The Bass, Berry & Sims international trade team continues to monitor U.S. government action in response to Russia’s invasion of Ukraine. In the final months of 2022, the U.S. government added multiple individuals and entities to the Specially Designated Nationals (SDN) List and the Entity List (EL), froze assets of individuals, issued or revised general licenses, and took enforcement action against individuals and companies. This post summarizes new U.S. sanctions and export restrictions as of Friday, December 30. This post supplements our previous summaries, which are available by following the links at the end of this blog post.
Department of the Treasury and Department of State Designations
On December 22, the Department of the Treasury, Office of Foreign Assets Control (OFAC), in consultation with the Department of State, added 10 entities associated with the Russian Navy and/or the Russian maritime industry to the SDN List.
The prior week, on December 15, OFAC added to the SDN List 18 entities related to Russia’s financial services industry, most notably Rosbank, a financial institution deemed a “systemically important credit institution” to the government of Russia. Fourteen subsidiaries of Russia’s second largest bank, VTB Bank, were also designated. As we reported in a blog post earlier this year, VTB itself was designated on February 24.
Concurrent with the OFAC designations, the State Department designated Vladimir Potanin, three members of his family, and his company – Interros. The State Department also identified Potanin’s yacht – Nirvana – as blocked property. Note that State Department designations, imposed in consultation with OFAC, have the same practical effect as when OFAC designates a party (or a vessel) as in both cases OFAC places the entity or individual on the SDN List and U.S. persons are prohibited from conducting virtually any transaction with the party. In addition, the State Department designated 29 Russian regional officials, two members of their families, a company owned by a family member, six proxy authorities, and five individuals on the board of directors of Russian Railways. While Russian Railways has not itself been designated as an SDN, as we reported in our February 24 blog post, the company was listed as one of 13 Russian firms pursuant to Directive 3, under which U.S. entities and individuals are prohibited from dealing in certain new debt or equity of the designated firms. The aforementioned designations include two Russian Deputy Prime Ministers – Andrey Removich Belousov and Dmitriy Nikolaevich Chernyshenko.
On November 21, OFAC announced the implementation of a price cap of $60 per barrel on seaborne crude oil of Russian origin. The cap became effective on December 5. The announcement follows an agreement between all members of the European Union, the G7 (which includes Canada and Japan), and Australia. Companies purchasing seaborne crude oil from Russia must pay at or below $60 per barrel or they will otherwise be barred from access to key services including – trading/commodities brokering, financing, shipping, insurance, flagging, and customs brokering. Shipping, freight, customs and insurance costs are not included in the price cap.
On November 15, OFAC, in consultation with the State Department, designated three Iranian entities involved in manufacturing and delivering unmanned aerial vehicles (UAVs) from Iran to Russia. Three Russian individuals and entities involved in acquiring the UAVs, and two third-party entities who collaborated with an Iranian firm to transfer the UAVs to Russia, were also designated. The Department of State press release can be found here; the OFAC press release can be found here.
On November 14, OFAC, again acting in consultation with the Department of State, designated 14 individuals and 28 entities, and identified eight aircraft as blocked property. The designations include individuals and entities associated with a “transnational network procuring technology that supports the Russian military-industrial complex” and “a global network of financial facilitators, enablers, and others associated with two key Kremlin-linked elites,” Suleiman Abusaidovich Kerimov and Alexander-Walter Studhalter. The Department of State press release can be found here. The OFAC press release can be found here.
On October 19, OFAC designated Yury Yuryevich Orekhov and his companies which, OFAC has concluded, form a procurement network that has identified and procured sensitive technologies from U.S. manufacturers and transferred them to Russian end-users.
OFAC Issues New General Licenses
Since our last update on October 3, OFAC has issued multiple new and revised General Licenses (GLs) as noted below:
- General License 8E – issued December 15, authorizes certain transactions related to energy sector activities. The GL replaces GL 8D and expires on May 16, 2023.
- General License 58 and General License 59 – issued on December 15, authorize certain transactions related to Public Joint Stock Company Rosbank. The GLs expire on March 15, 2023.
- General License 57 – issued on November 22, authorizes certain services related to vessel emergencies. There is no expiration date for this GL.
- General License 56 – issued on November 22, authorizes certain services related to the maritime transport of crude oil originating from Russia to certain European Union Member States. There is no expiration date for this GL.
- General License 55 – issued on November 22, authorizes certain services related to the maritime transport of crude oil originating from the Sakhalin-2. The GL expires on September 30, 2023.
- General License 54 – issued on November 18, authorizes certain transactions involving debt or equity services of VEON Ltd. The GL has no expiration date.
- General License 53 – issued on November 10, authorizes certain transactions involving diplomatic missions of Russia. The GL has no expiration date.
- General License 13C – issued on November 21, authorizes certain transactions involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation. The GL replaces General License 13B, and expires on March 7, 2023.
- General License 40C – issued on November 14, authorizes certain transactions related to the safety of civil aviation. The GL replaces General License 40B, and does not have an expiration date.
