In response to Russia’s invasion of Ukraine, the U.S. government has deployed a whole-of-government approach to impose sanctions and tighter export controls on Russia. This alert summarizes key economic sanctions imposed by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC). It is not intended to be, and is not, a comprehensive summary of the economic sanctions implemented as a result of the invasion of Ukraine. Rather, this alert is a tool to help companies, both U.S. and foreign, identify whether doing business with Russia, Belarus, or Ukraine (Covered Regions) is now prohibited due to the wide-ranging economic sanctions, which include import prohibitions, export prohibitions, and designation of hundreds of individuals, entities, and vessels as sanctioned or blocked persons.
OFAC’s economic sanctions generally complement the export, reexport and transfer (in-country) controls imposed by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) on items subject to the Export Administration Regulations (EAR) destined for Russia, Belarus, Ukraine (Covered Regions) or certain individuals and entities. The EAR governs the export, reexport and transfers (in-country) of most items exported from the United States, U.S.-origin items wherever located, and certain foreign-produced goods.
For any transaction involving Russia, Belarus, or Ukraine (Covered Regions), it is important to review both the OFAC sanctions and the EAR and to conduct screening of participants to determine whether a contemplated transaction is authorized. A summary of the current state of export controls implemented in response to the Russian Federation’s invasion of Ukraine can be found here.
Executive Summary of Changes Since March 7, 2024
On April 12, OFAC issued a determination adding aluminum, copper, and nickel (produced on April 13, 2024 or after) to the list of Russian origin products that are banned from importation into the United States pursuant to Executive Order 14068. On that same day, OFAC issued a second determination prohibiting the exportation of “Covered Metals Acquisition Services,” which include warranting services for such metals on a global metal exchange and services to acquire such metals as part of a physical settlement of a derivative contract. Acquisition services related to Russian origin aluminum, copper, or nickel that was produced prior to April 13, 2024, are excluded from the prohibition. This service prohibition does not apply to gold.
Also on April 12, OFAC issued a new General License, five new FAQs, and amended two others. See Sections III.D, IV, and VII.D of this alert for a description of the new General License and FAQs.
On April 19, 2024, OFAC issued a General License unblocking the property and interests in property of OWH SE i.L. (“OWH”) (formerly known as VTB Bank Europe SE), and any entity in which OWH owns a 50% or greater interest, directly or indirectly. OWH was formerly known as VTB Bank Europe SE.
On April 24, 2024, President Biden signed into law Public Law No: 118-50, which, among other things, extended the statute of limitations (SOL) for civil violations of sanctions programs to 10 years from five years. The 10-year SOL applies to regulatory programs implemented pursuant to the International Emergency Economic Powers Act (IEEPA), which is one of the statutes underpinning the Ukraine-/Russia-related Sanctions program and the Russian Harmful Foreign Activities Sanctions program, and The Trading with the Enemy Act. As a result, OFAC will have up to 10 years to commence enforcement actions for violations of Russia sanctions programs.
On May 1, 2024, OFAC designated 29 individuals, 253 entities, and 16 vessels due their support of Russia’s military-industrial base and chemical and biological weapons programs; the designations include Russian individuals, entities and vessels as well as companies and individuals in third countries that are supporting the Russian military-industrial base and chemical and biological weapons programs.
In conjunction with the designations, OFAC issued three new general licenses; they authorize i) select safety and environmental transactions involving certain blocked persons or vessels, ii) civil aviation safety and wind down transactions involving Limited Liability Company Aviakompaniya Pobeda, and iii) winding down of transactions with certain other newly designated entities.
Table of Contents
I. Overview of OFAC Economic Sanctions Regulations Relating to Russia
A. Ukraine-/Russia-related Sanctions Regulations
B. Russian Harmful Foreign Activities Sanctions
II. OFAC Restrictions on Doing Business in Ukraine (Covered Regions)
Imposition of embargoes on Crimea and the Donetsk People’s Republic and Luhansk People’s Republic regions of Ukraine
III. Import Restrictions on Goods from Russia or of Russian Origin
A. Import Ban on Crude Oil, Petroleum and Related Energy Products
B. Import Ban on Items from Key Sectors (for example, seafood, alcohol and non-industrial diamonds)
C. Import Ban on Gold
D. Import Ban on Aluminum, Copper, and Nickel
IV. Restrictions on the Export of Key Services to Russia by U.S. persons
Export bans on accounting services, trust and corporate formation services, management consulting services, quantum computing, architecture services, and engineering services; and certain services related to aluminum, copper and nickel of Russian origin.
V. Restrictions Regarding Maritime Services in Connection with Russian Crude Oil and Petroleum Products
Summary of restrictions on the provision of certain services related to maritime transport of Russian-origin crude oil and petroleum products:
A. Services Related to Crude Oil Transport
B. Services Related to Petroleum Products Transport
C. Country of Origin Guidance
D. Future Developments
E. Evasion Alert
VI. Sanctions Relating to Numerous Russian Economic Sectors
Persons determined to operate or to have operated in numerous sectors of the Russian economy may be sanctioned. The sectors are:
- technology, defense and related materials as of April 15, 2021;
- financial services as of February 22, 2022;
- aerospace industries, electronics and marine as of March 31, 2022;
- accounting services, trust and corporate formation services and management consulting services as of May 8, 2022;
- quantum computing as of September 15, 2022;
- metals and mining as of February 24, 2023; and
- architecture, engineering, construction, manufacturing, and transportation as of May 19, 2023.
VII. Restrictions Regarding Financial Institutions, Financial Transactions and Related Transactions with Russia
A. Investment Prohibition
B. U.S.-Denominated Banknotes
C. Debt and Equity Restrictions
D. Amended Directive 4 (Prohibited Transactions and Reporting Requirements)
E. Designations of Financial Institutions and Executives and Board Members of Financial Institutions as SDNs
F. Secondary Sanctions Against Foreign Financial Institutions
VIII. Further Specially Designated National and Blocked Person Designations
Additional SDN designations include oligarchs, Russian elites, TV stations, key industry entities, vessels and aircraft.
