Sanctions Tracker – Further U.S. Responses to the Crisis in Ukraine

This post provides an update regarding further Russia-related sanctions measures in the United States.

New General Licenses

On June 28, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued several new General Licenses (“GLs”):

• GL 39 authorizes certain transactions ordinarily incident and necessary to the wind down of any transaction involving State Corporation Rostec, or any entity blocked on or after June 28, 2022 that is owned 50% or more by State Corporation Rostec, through August 11, 2022, provided that any payment to a blocked person must be made into a blocked account.
• GL 40 authorizes certain transactions ordinarily incident and necessary to the provision, exportation, or reexportation of goods, technology, or services to ensure the safety of civil aviation involving one or more of the blocked entities listed in the Annex to the GL, provided that: (1) the aircraft is registered in a jurisdiction solely outside of Russia; and (2) the goods, technology, or services that are provided, exported, or reexported are for use on aircraft operated solely for civil aviation purposes.
• GL 41 authorizes certain transactions ordinarily incident and necessary to the manufacture, sale, and maintenance, including the provision and receipt of warranty and maintenance services, of agricultural equipment, components, and spare parts produced by Nefaz Publicly Traded Company (“Nefaz”) or Public Joint Stock Company Tutaev Motor Plant (“Tutaev Motor Plant”), or any entity owned 50% or more by Nefaz or Tutaev Motor Plant, through December 22, 2022, provided that any payment to a blocked person must be made into a blocked account.
• GL 42 authorizes certain transactions involving the Federal Security Service (a.k.a. Federalnaya Sluzhba Bezopasnosti) (a.k.a. FSB), provided that such transactions and activities are ordinarily incident and necessary to:
  • Requesting, receiving, utilizing, paying for, or dealing in licenses, permits, certifications, or notifications issued or registered by the Federal Security Service for the importation, distribution, or use of information technology products in Russia, provided that (i) the exportation, reexportation, or provision of any goods or technology that are subject to the Export Administration Regulations (15 CFR parts 730 through 774), is licensed or otherwise authorized by the Department of Commerce; and (ii) the payment of any fees to the Federal Security Service for such licenses, permits, certifications, or notifications does not exceed $5,000 in any calendar year;
  • Complying with law enforcement or administrative actions or investigations involving the Federal Security Service; and
  • Complying with rules and regulations administered by the Federal Security Service.
• GL 43 authorizes certain transactions ordinarily incident and necessary to the divestment or transfer of debt or equity of Public Joint Stock Company Severstal (“Severstal”) or Nord Gold PLC (“Nord Gold”), or any entity owned 50% or more by Severstal or Nord Gold, purchased prior to June 3, 2022 (“covered debt or equity”), through August 31, 2022, provided that any divestment or transfer, or facilitation of divestment or transfer, of covered debt or equity must be to a non-U.S. person. In addition, GL 43 authorizes certain transactions ordinarily incident and necessary to the wind down of derivative contracts entered into prior to June 2, 2022 that (i) include as a counterparty Severstal or Nord Gold, or any entity owned 50% or more by Severstal or Nord Gold; or (ii) are linked to covered debt or equity, through August 31, 2022, provided that any payments to a blocked person are made into a blocked account.

Sanctions on Imports of Gold of Russian Origin

On the same date, OFAC issued a “Determination (“Determination”) Pursuant to Section 1(a)(i) of Executive Order (“E.O.”) 14068” (the “E.O. 14068 Determination”).  E.O. 14068 sets forth a framework by which the Secretary of the Treasury, in consultation with the Secretary of State and the Secretary of Commerce, may prohibit the importation into the United States of any products of Russian origin.  Pursuant to the E.O. 14068 Determination, the Director of OFAC, in consultation with the Department of State and the Department of Commerce, has determined that E.O. 14068 now applies to gold of Russian origin.  As a result, the importation into the United States of gold of Russian origin is now prohibited, except to the extent provided by law or unless licensed or otherwise authorized by OFAC.  This Determination excludes gold of Russian origin that was located outside of Russia prior to the effective date of the Determination.  This Determination became effective upon publication.

Additional Guidance Clarifications

OFAC also issued additional guidance related to the sanctions measures announced.  In particular, OFAC updated existing Frequently Asked Question (“FAQ”) 1,029 to clarify that gold-related transactions involving Russia may be sanctionable under E.O. 14024 and other Russia-related sanctions authorities, including pursuant to the E.O. 14068 Determination prohibiting the importation into the United States of certain gold of Russian origin.

In addition, OFAC issued new FAQ 1,070, which clarifies the prohibitions and exclusions set forth in the E.O. 14068 Determination.

New Sanctions Designations

Finally, OFAC designated 70 entities, “many of which are critical to the Russian Federation’s defense industrial base, including State Corporation Rostec, the cornerstone of Russia’s defense, industrial, technology, and manufacturing sectors,” as well as 29 Russian individuals.  The OFAC press release, which can be found here, explains that the sanctions measures imposed on June 28, 2022 “strike at the heart of Russia’s ability to develop and deploy weapons and technology used for Vladimir Putin’s brutal war of aggression against Ukraine.”

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