1. New SDNs
On Monday, 28 April, 2014, the Office of Foreign Assets Control (“OFAC”) in the US Treasury Department announced its fourth group of “Specially Designated Nationals” (“SDNs”) related to the crisis in Ukraine and added 17 entities and 7 individuals in Russia to the US SDN List pursuant to Executive Order 13661.
“U.S. Persons” are now prohibited from dealing (directly or indirectly) with these SDNs and any entities 50% or more owned by these SDNs. “U.S. Persons” include (i) entities organized under U.S. laws and their non-U.S. branches, (ii) individuals or entities in the United States, or (iii) U.S. citizens or permanent resident aliens (“Green Card” holders) wherever located or employed. Separately incorporated foreign subsidiaries of U.S. companies may be subject to U.S. jurisdiction if they cause any SDN-related transactions to occur in whole or in part in the United States.
According to the US Treasury Department press statement, the designated individuals are Russian government officials, including two key members of the Russian leadership’s inner circle. The 17 entities designated as SDN are affiliated with previously designated SDNs, including Arkady and Boris Rotenberg, Gennady Timchenko, and Bank Rossiya. The new SDNs include InvestCapitalBank, SMP Bank, LLC Investment Company Abros, CJSC Zest, and JSB Sobinbank.
The seven SDN individuals announced on 28 April are:
-
Oleg Belavantsev
-
Sergei Chemezov
-
Dmitry Kozak
-
Evgeniy Murov
-
Aleksei Pushkov
-
Igor Sechin and
-
Vyacheslav Volodin
The new SDN individuals are Russian government officials. Mr. Chemezov is the Director General of the State Corporation for Promoting Development, Manufacturing and Export of Russian Technologies High-Tech Industrial Products (“Rostec”) and serves on the board of directors of Rosneft. Mr. Sechin is the President and Chairman of the Management Board for Rosneft. The US Treasury Department clarified that neither Rostec nor Rosneft is designated as an SDN.
2. New Designations on the Entity List
In a coordinated statement, the Bureau of Industry and Security (“US BIS”) in the US Commerce Department also announced that it plans to add 13 Russian entities to the Entity List pursuant to the Export Administration Regulations (“EAR”). The 13 Russian entities added to the Entity List are a subset of the 17 entities designated as SDNs on the same day. The inclusion of these 13 entities on the Entity List means that a US BIS licence will be required for the export, reexport or in-country transfer by any U.S. or non-U.S. person of items (i.e., goods, software, technology) subject to the EAR to any of the 13 entities, with a presumption of denial.
Although it will not be clear until US BIS formally adds the 13 entities to the Entity List, the new EAR licensing requirements appear to apply to both controlled and non-controlled (aka “EAR99”) items intended for any of these entities. This approach would be consistent with the recent addition of Chermomorneftegaz, an SDN, to the Entity List on 16 April 2014 (see our previous blog post on Chermomorneftegaz’s designation as an SDN and addition to the Entity List).
3. Strengthened US Export Controls Targeting Russia
In the same statement, US BIS also announced that it will deny pending applications for licenses to export/reexport any “high technology” items (an undefined term) subject to the EAR to Russia or “occupied Crimea” that contribute to Russia’s military capabilities. The US State Department made a similar statement regarding defense articles and services under the US Munitions List.
US BIS and State Department explained that they will revoke existing export licenses meeting these conditions and that existing licenses for exports/reexports to Russia will be reviewed on a case-by-case basis to determine their contribution to Russia’s military capabilities, presumably for potential revocation. It appears that US BIS and State Department will contact export license holders to revoke affected licenses.
US BIS and State Department previously announced that they have suspended the processing of license applications for export/reexports to Russia. See our previous blog posts on the announcements from US BIS and State Department in this regard.