IX. Humanitarian-Related Authorizations for Certain Activities In or Involving Russia Sanctions
I. Overview of OFAC Economic Sanctions Relating to Russia
The economic sanctions relating to the Russian invasion of Ukraine are being implemented primarily through two programs: the Ukraine-/Russia-related Sanctions program and the Russian Harmful Foreign Activities Sanctions program. OFAC also maintains sanctions against Russia under the Magnitsky Sanctions program and the Countering America’s Adversaries Through Sanctions Act of 2017, but these programs have not been deployed in response to the 2022 invasion and are not a focus of this summary.
As a general rule, OFAC’s economic sanctions against Russia and Ukraine (Covered Regions) apply to U.S. citizens, wherever located; U.S. permanent residents – i.e., “green card” holders, wherever located; entities formed in the United States, including their foreign branches; and anyone, including entities, located in or otherwise subject to the jurisdiction of the United States regardless of citizenship.
For information on General Licenses that may be applicable to certain of the prohibited activities described below, see OFAC’s Selected General License page, the Russian Harmful Foreign Activities Sanctions page and the Ukraine-/Russia-related Sanctions page.
A. Ukraine-/Russia-related Sanctions
The Ukraine-/Russia-related sanctions include the sanctions that were implemented in March 2014 in response to Executive Order (EO) 13660, which declared a national emergency to deal with the threat posed by Russia to the security, stability and sovereignty of Ukraine, including the annexation of the Crimea region by Russia. In addition to the restrictions promulgated in EO 13660, these sanctions implement the restrictions imposed by three subsequent 2014 executive orders: EO 13661 (March 16, 2014), EO 13662 (March 20, 2014) and EO 13685 (December 19, 2014). As discussed in Part II below, this program also includes the first EO addressing the 2022 invasion (EO 14065) as well as the Ukraine-/Russia-related Sanctions Regulations, which are codified at 31 C.F.R. Part 589, and general licenses that have been issued authorizing certain transactions that would be prohibited under these sanctions (many of which are time-limited) as well as numerous FAQs and other guidance.
Select provisions of the Ukraine-/Russia-related Sanctions are outlined in Section II below. For more information on Ukraine-related Sanctions, see OFAC’s page on the Ukraine-/Russia-related Sanctions, Amendment to the Ukraine-Related Sanctions Regulations and Associated Administrative List Updates and OFAC’s FAQs on the sanctions applicable to Ukraine (Covered Regions).
B. Russian Harmful Foreign Activities Sanctions
The Russian Harmful Foreign Activities Sanctions program began in 2021 with the issuance of EO 14024, and the Russian Harmful Foreign Activities Sanctions Regulations (RuHSR) were issued in May 2022. The RuHSR, which are codified at 31 C.F.R. Part 587, implement the restrictions imposed by EO 14024 and any legal prohibitions or restrictions in executive orders issued pursuant to the national emergency declared in EO 14024. In EO 14024, the president declared an unusual and extraordinary threat to the national security, foreign policy and economy of the United States due to the Russian government’s efforts to undermine the democracy of the United States and its allies and partners, Russia’s “malicious cyber-enabled activities against the United States and its allies and partners,” and Russia’s violations of “well-established principles of international law.”
To supplement the RuHSR, OFAC issued four directives in 2022 that imposed additional restrictions regarding financial transactions relating to Russia (see Section VII below). As discussed below, an amended Directive 4 was issued by OFAC on May 19, 2023. Under this program, OFAC also issued three additional executive orders in 2022 (discussed in Sections III and VI below) as well as numerous general licenses, FAQs and other guidance. As of May 1, 2024, there are 57 active general licenses under the RuHSR program, including authorizations for the offloading of cargo; safety and environmental transactions; agricultural commodities and medicine; telecommunications; activities by nongovernmental organizations; overflight payments, emergency landings and air ambulance services; certain emergency vessel repairs or salvage operations; civil aviation safety; certain transactions involving Russia’s Federal Security Service; certain energy transactions related to the importation of Russian crude oil into Bulgaria, Croatia and certain landlocked EU member states; and other support to people impacted by Russia’s further invasion of Ukraine.
Select provisions of the RuHSR program are outlined below. For more information on the program, see OFAC’s Russian Harmful Foreign Activities Sanctions page and OFAC’s Russian Harmful Foreign Activities Sanctions FAQ page.
II. OFAC Restrictions on Doing Business in Ukraine
As a result of the February 2022 invasion of Ukraine and Russia gaining control of the Donetsk People’s Republic and Luhansk People’s Republic regions of Ukraine (DNR and LNR regions, respectively), the United States imposed an embargo on the two regions. Specifically, on Monday, February 21, 2022, the president issued EO 14065, prohibiting “United States persons” from engaging in new investment in the DNR and LNR regions as well as engaging in trade – including the export, import, reexport, and sale or supply of goods, services or technology – with the DNR and LNR regions. The comprehensive embargo on transactions with the two regions mirrors the 2014 sanctions prohibiting transactions with the Crimea region of Ukraine.
These embargoes mean that exports of all U.S.-origin items (other than food and medicine designated as EAR99 and certain software and Internet-based personal communications) to Crimea or the DNR or LNR regions require a license. Also, U.S. persons, wherever located, are prohibited from approving, financing, facilitating or guaranteeing transactions by foreign persons that cannot be performed by U.S. persons because of the embargoes. Licenses from both BIS and OFAC may be needed for any export, reexport or transfer (in-country) and related transactions involving Crimea or the LNR or DNR regions.
Under the Ukraine-/Russia-Relation Sanctions program, OFAC has issued general licenses authorizing certain transactions with the DNR and LNR regions, mainly for humanitarian reasons, that would have otherwise been prohibited under the EO. For example, General License 18 authorizes the “exportation or reexportation of agricultural commodities, medicine, medical devices, replacement parts and components for medical devices, or software updates for medical devices” as well as “the prevention, diagnosis, or treatment of COVID-19.” General License 20 authorizes transactions “for the conduct of the official business of certain international organizations and entities.” The Ukraine-Related Sanctions Regulations provide similar general licenses related to Crimea. In addition, under the Russian Harmful Foreign Activities Sanctions program, OFAC has issued General License 27 authorizing certain humanitarian and democracy-building efforts by non-governmental organizations in Ukraine otherwise prohibited by those sanctions.
