On January 26, 2023, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) redesignated PMC Wagner (“Wagner Group”) a Significant Transnational Criminal Organization (“STCO”) pursuant to Executive Order 13581 (“EO 13581”) as amended by Executive Order 13863 (“EO 13863”) for the Wagner Group’s activities in Ukraine, the Central African Republican (“CAR”), and Mali. Concurrently, OFAC has sanctioned the Wagner Group under Executive Order 13667 (“EO 13667”) for its activities in the CAR.
Functionally, the sanctions announced on January 26, 2023 do not impose new restrictions beyond those in place since 2017. OFAC had previously sanctioned the Wagner Group on June 20, 2017 pursuant to Executive Order 13660 (“EO 13660”) for its activities in Ukraine. On November 15, 2022, OFAC had again sanctioned the Wagner Group under Executive Order 14024 (“EO 14024”) for operating in the defense and defense materiel sector of the Russian economy.
The Wagner Group designations under each executive order above (EO 13581 as amended by EO 13863, EO 13667, EO 13660, and EO 14024) result in the Wagner Group’s listing on the Specially Designated Nationals and Blocked Person’s List (“SDN List”). 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 include, in particular, the risk of designation as an SDN themselves) for providing “material support” to SDNs.
In addition, OFAC has added nine entities and individuals across four countries to the SDN List for affiliating with the Wagner Group and facilitating its activities, including companies based in China, the CAR, and the UAE. In conjunction with action against the Wagner Group, OFAC and the State Department (see here and here, respectively) designated to the SDN List additional entities and individuals active in the Russian military industrial sector as SDNs subject to full blocking sanctions pursuant to EO 14024 as well as affiliates and government officials associated with Russian President Vladimir Putin.
The authors acknowledge the assistance of Rob O’Brien with the preparation of this blog post.
Bart M. McMillan
Mr. McMillan's practice involves compliance counseling; compliance programs; licensing; compliance reviews; internal investigations; voluntary disclosures; administrative enforcement actions; criminal investigations; customs inquiries, audits, detentions, and seizures; and trade-compliance due diligence and post-acquisition integration in mergers and acquisitions. His practice includes matters that implicate the US International Traffic in Arms Regulations (ITAR), US Export Administration Regulations (EAR), US National Industrial Security Program (NISP), the US Committee on Foreign Investment in the United States (CFIUS), and equivalent non-US laws. Mr. McMillan regularly advises on and represents clients in matters involving technology, including its control, protection, accidental disclosure, diversion, or unauthorized collection.
Mr. McMillan has extensive experience working with companies in the aerospace and defense industry, as well as companies in the Middle East and other parts of Asia.
Alexandre (Alex) Lamy
Alex advises clients on compliance with US export controls, trade and economic sanctions, export controls (Export Administration Regulations (EAR); International Traffic in Arms Regulations (ITAR)) and antiboycott controls. He counsels on and prepares filings to submit to the US Government's Committee on Foreign Investment in the United States (CFIUS) with respect to the acquisition of US enterprises by non-US interests. Moreover, Alex advises US and non-US companies in the context of licensing, enforcement actions, internal investigations, compliance audits, mergers and acquisitions and other cross-border transactions, and the design, implementation, and administration of compliance programs. He has negotiated enforcement settlements related to both US sanctions and the EAR.
Rob assists multinational companies on OFAC sanctions, export controls, and other trade laws in the context of compliance, licensing, internal investigations, mergers and acquisitions, government disclosures, and enforcement actions.
He has experience assisting clients navigate sanctions and export control in the following sectors: semiconductor design and manufacturing, telecommunications, pharmaceuticals, consumer goods, and financial services. Rob has also assisted start-ups and medium-sized businesses encountering OFAC sanctions and export controls for the first time.
Rob's pro bono practice includes providing sanctions and export control advice to a global NGO providing humanitarian relief in conflict zones. He also advises a global pro-bono law firm in advocacy matters relevant to sanctions and export controls. He has also served on the board of directors of a nonprofit working to improve the mental health environment for university students.