective commitment to enforcing our sanctions and export controls, including holding accountable those who seek to evade these measures.”
In total, BIS added 42 entities to the Entity List, including De Geetere and related entities, for supporting Russia’s military and defense industrial base, including co-production of drones with Iran and illicit efforts to acquire Tier 1 High Priority Items identified by the US Government and international partners. Specifically, 11 entities were associated with Iranian-Russian efforts to develop and construct a UAV production facility in the Alabuga Special Economic Zone, which would produce thousands of Shahed-136 drones for Russia’s war against Ukraine. Notably, 13 entities were added to Entity List for engaging in dealings with other entities on the Entity List, including entities designated as Russian military end users, or entities sanctioned by OFAC.
OFAC designated 11 entities and seven individuals pursuant to Belarus-related Executive Order 14038 for their involvement in generating revenues for the Belarusian authoritarian regime and its support for Russia’s war against Ukraine. OFAC issued Belarus General License 10 (“GL 10”), which authorizes the wind down of transactions involving Tabak Invest LLC (“Tabak Invest”), or any entity in which Tabak Invest owns, directly or indirectly, a 50% or greater interest, through 12:01 a.m. eastern standard time, February 2, 2024.
On December 12, 2023, OFAC designated more than 150 individuals and entities for supporting Russia’s military and defense industrial base and issued Russia-related General License 79 and General License 80, which authorize the wind down of transactions involving certain parties designated on December 12, 2023 through 12:01 a.m. eastern daylight time, March 11, 2024.
UK Sanctions and Export Control Updates
The UK announced on December 6, 2023 that it has imposed sanctions against 46 new targets, in particular people and groups supplying and funding Russia’s illegal invasion of Ukraine.
The targeted individuals and entities include a number of entities in third countries including Belarus, China, Serbia, Turkey, the United Arab Emirates, and Uzbekistan and consists of foreign military suppliers exporting equipment and parts to Russia, actors supporting the Wagner Group network, and operators of “shadow fleet” vessels used by Russia to circumvent oil-related sanctions.
Notable inclusions in the list are:
- Three Chinese entities for being involved in the supply of sanctioned goods critical for Russia’s war efforts;
- One Turkish entity for its involvement in the supply of sanctioned Western electronics to Russia;
- Four UAE-based entities for their use of opaque corporate structures and deceptive shipping practices to facilitate trade in Russian oil; and
- 31 Russian individuals and entities linked to designing and manufacturing drones and missile parts, as well as importing and supplying key electronic components.
As a result of these additions, the UK Government has now taken action against over 30 third-country actors, signifying the UK’s no tolerance approach to those enabling the Russian war effort, regardless of geographical location. This further demonstrates the UK Government’s commitment to targeting those entities enabling or facilitating sanctions circumvention – in collaboration with its G7 partners – and/or Russia’s continued access to global goods and services. Businesses should continue to be vigilant of the potential diversion risks of supplying to countries at higher risk of onward supply to Russia, some of which have been targeted in this latest round of designations.
In tandem with this announcement, the National Crime Agency, in collaboration with other UK white collar crime agencies including the UK Office of Financial Sanctions Implementation (the UK’s financial sanctions regulatory authority), issued a ‘Red Alert’ notice: an advisory to the UK’s regulated sector (though noting that it might also be relevant in particular to customs brokers, freight forwarders and other transportation and logistics providers) which sets out key red flags of transactions and customer attributes commonly associated with attempts to evade sanctions in the export of high-risk goods which Russia is using on the battlefield in Ukraine. The UK’s announcement comes in the context of the G7 also announcing on December 6, 2023 a series of new measures against Russia. These are indicated to be aimed at further bearing down on the revenue Russia needs to finance Putin’s war machine, preventing Russia from accessing inputs to its military and industrial base, and demonstrating to Russia that there is a “price to pay” for the damage it has caused to Ukraine. A key measure includes the introduction of import restrictions on non-industrial diamonds, mined, processed or produced in Russia by January 1, 2024, followed by further phased restrictions on the import of Russian diamonds processed in third countries by March 1, 2024.