For further information, see February 21, 2022 Issuance of Executive Order Blocking Property Of Certain Persons And Prohibiting Certain Transactions With Respect To Continued Russian Efforts To Undermine The Sovereignty And Territorial Integrity Of Ukraine; Issuance of Ukraine-related General Licenses; White House Fact Sheet; and FAQ 1007.
III. Import Restrictions on Goods from Russia or of Russian Origin
A number of import restrictions have been imposed on goods from the Russian Federation or goods that are of Russian origin. These restrictions include an import ban on crude oil, petroleum, energy products, gold, aluminum, copper, and nickel, as well as a ban on certain items from key Russian sectors, including fish, seafood, and preparations thereof; alcoholic beverages; certain non-industrial diamonds; and diamond jewelry. Further, as discussed below in Section IV, certain services relating to some of the banned Russian origin metals (i.e., aluminum, copper, and nickel) are also prohibited.
A. Import Ban on Crude Oil, Petroleum and Related Energy Products
Since March 8, 2022, pursuant to EO 14066, imports into the United States of Russian Federation-origin crude oil; petroleum; petroleum fuels, oils and products of their distillation; liquefied natural gas; coal; and coal products have been prohibited.
B. Import Ban on Items from Key Sectors
Since March 11, 2022, pursuant to EO 14068, imports of Russian Federation-origin goods from several notable sectors of the Russian economy, including fish, seafood and preparations, alcoholic beverages and non-industrial diamonds, also have been prohibited.
The import ban imposed by EO 14068 was expanded in three key ways pursuant to EO 14114, issued on December 22, 2023.
First, whereas prior to December 22, 2023, only “importation” was banned, the prohibition now extends to “the importation and entry into the United States, including importation for admission into a foreign trade zone located in the United States” (but see comments in Section III.C, below).
Second, the revised executive order, together with the Determination Pursuant to Section 1(a)(i)(B) of Executive Order 14068, issued on December 22, 2023, extended the import ban to “products . . . that were mined, extracted, produced, or manufactured wholly or in part in the Russian Federation or harvested in waters under the jurisdiction of the Russian Federation or by Russia-flagged vessels, notwithstanding whether such products have been incorporated or substantially transformed into other products outside of the Russian Federation: fish, seafood, and preparations thereof; diamonds and any other such products.” Pursuant to this authority, salmon, cod, pollock and crab that are incorporated in or substantially transformed into other products outside of Russia are subject to the import prohibition. On February 20, 2024, OFAC extended GL 83 through issuance of GL83A to permit importation of such seafood derivatives through May 31, 2024, provided that the importation is pursuant to written contracts or agreements entered into prior to December 22, 2023. FAQ 1157, as amended on January 18, 2024, states that OFAC intends to publish regulations defining salmon, cod, pollack and crab as articles falling under the Harmonized Tariff Codes specified in the FAQ.
Finally, revised EO 14068, in a new section 1(e), defined the previously undefined term “diamond” to include “any diamonds classifiable under subheadings 7102.10, 7102.31, and 7102.39 of the Harmonized Tariff Schedule of the United States” as well as subheadings specified in determinations made pursuant to the executive order.
The definition paved the way for two new determinations issued on February 8, 2024. The first determination expanded the import ban to include diamond jewelry and unsorted diamonds, whether of Russian origin or exported from Russia, effective March 1, 2024. The second determination banned importation of non-industrial diamonds mined, extracted, produced, or manufactured wholly or in part in Russia – effective March 1, 2024, for such diamonds with a weight of 1.0 carat or greater; and, effective September 1, 2024, non-industrial diamonds with a weight of 0.5 carats or greater. In both cases, the ban will apply notwithstanding whether such diamonds have been incorporated or substantially transformed into other products outside of the Russian Federation. On February 23, 2024, OFAC issued FAQs 1164 – 1166 which provided further guidance on the diamond import bans.
Based on FAQs 1016, 1024 and 1156, the import bans do not extend to U.S. persons engaging in transactions to sell or redirect shipments of goods covered by the import ban outside the United States that were previously destined for the United States.
Although OFAC has not issued clear guidance on how theories of incorporation or substantial transformation may impact the ban on importation of goods of Russian Federation origin into the United States, the December 22, 2023, and February 8, 2024, developments appear to clarify that the import ban only applies to items that have been incorporated or substantially transformed into a foreign-made product when an OFAC determination has been issued to that effect, i.e., currently, salmon, cod, pollock and crab; effective March 1, 2024, diamond jewelry, unsorted diamonds, and non-industrial diamonds with a weight of 1.0 carat or greater; and, effective September 1, 2024, non-industrial diamonds with a weight of 0.5 carats or greater.
Finally, previously issued FAQ 1019 defines “Russian Federation origin” to include “goods produced, manufactured, extracted, or processed in the Russian Federation, excluding any Russian Federation origin good that has been incorporated or substantially transformed into a foreign-made product.” Country-of-origin determinations are the purview of U.S. Customs and Border Protection regulations and guidelines, which, in the absence of a relevant determination, may offer some additional guidance for the purposes of OFAC’s ban on importation of Russian Federation-origin goods.
For more information on the sector-based import ban, see the OFAC FAQs.
C. Import Ban on Gold
Since June 28, 2022, pursuant to a determination issued under EO 14068 section 1(a)(i)(A) and updated on December 22, 2023, imports of newly mined or refined gold of Russian origin have been prohibited unless licensed or otherwise authorized by OFAC. However, the ban does not apply to gold of Russian origin that was located outside the Russian Federation prior to June 28, 2022. Although the updated December 22, 2023, determination states that the amended determination “reflects technical, non-substantive changes,” it seems to retroactively prohibit not only importation but “the importation and entry into the United States, including importation for admission into a foreign trade zone located in the United States.” This suggests that OFAC may view the additional language in the amended executive order as a clarification that is not intended to change the scope of the ban.