Department of Commerce
On December 21, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) added the Wagner Group to the EL. The Wagner Group has been determined to be a Russia/Belarus “Military End User.” As a result of the designation, a license from BIS is required to export/re-export to the group both U.S.-origin items and certain foreign-produced items (i.e., items produced outside the United States using U.S.-origin technology or equipment).
On December 13, BIS issued a temporary denial order (TDO) suspending the export privileges of three people and two companies for 180 days for the unauthorized export of items controlled under the Export Administration Regulations (EAR). Boris Livshits, Svetlana Skvortsova, and Aleksey Ippolitov of Russia along with two companies registered in the United States – Advanced Web Services and Strandaway, LLC – were denied export privileges under the EAR.
On December 8, BIS added one entity from Latvia, one entity from Switzerland, and nine entities from Russia to the EL for significant contributions to Russia’s military and/or defense industrial base. The added entities have been determined to be Russia/Belarus “Military End Users.” As a result of the designation, a license from BIS is required to export/re-export to the listed entities both U.S.-origin items and certain foreign-produced items (i.e., items produced outside the United States using U.S.-origin technology or equipment). The BIS press release can be found here.
On October 13, BIS issued a TDO against Ural Airlines citing apparent ongoing violations of the comprehensive export controls imposed on Russia. Ural joins eight other Russian airlines under TDOs, each of which ban the companies from participating in transactions subject to the EAR, including exports from the United States and re-exports of EAR-controlled items from abroad. BIS also renewed previously issued TDOs against Aviastar-TU (April 21, 2022), UTair Aviation JSC (April 7, 2022), and PJSC Aeroflot (April 7, 2022). These renewed TDOs will remain in effect for an additional 180 days, and then will likely be extended again.
Department of Justice
On October 19, the Department of Justice (DOJ) unsealed a 12-count indictment alleging that the named defendants had laundered millions of dollars for Russian oligarchs, smuggled hundreds of millions of barrels of oil, and illegally obtained U.S. military equipment. One defendant, Yury Orekhov, part owner and CEO of the German industrial equipment company Deutshe Industrieanlagenbau GmbH, purportedly used his company as a front to procure sensitive technologies from U.S. manufacturers, including advanced semiconductors and microprocessors used in fighter aircraft, missile systems, and smart munitions for Russian end-users. The sophisticated scheme involved falsified shipping documents, a complicated web of shell companies, and the use of international couriers to transfer bulk cash.
Also on October 19, the DOJ unsealed an indictment alleging that three Latvian Nationals and one Ukrainian National conspired to smuggle a high-precision jig grinder into Russia. The jig grinder, which was manufactured in the United States, has dual-use applications, as it can be used in nuclear proliferation and other defense programs. While the jig grinder does not require an export license to many countries, including the European Union, it does require a license for export to Russia. The U.S. government, working with Latvian law enforcement authorities, intercepted the jig grinder before its re-export to Russia, and each of the individuals involved was arrested. The DOJ press release can be found here.
On October 17, Intertech, a New Hampshire laboratory equipment distributor, was sentenced to the maximum allowable fine for falsely describing the nature and value of exported items on commercial invoices and shipping forms pertaining to exports to Russia, Ukraine, and elsewhere. The undervaluation allowed Intertech to avoid filing Electronic Export Information with the U.S. government. The DOJ press release detailing the sentencing can be found here.
On October 11, Graham Bonham-Carter, a UK National, was indictedfor violations of U.S. sanctions. Bonham-Carter apparently began working for Russian oligarch Oleg Vladimirovich Deripaska in 2003. In April 2018, OFAC designated Deripaska as an SDN. However, Bonham-Carter continued to work for Deripaska, allegedly engaging in over $1 million of illicit transactions to fund real estate properties in the United States for Deripaska’s benefit. Bonham-Carter also attempted to transfer art from the United States to the UK through misrepresentations, concealing Deripaska’s ownership of the art. Bonham-Carter was arrested in the UK, and the U.S. government is seeking his extradition. The DOJ press release can be found here.
For additional information pertaining to recent enforcement actions, both related to Russia and other jurisdictions, please sign up for our monthly enforcement roundups. You can read the November edition here.
If you have any questions or need assistance related to this evolving situation or other international trade matters, please contact the authors. To read our previous coverage concerning the Russia-Ukraine situation, click the links below:
- Monday, October 3
- Tuesday, August 9
- Thursday, July 7
- Monday, June 6
- Wednesday, June 1
- Monday, May 9
- Thursday, May 5
- Wednesday, April 27
- Monday, April 18
- Monday, April 11
- Thursday, April 7
- Wednesday, April 6
- Friday, April 1
- Thursday, March 31
- Thursday, March 24
- Monday, March 21
- Monday, March 14
- Tuesday, March 8
- Monday, March 7
- Thursday, March 3
- Monday, February 28
- Friday, February 25
- Thursday, February 24
- Wednesday, February 23