Russia and Belarus Sanctions Update – March 15, 2022

Key Takeaways:

  • The new executive order bans certain imports and exports and allows the Treasury Department to impose significant restrictions on US investment in Russia.
  • Additional wave of sanctions targeting Russian “elites” close to President Vladimir Putin
  • The OFAC guidelines make it clear that Russia-related sanctions apply to cryptocurrency transactions.

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On March 11, 2022, President Biden signed a new Russia-related executive order banning certain imports, exports and new investments related to the continued aggression of the Russian Federation (“March 11 EO”).

The March 11 EO includes bans on fish, seafood and its preparations, alcoholic beverages and imports of non-industrial diamonds from Russia, as well as restrictions on the export of luxury goods from the United States to Russia and Belarus. The Department of Commerce’s Bureau of Industry and Security has released a list of items subject to export bans, which include high-value products such as gemstones, antiques and fur, as well as more general consumer goods such as make-up and carpets. , And blankets.

In addition to restricting trade, the EU on March 11 imposed significant sanctions on US investment in Russia:

  • New investments in any sector of the economy of the Russian Federation, wherever they may be, may be determined by the Secretary of State, in consultation with the Secretary of State, by an individual.
  • US dollar-denominated banknotes for export, repatriation, sale, or supply, directly or indirectly, from the United States, or by a US person, wherever they are, to the Government of the Russian Federation or to any person located in the Russian Federation.
  • Any authorization, financing, benefit, or guarantee by a U.S. person, regardless of where he resides, in the case of a transaction by a foreigner, where the transaction by that foreign person is prohibited by this section if performed in the U.S. or within the United States

On the same day, the Department of the Treasury Office of Foreign Assets Control (“OFAC”) issued several new general licenses to allow certain transactions otherwise prohibited by the 11th EU. Note that the following general licenses do not allow any otherwise prohibited transactions Activities prohibition regulations (31 CFR 587).

  • General License 17: Transaction authorization until March 25, 2022 is generally required and required for the importation of fish, seafood and its preparation into the United States; Alcoholic beverages; Or non-industrial diamonds of origin of the Russian Federation in accordance with the written agreement or written agreement before March 11, 2022.
  • General License 18: Approval of transactions that typically involve the transfer of US dollar-denominated banknotes from non-commercial, personal remittances and the necessary: ​​(i) the United States or a U.S. person, wherever you are, to a person located in the Russian Federation; Or (ii) a person from the United States who is located in the Russian Federation.
  • General License 19: Generally approving events and necessary transactions for their personal maintenance in the Russian Federation, including accommodation expenses, acquisition of goods or services for personal use, payment of taxes or fees and permits, purchase or receipt of licenses. , Or public utility services.

In addition, OFAC has issued the General License 23, which allows non-governmental organizations to engage in some humanitarian, democracy-building, educational, non-commercial development, and environmental protection activities in the Donetsk People’s Republic or Luhansk People’s Republic of Ukraine, which are otherwise. Prohibited by Executive Order 14065 of February 21, 2022.

Activities related to the new executive order on the same day also launched an additional wave of sanctions targeting the Russian “elite and business executives” in accordance with OFAC Executive Order 14024 (“EO 14024”). Nominees include:

  • President Putin’s spokesman, Dmitry Sergeevich Peskov, has three family members who have already been approved by the United States, Australia, Canada and the EU;
  • Russian tycoon and Kremlin insider Victor Wexelberg, previously nominated under Executive Order 13662. OFAC has identified two of Wexelberg’s luxurious assets – an aircraft with tail number P4-MIS and a yacht called Tango – as blocked property. Both the P4-MIS and the Tango are valued at about $ 90 million.
  • The entire board of directors of VTB Bank consists of ten persons, who were earlier approved under EO 14024.
  • The Russian State Duma (Legislature) has twelve members, including Bachellav Viktorovich Volodymyr, who is also a permanent member of Russia’s Security Council. Volodymyr was previously approved under Executive Order 13661. All 12 were previously nominated by the EU and Canada, and three, including Volodymyr, were nominated by the United Kingdom.

The above have been added to the list of citizens and blocked persons specially designated by OFAC (“SDN List”). U.S. individuals are generally barred from engaging in most transactions with the SDN, a specific or generic license is missing, and all U.S. assets on the SDN are “blocked” and must be reported to OFAC. Nominated natural persons are also subject to travel restrictions, and all entities that own 50% or more of an SDN are generally considered to be on the SDN list (known as the “50% rule”).

In addition, any person, including a non-US person, may be nominated to provide material support, sponsorship or financial, material, or technical support, or to provide products or services in support of this SDN.

OFAC further clarifies in the new guidelines that all restrictions imposed under EO 14024 will apply regardless of whether the transaction is using traditional currency or virtual currency, including cryptocurrency. In this guideline, OFAC warns that “US individuals, wherever they may be, including companies that conduct virtual currency transactions, must be wary of attempts to circumvent OFAC regulations and take risk-based measures to ensure they are not involved in prohibited transactions.” ” For additional information on Prohibition Compliance and Virtual Currency, please see OFAC’s Prohibition Compliance Guidelines for the Virtual Currency Industry and Foley Hogg’s Client Alert.

In the case of Ukraine, Foley Hog will continue to provide updates as the situation improves. Organizations that have questions about these activities or how to ensure compliance with U.S. sanctions and export control regulations should contact a member of the Foley Hog Trade Prohibition and Export Control Practice. For information on previous Russia-related actions, see our previous customer alerts issued on March 11, March 7, March 1, February 28 and February 17.

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