D. Import Ban on Aluminum, Copper, and Nickel
On April 12, 2024, OFAC issued a determination banning the importation of Russian origin aluminum, copper, and nickel produced on or after April 13, 2024, into the United States, including U.S. foreign trade zones. This action was taken pursuant to Executive Order 14068. Revised FAQ 1119 and new FAQ 1171, also issued on April 12, clarify that the ban does not extend to Russian origin aluminum, copper, or nickel that has been incorporated or substantially transformed into a foreign-made product. Further, FAQ 1170 provides that regulations will be issued by OFAC to define aluminum, copper, and nickel as articles or products falling within Chapters 76, 75, and 74, respectively, of the Harmonized Tariff Schedule of the United States.
As stated in the Department of the Treasury’s April 12 press release, these measures were taken in coordination with the United Kingdom and are intended to cut off another stream of revenue to Russia, thereby limiting its ability to fund its war against Ukraine. In addition, as described in Section IV below, effective April 12, 2024, certain services relating to the acquisition of Russian origin aluminum, copper, and nickel produced on or after April 13, 2024.
IV. Restrictions Imposed on the Export of Services to Russia
On May 8, 2022, pursuant to EO 14071, OFAC issued a determination that prohibited the export of certain professional services to Russia by U.S. persons. At that time, the scope of the prohibition covered accounting, trust and corporate formation and management consulting services, and the prohibitions took effect on June 7, 2022.
On September 15, 2022, also pursuant to EO 14071, OFAC issued a second determination prohibiting the provision of professional services related to quantum computing. On May 19, 2023, again, pursuant to EO 14071, OFAC issued a third determination related to services that prohibit the provision of professional services related to architecture and engineering to Russia by U.S. persons effective as of June 18, 2023. Note, however, that these prohibitions do not apply to services provided to entities in Russia that are owned or controlled by a U.S. person or to services provided in connection with the winding down or divestiture of an entity located in Russia that is not owned or controlled by a Russian person.
As noted above, on April 12, 2024, OFAC issued a determination prohibiting U.S. persons from providing “Covered Metals Acquisition Services” for aluminum, copper, or nickel of Russian origin. Covered Metal Acquisition Services include warranting services for Russian origin aluminum, copper, or nickel on a global metal exchange and services to acquire such metals as part of the physical settlement of a derivative contract. The determination expressly excluded services related to aluminum, copper, or nickel produced prior to April 13, 2024. OFAC issued FAQs 1168 and 1169 to help clarify the scope of the Covered Metals Acquisition Services prohibition. FAQ 1168 offers various suggestions regarding how U.S. global metal exchanges can comply with the determination. FAQ 1169 clarifies that such metals that are already warranted as of April 13, 2024, on a global metal exchange can continue to be traded and that new warranting can continue for such metals produced prior to April 13, 2044, including through new derivatives contracts. In addition, FAQ 1169 provides that “[m]arket participants and traders can reasonably rely on the Certificate of Analysis and Certificate of Origin of the relevant Russian metal, or other documentation available to them in the ordinary course of business, with respect to the date of production, but should exercise caution if they have reason to believe such documentation has been falsified or is otherwise erroneous.”
OFAC has broadly defined the scope of all prohibited services. The prohibited services are defined as follows:
Accounting services include “services related to the measurement, processing, and transfer of financial data about economic entities.”
Trust and corporate formation services include “services related to assisting persons in forming or structuring legal persons, such as trusts and corporations; acting or arranging for other persons to act as directors, secretaries, administrative trustees, trust fiduciaries, registered agents, or nominee shareholders of legal persons; providing a registered office, business address, correspondence address, or administrative address for legal persons; and providing administrative services for trusts.”
Management consulting services include “services related to strategic advice; organizational and systems planning, evaluation, and selection; marketing objectives and policies; mergers, acquisitions, and organizational structure; staff augmentation and human resources policies and practices; and brand management.”
Quantum computing includes “any of the following services when related to quantum computing, quantum computers, electronic assemblies thereof, or cryogenic refrigeration systems related to quantum computing: infrastructure, web hosting, or data processing services; custom computer programming services; computer systems integration design services; computer systems and data processing facilities management services; computing infrastructure, data processing services, web hosting services, and related services; repairing computer, computer peripherals, or communication equipment; other computer-related services; as well as services related to the exportation, reexportation, sale, or supply, directly or indirectly, of quantum computing, quantum computers, electronic assemblies thereof, or cryogenic refrigeration systems related to quantum computing to any person located in the Russian Federation.”
Architecture services include “advisory services; pre-design services; design services, including schematic design, design development, and final design; contract administration services; combined architectural design and contract administration services; including post-construction services; and all other services requiring the expertise of architects.” The prohibition applies irrespective of focus (e.g., residential, institutional, etc.) and also extends to urban planning services and landscape architectural services.
Engineering Services include “assistance, advisory, consultative, design, and recommendation services concerning engineering matters or during any phase of an engineering project; geotechnical, groundwater, and corrosion engineering services; integrated engineering services, such as those for transportation infrastructure or other projects; engineering-related scientific and technical consulting services, including geological, geophysical, geochemical, surface or subsurface surveying, and map making services; testing and analysis services of chemical, biological, and physical properties of materials or of integrated mechanical and electrical systems; and technical inspection services.” Note, however, that consistent with the price cap policy for crude oil and petroleum products discussed in Section V below, the term “engineering services” does not include maritime classification services.
Covered Metals Acquisition Services means warranting services for aluminum, copper, or nickel of Russian origin on a global metal exchange and services to acquire aluminum, copper, or nickel of Russian origin as part of the physical settlement of a derivative contract. “Warranting services” refers to issuing, registering, accepting, or acquiring a warrant or the underlying metal on a global metal exchange (i.e., a commodities exchange that provides infrastructure and services for the international trading of base metal derivatives contracts). . . . “Warrant” means an electronic record or physical document of title to, possession of, or rights in respect of a specified lot of metal (including where such metal is held in a third country within a global metal exchange-approved warehouse). A warrant is created or issued in accordance with the rules of a global metal exchange.
In numerous FAQs, OFAC has provided additional guidance regarding the ban on the provision of services noted above. See OFAC FAQ 1128 for the complete sanctionable services definitions.
