Trade Law

The United Kingdom just issued a new statutory instrument, effective immediately, which extends the authority to designate persons and entities under the U.K. sanctions against Russia.

On February 2, 2017, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Cyber-related General License (GL) 1, a general license that authorizes certain transactions with Russia’s Federal Security Service (Federalnaya Sluzhba Bezopasnosti or FSB).  GL 1 authorizes U.S. persons (i.e., individuals and companies) to request, receive, use, pay for or deal in licenses, permits, certifications, or notifications issued or registered by the FSB for information technology (IT) products in Russia, provided that (i) the relevant IT goods or technology are subject to the U.S. Export Administration Regulations (EAR) and are licensed or otherwise authorized by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS); and (ii) payment of fees to the FSB for such licenses and other authorization or notification does not exceed $5,000 in any calendar year. GL 1 also authorizes transactions or activities that are necessary and ordinary incident to complying with law enforcement or administrative actions or investigations involving the FSB or rules and regulations administered by the FSB.

Overview of Actions Taken by the United States

On December 29, 2016, President Obama announced that he was sanctioning nine individuals and entities: the Main Intelligence Directorate (aka Glavnoe Razvedyvatel’noe Upravlenie) (GRU) and the Federal Security Service (aka Federalnaya Sluzhba Bezopasnosti) (FSB), two Russian intelligence services; four individual officers of the GRU; and three companies that were stated to have provided material support to the GRU’s cyber operations. In addition, two Russian individuals were sanctioned for using cyber-enabled means to cause misappropriation of funds and personal identifying information. These actions mark the first expansion of the Specially Designated Nationals (SDN) List to include entities and individuals under the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) cybersecurity program since it was established on April 1, 2015. The 2015 client alert can be found here.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued new Russia/Ukraine-related sanctions on Thursday, September 1, 2016. This action marks OFAC’s first major expansion of the Specially Designated Nationals (SDN) List and Sectoral Sanctions Identifications (SSI) List for the Russia sanctions program since December 22, 2015. Additionally, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) made corresponding additions to its Entity List on September 7, 2016.

U.S. Department of Commerce Places Export Restrictions on 29 Parties; State Department Announces Sanctions on Russian Defense Companies; EU to Extend Russia-Related Sanctions.

A. BIS Adds 29 Entities to Entity List

On September 2, 2015, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued a final rule amending the Export Administration Regulations (EAR) by adding 
29 parties to its Entity List, a restricted-party list identifying foreign persons that engage in activities contrary to U.S. national security and/or foreign policy interests. This latest action was taken in accordance with Executive Orders 13660, 13661, 13662 and 13685 to “ensure the efficacy of existing sanctions on [Russia] for violating international law and fueling the conflict in Ukraine.”

For 14 of the 29 entities added to the Entity List, BIS imposes a general license requirement for all items subject to the EAR. Accordingly, all exports, re-exports and transfers (in-country) of all restricted items to these companies require a license from BIS, and BIS will also consider such license requests with a presumption of denial. This BIS action essentially conforms the Entity List with actions against the same entities previously taken by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), designating these entities as “Specially Designated Nationals” (SDNs) under Executive Orders 13660, 13661 and 13685.

On August 7, 2015, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) published a final rule adding the Yuzhno-Kirinskoye Field, a Russian oil and gas field located in the Sea of Okhotsk, to its Entity List, a restricted party list maintained by BIS which identifies foreign persons that engage in activities contrary to U.S. national security and/or foreign policy interests. Consequently, exports, reexports and transfers (in-country) of all items subject to the Export Administration Regulations (EAR) to this Russian field require a license from BIS. Furthermore, BIS will consider such license requests with a presumption of denial.

On July 30, 2015, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a Crimea Sanctions Advisory highlighting certain practices that have been used to circumvent or evade U.S. sanctions involving Crimea and suggesting measures to mitigate Crimea sanctions risks.

Signaling increased tensions with Russia regarding its alleged intervention in eastern Ukraine, the European Union on June 19 and 22, 2015, took action extending sanctions targeting Russia and Crimea, including measures that prohibit EU persons from investing in or importing from Crimea and measures that restrict certain companies operating in Russia’s energy, defense and financial sectors from accessing European capital and equity markets.