New Wave of Russian Sanctions, General Licenses, FAQs, and Export Controls

Date: 06/29/2022

On June 27 and 28, 2022, the U.S. government unleashed a new wave of sanctions and related measures aimed at Russians and Russian industry in response to Putin’s ongoing war against Ukraine. The Department of Treasury Office of Foreign Assets Control (“OFAC”) 1) added 99 persons to the Specially Designated Nationals and Blocked Persons (“SDN”) List, and 2) prohibited the importation of gold from Russia. OFAC also issued five new General Licenses.

Further, pursuant to its suspension of normal trade relations with Russia, the United States raised the duty rate for multiple products from Russia. Lastly, the Department of Commerce added dozens of companies to the Entity List, severely limiting their export privileges for goods from the United States. Find below a more detailed description of each of these measures.

OFAC Actions

OFAC’s addition of both individual and corporate parties to the SDN List – which prohibits U.S. persons from doing business with listed parties – targeted the defense, industrial, technology, and manufacturing sectors, including state-owned enterprise Rostec and a number of its subsidiaries and affiliated entities.

The newly issued General Licenses, which permit certain transactions without an application to OFAC, are as follows:

  • General License 39 provides a wind-down period until August 11, 2022, for transactions with Rostec and majority-owned Rostec subsidiaries.
  • General License 40 permits certain transactions to ensure the safety of civil aviation in Russia.
  • General License 41 permits transactions in certain agricultural equipment prior to December 22, 2022.
  • General License 42 permits certain transactions involving the Federal Security Service (“FSB”).
  • General License 43 provides a divestment period until August 31, 2022, for transactions involving PJSC Severstal or Nord Gold PLC.

A new Determination, pursuant to Section 1(a)(i) of Executive Order (“E.O.”) 14068, adds gold of Russian origin to the list of goods prohibited for import (i.e. fish, seafood, alcoholic beverages, and non-industrial diamonds) into the United States. As a result, gold originating in Russia may not be imported into the United States without a specific license from OFAC. Newly issued  FAQ 1070 clarifies that the prohibition does not apply to gold located outside Russia prior to June 28, 2022.

OFAC also amended FAQ 1029 to further clarify the impact of the prohibitions of E.O. 14024 and other Russia-related sanctions on the gold market and gold-related transactions. Amended FAQ 1029 warns that persons – such as gold dealers, distributors, wholesalers, buyers, individual traders, refineries, and financial institutions – may also be subject to blocking sanctions if they facilitate prohibited transactions or are complicit in evading sanctions.

Duty Rate Increase

In a further move against Russian imports, President Biden, on June 28, pursuant to the April 8, 2022 Suspending Normal Trade Relations with Russia and Belarus Act (19 U.S.C. 2434 note), raised the column 2 rates of duty applicable to products – under more than 500 Harmonized Tariff Schedule codes listed in Annex A of the proclamation, covering a variety of sectors and categories – from the Russian Federation to 35 percent.

Entity List Additions

The Department of Commerce’s Bureau of Industry and Security (“BIS”) added 36 entities to the Entity List, requiring a license for export, reexport, or transfer (in-country) to these listed parties, without the possibility of license exceptions. Included are five Russian entities (Avcom-Technique; FASTAIR; Intertech Rus LLC; KingPai Technology Int’l Co., Limited; and Laboratory Systems and Technologies LTD) and six non-Russian entities that have “continue[d] to contract to supply Russian entity listed and sanctioned parties after Russia’s further invasion of Ukraine” and “providing support to Russia’s military and/or defense industrial base” (Connec Electronic Ltd.; King Pai Technology; Sinno Electronics Co., Ltd.; Winninc Electronic; World Jetta (H.K.) Logistics Limited) and Promcomplektlogistic Private Company). BIS added the remaining 25 entities for activities unrelated to Russia.

As the war in Ukraine continues, we expect additional sanctions, export controls, and other measures to be levied against Russia. For any questions about the above or trade with Russia generally, please do not hesitate to reach out to the attorneys at Torres Trade Law.

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