V. Restrictions Regarding Maritime Services in Connection with Russian Crude Oil and Petroleum Products
A. Services Related to Crude Oil Transport
On November 21, 2022, OFAC issued a determination pursuant to EO 14071 – the Prohibitions on Certain Services as They Relate to the Maritime Transport of Crude Oil of Russian Federation Origin – restricting maritime services in connection with the maritime transport of Russian crude oil. A second determination – Price Cap on Crude Oil of Russian Federation Origin – was issued on December 5, 2022, implementing the $60-per-barrel price cap agreed to by allied and participating nations, including the United States, the 27 member states of the European Union and the members of the G7. Under the determinations, U.S. persons are prohibited from providing a wide range of services, including trading/commodities brokering, financing, shipping, insuring (including reinsurance and protection and indemnity), flagging and rendering customs brokering services (“covered services”) related to the maritime transport of Russian crude oil that is priced above the $60 price cap.
The ban on covered services does not apply to services related to maritime transport of Russian crude oil priced at or below the price cap. The price cap excludes the cost of shipping, freight, customs and insurance, provided they are invoiced separately at commercially reasonable rates. There are also certain de minimis exceptions, and the price cap does not apply when crude oil is substantially transformed (when the crude oil loses its identity and is transformed into a new product with a change in name, character and use) in a jurisdiction other than Russia or has cleared another jurisdiction’s customs for onshore sale. OFAC does not consider certain blending activities alone to be substantial transformation of crude oil.
In addition, in some instances, the price cap will apply beyond the first point of sale:
- If the Russian crude oil is imported into a country other than Russia, has cleared customs and is then exported back to Russia via maritime transport without undergoing a substantial transformation, the price cap still applies.
- If the Russian crude oil is sold at sea, the price cap will still apply to the sale and transfer until it clears customs into a jurisdiction other than Russia.
On February 3, 2023, and again on December 20, 2023, OFAC issued updated and consolidated guidance (Price Cap Guidance) covering the price cap on both crude oil and petroleum products as well as the covered services prohibitions. The consolidated guidance did not change the price cap on crude oil or the scope of services that constitute covered services. The Price Cap Guidance now includes the guidance relating to crude oil and petroleum products in one document. However, the guidance published by OFAC on November 22, 2022, remains applicable to the assessment of any violations that may have occurred prior to the issuance of the consolidated guidance (see OFAC November 2022 Guidance on Implementation of the Price Cap Policy for Crude Oil of Russian Federation Origin).
With respect to both crude oil and petroleum products, the scope of covered services prohibited, including key definitions of terms, is as follows:
Trading/Commodities Brokering: Buying, selling or trading commodities and/or brokering the sale, purchase or trade of commodities on behalf of other buyers or sellers.
Financing: A commitment for the provision or disbursement of any debt, equity, funds or economic resources, including grants, loans, guarantees, suretyships, bonds, letters of credit, supplier credits, buyer credits and import or export advances. For the purposes of the determination, the term “financing” does not include the processing or clearing of payments by intermediary banks. [Note: This exclusion is subject to certain conditions as further provided in the guidance.]
Shipping: Owning or operating a ship for the purposes of carrying or delivering cargo and/or freight transportation, chartering or subchartering ships to deliver cargo or transport freight, brokering between shipowners and charterers, and serving as a shipping/vessel agent.
Insurance: The provision of insurance, reinsurance or protection and indemnity (P&I) services; satisfying claims related to underwriting insurance policies that protect policyholders against losses that may occur as a result of property damage or liability; assuming all or part of the risk associated with existing insurance policies originally underwritten by other insurance carriers, including the reinsurance of a non-U.S. insurance carrier by a U.S. person; and liability insurance for maritime liability risk associated with the operations of a vessel, including cargo, hull, vessel, P&I and charterers liability.
Flagging: Registering or maintaining the registration of a vessel with a country’s national registry of vessels. This definition does not include the deflagging of vessels transporting Russian oil sold above the price cap.
Customs Brokering: Assisting importers and exporters in meeting requirements governing imports and exports. This definition does not include legal services or assisting importers and exporters in meeting the requirements of U.S. sanctions.
Per the Price Cap Guidance, covered services do not include medical evacuation or other emergency services for crew members; health, travel or liability insurance for crew members; or classification, inspection, bunkering and pilotage.
The Price Cap Guidance also implemented a safe harbor from OFAC enforcement for participating service providers based on their level of involvement in maritime service; the safe harbor groups participating service providers into “tiers” – Tier 1, Tier 2 and Tier 3. All tiered actors are required to maintain records for a period of five years and have specific due diligence requirements as follows:
- Tier 1 actors are those that regularly have direct access to price information – for example, commodity brokers and oil traders. To receive safe harbor protection, these actors are required to maintain documentation that the purchase price of the Russian crude oil was at or below the $60 price cap.
- Tier 2 actors are financial institutions, ship/vessel agents, customs brokers, etc., that sometimes are able to request and receive price information from customers. To the extent practical, these actors must request and retain documents demonstrating the Russian crude oil was purchased at or below $60. If it is not practical to obtain price information, these actors must obtain and retain signed attestations from the customers regarding the purchase price.
- Tier 3 actors are those that do not regularly have access to price information in the ordinary course of business and include insurers, P&I clubs, shipowners and flagging registries. These actors can be afforded safe harbor protection by obtaining customer attestations, which can be accomplished by utilizing preexisting or revised sanctions exclusion clauses.
The December 20, 2023, updates to the Price Cap Guidance include new requirements to receive attestations within 30 days of each lifting or loading of Russian oil or Russian petroleum products and retain, provide or receive itemized ancillary cost information as required. The updated guidance conveys OFAC’s expectation that U.S. service providers be in compliance with these new requirements by February 19, 2024, in order to continue to benefit from the safe harbor outlined in the guidance. Furthermore, U.S. service providers must retain relevant records, including attestations and cost information, for five years.
OFAC has noted that it does not intend to pursue penalties against U.S. service providers that reasonably relied on documentation or attestations, provided there are no red flags that suggest evasion of the sanctions. Red flag indicators include a customer’s or counterparty’s refusal to provide any necessary documentation or attestations, which may be indicative of that party’s involvement in the purchase of Russian crude oil above the relevant price cap. If the U.S. service provider knew or had reason to believe the crude oil was or was potentially purchased above the price cap, then the safe harbor protections will not protect the U.S. service provider.
For more information on the price caps and covered services ban, see the Oil Price Cap (OPC) Compliance and Enforcement Alert of February 1, 2024; OFAC’s December 20, 2023, Price Cap Guidance; OFAC’s Nov. 22, 2022, price cap guidance; OFAC’s Nov. 21, 2022 determination; OFAC’s December 5, 2022 determination; and OFAC’s FAQs.
B. Services Related to Petroleum Products Transport
Effective February 5, 2023, price caps were implemented for two categories of Russian origin petroleum products:
- A price cap of above $100 per barrel for “premium to crude” petroleum products.
- A price cap of above $45 per barrel for “discount to crude” petroleum products.
See Price Cap on Petroleum Products of Russian Federation Origin and the February 5, 2023 Determination.
1. Premium to Crude
Also effective February 5, 2023, the covered services ban related to the maritime transport of petroleum products was implemented. The covered services prohibition for petroleum products has the same scope as the covered services ban related to maritime transport of crude oil, as discussed above. See Covered Services for Petroleum Products determination.
Petroleum products subject to the premium to crude price cap are those that have specific classifications in 2710 of the Harmonized Tariff Schedule of the United States (HTSUS). The HTSUS classifications for premium to crude petroleum products are shown on page 5 of OFAC’s February 2023 Price Cap Guidance. These HTSUS classifications generally include gasoline, motor fuel, blending stock, gas oil and diesel fuel, kerosene and kerosene-type jet fuel and vacuum gas oil. A full description of the affected HTSUS classifications can be found on the U.S. International Trade Commission website. Premium to crude products that are sold at or below $100 per barrel are not subject to the covered services ban.
2. Discount to Crude
Articles subject to the discount to crude price cap are classified under HTSUS 2710 and include naphtha, residual fuel oil, waste oils and any other articles in the 2710 HTSUS heading that are not subject to the premium to crude price cap. See the U.S. International Trade Commission website for further details on HTSUS 2710. Discounts to crude products that are sold at or below $45 per barrel are not subject to the covered services ban.
C. Country of Origin Guidance
For origin determinations of petroleum products, the substantial transformation rules that apply to the covered petroleum products are broader than those applicable to crude oil. OFAC has previously stated that examples of processing that constitute substantial transformation (meaning that the product loses its identity and is transformed into a new product with a change in name, character and use) of crude oil and petroleum products are generally refinery processes involving chemical transformation, separation, conversion or treatment of the subject item. In addition, for petroleum products, OFAC will consider that blending operations constitute a substantial transformation if they result in a tariff classification shift. As stated above, OFAC has stated that certain blending operations alone do not result in substantial transformation of crude oil.
D. Future Developments
The price caps for Russian crude oil and petroleum products are subject to revision. Any changes in the price caps agreed upon will be implemented by OFAC in subsequent actions.
E. Evasion Alert and Additional Compliance Guidance
On April 17, 2023, OFAC issued an alert to warn U.S. persons about possible evasion of the price cap, particularly involving oil exported through the Eastern Siberia Pacific Ocean pipeline and ports on the eastern coast of Russia. Since that time, including on December 20, 2023, and January 18, 2024, numerous entities and vessels have been added to the SDN List for their part in evasion of the price cap. The Coalition Advisory for the Maritime Industry and Related Sectors, issued on October 12, 2023, recommends best practices for compliance with the price cap.
VI. Sanctions Relating to Numerous Russian Economic Sectors
Pursuant to EO 14024, the Secretary of the Treasury has authority to sanction any individual or entity who currently operates or has previously operated in sectors identified by the Secretary of the Treasury. As of May 19, 2023, OFAC has implemented authority to sanction individuals and entities operating in the following sectors:
- technology and defense and related materiel as of April 15, 2021;
- financial services as of February 22, 2022;
- aerospace industries, electronics and marine as of March 31, 2022;
- accounting services, trust and corporate formation services and management consulting services as of May 8, 2022;
- quantum computing as of September 15, 2022;
- metals and mining as of February 24, 2023; and
- architecture, engineering, construction, manufacturing, and transportation as of May 19, 2023.
The May 19, 2023 designated sectors are defined as:
- Architecture Sector includes “advising; pre-designing; designing; preparing sketches, reports, studies, assessments, site plans, working drawings, specifications, cost estimates, as-built drawings, or other materials; contract administration; site selection; and inspections concerning architectural and related matters involving the Russian Federation economy.”
- Engineering Sector includes “advising; designing; recommending; consulting; constructing; installing, surveying; preparing studies, specifications, cost estimates, working drawings, process flow diagrams, arrangement drawings, or other materials; map making; planning; testing; analysis; and inspecting for engineering and related matters involving the Russian Federation economy.”
- Construction Sector includes “activities such as the production, procurement, devising, framing, design, testing, financing, distribution, or transport involving the Russian Federation, of goods, services, or technology to fabricate, shape, alter, maintain, or form any buildings or structures, including the on-site development, assembly, or construction of residential, commercial, or institutional buildings, or of transportation infrastructure, in the Russian Federation; and any related activities, including the provision or receipt of goods, services, or technology to, from, or involving the construction sector of the Russian Federation economy.”
- Manufacturing Sector includes “activities such as the creation, modification, repair, testing, or financing, of goods by manual labor or machinery involving the Russian Federation and any related activities, including the provision or receipt of goods, services, or technology to, from, or involving the manufacturing sector of the Russian Federation economy.”
- Transportation Sector includes “activities such as the production, manufacturing, testing, financing, distribution or transport to, from, or involving the Russian Federation of any mode of transport or any goods, services, or technology for the movement or conveyance of persons or property and the loading, unloading, or storage incidental to the movement of such persons or property; and any related activities, including the provision or receipt of goods, services, or technology to, from, or involving the transportation sector of the Russian Federation economy.”
- FAQ 1114 emphasizes that although only designated persons are subject to sanctions, persons who operate or have operated in this sector are at risk of sanctions. FAQ 1117 also makes clear that non-U.S. persons may be exposed to sanctions for dealing with persons designated under EO 14024. However, OFAC also signaled in FAQ 1117 that it does not intend to target persons operating in an identified sector for activities that U.S. persons could engage in without a specific license or where the provision of goods or services is solely for certain purposes, such as safety, protection of human life or environmental protection (for example, provision of goods such as personal protective equipment or services such as rescue and accident response services).
VII. Restrictions Regarding Financial Institutions, Financial Transactions and Related Transactions
Numerous restrictions have been implemented regarding transactions with financial institutions in Russia, as well as prohibitions regarding financial transactions with entities in Russia, including those for the benefit of certain sectors of the Russian economy. These restrictions include the following.
A. Investment Prohibition
On March 8, 2022, EO 14066 banned new investment by U.S. persons in Russia’s energy sector. On April 6, 2022, pursuant to EO 14071, the ban was expanded to prohibit new investment into any sector of the Russian economy.
While “investment” was not defined in EO 14066 or EO 14071, based on OFAC FAQ 1049, “new investment” includes any commitment or contribution of funds or other assets for or “any transfer or extension of funds or credit on the basis of an obligation to repay, or any assumption or guarantee of the obligation of another to repay an extension of funds or credit, including overdrafts, currency swaps, purchases of debt securities, purchases of a loan made by another person, sales of financial assets subject to an agreement to repurchase, renewals or refinancing whereby funds or credits are transferred or extended to a borrower or recipient described in the provision, the issuance of standby letters of credit, and drawdowns on existing lines of credit.”
For more information, see Background Press Call by Senior Administration Officials on New Economic Costs on Russia.
B. U.S.-Denominated Banknotes
Effective March 11, 2022, the export and reexport of U.S. dollar-denominated banknotes to the Russian government or any person located in Russia is prohibited. Pursuant to General License 18, certain noncommercial personal remittances are authorized, including withdrawals of U.S. dollar-denominated banknotes via automated teller machines and the hand-carrying of U.S. dollar-denominated banknotes. For further information, see also OFAC FAQs re Dollar-Denominated Banknotes.
C. Debt and Equity Restrictions
Effective February 24, 2022, pursuant to EO 14024, OFAC Directive 3 prohibits all transactions in, provision of financing for and other dealings in new debt of greater than 14 days’ maturity and new equity issued by 13 Russian state-owned enterprises and entities, as follows:
1. Credit Bank of Moscow public joint stock company.
2. Gazprombank joint stock company.
3. Joint stock company Alfa-Bank.
4. Joint stock company Russian Agricultural Bank.
5. Joint stock company Sovcomflot.
6. Open joint stock company Russian Railways.
7. Public joint stock company Alrosa.
8. Public joint stock company Gazprom.
9. Public joint stock company Gazprom Neft.
10. Public joint stock company Rostelecom.
11. Public joint stock company Rushydro.
12. Public joint stock company Sberbank of Russia.
13. Public joint stock company Transneft.
For further information, see White House Fact Sheet and OFAC FAQs.
D. Amended Directive 4 (Prohibited Transactions and Reporting Requirements)
On May 19, 2023, OFAC amended Directive 4 to require U.S. persons to report to OFAC by June 18, 2023 (and annually thereafter by June 30) information about property located in the United States belonging to the Central Bank of Russia, the Russian National Wealth Fund or the Russian Ministry of Finance. This supplements the previous Directive 4, issued on February 28, 2022, which prohibited U.S. persons from conducting any transaction involving these Russian financial institutions, including any asset transfer to or any foreign exchanges for or on behalf of these Russian financial institutions. However, GL 13I authorizes, through July 11, 2024, the payment of taxes, fees or import duties and the purchase or receipt of permits, licenses, registrations, certifications or tax refunds by U.S. persons or entities owned or controlled by them, provided such transactions are ordinarily incident and necessary to the day-to-day operations in the Russian Federation of such U.S. persons or entities.
E. Designations of Financial Institutions and Executives and Board Members of Financial Institutions as Specially Designated Nationals
The designation of financial institutions, as well as executives and board members of financial institutions, as specially designated nationals (SDNs) has been a popular and powerful sanctions measurement imposed by OFAC. U.S. persons are prohibited from engaging in any business with an SDN and must freeze an SDN’s property and interests in property in the United States or in the U.S. person’s possession. An SDN designation is the most restrictive U.S.-sanctioned-person designation. An SDN is an individual, entity, aircraft or vessel listed on OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List) or an entity that is owned 50 percent or more, individually or in the aggregate, by one or more SDNs.
In just the financial sector, OFAC has imposed numerous sanctions, including:
a. SDN designations with full blocking restrictions on entities, including:
1. Sberbank and 42 of its subsidiaries.
2. VTB Bank Public Joint Stock Company and more than 25 of its subsidiaries (but note that on April 19, 2024, OFAC issued a general license unblocking the property and interests in property of the former VTB Bank Europe SE (now known as OWH SE i.L. (“OWH”)) and any entity in which OWH owns a 50% or greater interest, directly or indirectly).
3. Joint Stock Company Alfa-Bank (Alfa-Bank), six of its subsidiaries and five vessels.
4. State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank and 25 of its subsidiaries.
5. Promsvyazbank Public Joint Stock Company, 17 of its subsidiaries and five vessels.
6. Public Joint Stock Company Bank Financial Corporation Otkritie and 12 of its subsidiaries.
7. Open Joint Stock Company Sovcombank and 22 of its subsidiaries.
8. Joint Stock Commercial Bank Novikombank and 34 of its subsidiaries.
9. Joint Stock Company Moscow Industrial Bank and 10 of its subsidiaries.
10. Public Joint Stock Company Rosbank (Rosbank).
11. Credit Bank of Moscow Public Joint Stock Company, described by OFAC as one of Russia’s largest banks by asset value.
12. Joint Stock Company Commercial Bank Lanta Bank.
13. Public Joint Stock Company Commercial Bank Metallurgical Investment Bank.
14. Public Joint Stock Company MTS Bank.
15. Novosibirsk Social Commercial Bank Levoberezhny Public Joint Company.
16. Bank Saint-Petersburg Public Joint Stock Company.
17. Joint Stock Commercial Bank Primorye.
18. SDM-Bank Public Joint Stock Company.
19. Public Joint Stock Company Ural Bank for Reconstruction and Development.
20. Public Joint Stock Company Bank Uralsib.
21. Bank Zenit Public Joint Stock Company.
22. OOO Zenit Finance.
23. OOO Zenit Leasing.
24. OOO Zenit.
b. SDN designations with full blocking restrictions on executives and board members of Russian state-owned and private financial institutions, including:
1. Certain board members of Sberbank.
2. Certain board members of Gazprombank.
3. Certain governors of the Central Bank of the Russian Federation.
The designations summarized above are separate and apart from any designations, sanctions or license requirements imposed by BIS.
F. Secondary Sanctions Against Foreign Financial Institutions
EO 14114 issued on December 22, 2023 amends EO 14024 to authorize secondary sanctions against any foreign financial institution (FFI) that: i) conducts or facilitates any significant transaction that supports Russia’s military-industrial base, which includes the technology, defense and related material, construction, aerospace, and manufacturing sectors of the Russian Federation economy, ii) conducts or facilitates any transaction for or on behalf of an SDN designated under EO 14024 for operating in the designated sectors of the Russian economy (see Part VI, above); or iii) provides a service involving Russia’s military-industrial base. FAQ 1152 makes it clear that FFIs that engage in such activities are at risk of sanctions even if their activities relate to transactions processed in non-U.S. dollar currencies.
The sanctions consist of:
- Prohibiting the FFI from opening, or prohibiting or imposing strict conditions on the FFI’s maintenance, of correspondent accounts or payable-through accounts in the United States; or
- Adding the FFI to the SDN List.
The term “foreign financial institution” is very broadly defined in section 11(f) of amended EO 14114, to include, in addition to banks and other depository institutions, operators of credit card systems, trust and insurance companies, securities and commodities brokers and dealers, investment companies, employee benefit plans, foreign exchange merchants, clearing houses, dealers in precious metals, stones or jewels, and holding companies, affiliates or subsidiaries of such FFIs.
FAQ 1151 states that the term “military-industrial base” includes “the technology, defense and related materiel, construction, aerospace, and manufacturing sectors of the Russian Federation economy (and other sectors as may be determined pursuant to EO 14024). See Part VI above and FAQ 1126. In addition, the military-industrial base may also include “individuals and entities that support the sale, supply or transfer of critical items.” Categories of critical items (which are listed in a Determination Pursuant to Section 11(a)(ii) of Executive Order 14024 issued on December 22, 2023) are as follows:
1. Certain machine tools and manufacturing equipment
2. Certain manufacturing materials for semiconductors and related electronics
3. Certain electronic test equipment
4. Certain propellants, chemical precursors for propellants and explosives
5. Certain lubricants and lubricant additives
6. Certain bearings
7. Certain advanced optical systems
8. Certain navigation instruments
The term “significant transaction or transactions” is not defined in amended EO 14024, but FAQ 1151 provides guidance on the factors that OFAC will consider when assessing whether a transaction is significant. These factors include the nature, size, number, and frequency of the transaction(s); the level of awareness of a company’s management; the nexus of the transaction(s) to persons who are either sanctioned pursuant to EO 14024 or are operating in Russia’s military-industrial base; the extent to which the transaction(s) involve deceptive practices; and the impact on U.S. national security objectives.
OFAC has also issued guidance to aid FFIs in identifying the types of activities that could put them at risk of correspondence account and/or blocking sanctions and mitigating that risk,
To date, no FFIs have been sanctioned under the new authority. However, in anticipation of future sanctions, GL 84 authorizes certain “wind-down” transactions by U.S. financial institutions that maintain correspondence accounts or payable-through accounts for an FFI that is sanctioned in the future, provided that the transactions are completed within ten days of the imposition of sanctions on the FFI.
VIII. Additional Specially Designated National and Blocked Person Designations
As of May 1, 2024, the U.S. government has designated approximately 1,900 individuals and over 2,000 entities, vessels, and aircraft related to Russian and Ukrainian sanctions as SDNs, including entities that are owned 50 percent or more, individually or in the aggregate, by one or more SDNs, which, pursuant to OFAC guidance, must be treated as SDNs. Additional designations occur regularly.
Designated persons include influential financiers of Russian commercial banks, Russian financial institutions, wealth-management related entities and individuals, weapons manufacturer Limited Liability Company Promtekhnologiya (Promtechologia), state-controlled television stations Russia-1, Channel One and NTV, all of which are directly or indirectly state-owned and -controlled media within Russia, truck manufacturer KAMAZ Publicly Traded Company and its subsidiaries, many other distributors, manufacturers and state-owned enterprises involved in the Russian military industrial complex, individuals involved in the deportation and transfer of Ukrainian children to Russia, entities that operate in numerous sectors of the Russian economy, entities involved in the theft of Ukrainian wheat, Russian and non-Russian technology suppliers and importers, oil and gas companies, Private Military Company Wagner, numerous Russian government officials, elites and their entities linked to illicit financial activities and support for Russia’s war-fighting efforts against Ukraine, and, increasingly, those involved in evasion of the sanctions.
For more information on designations, see OFAC May 1, 2024, Russia-Related Designations; OFAC March 20, 2024, Russia-Related Designations; OFAC March 25, 2024, Russia-Related Designations; OFAC April 25, 2024, Russia-Related Designations; OFAC February 23, 2024, Russia-related Designations; OFAC February 8, 2024, Russia-related Designations; OFAC January 18, 2024, Russia-related Designations; OFAC January 11, 2024, Russia-related designations; OFAC Dec. 20, 2023, Russia-related Designations; OFAC December 12, 2023, Russia-related Designations; OFAC December 5, 2023, Russia-related Designations; OFAC December 1, 2023, Russia-related Designations; OFAC November 16, 2023, Russia-related Designations; OFAC November 3, 2023, Russia-related Designation; OFAC November 2, 2023, Russia-related Designations; OFAC September 14, 2023, With Wide-Ranging New Sanctions, Treasury Targets Russian Military-Linked Elites and Industrial Base; State Department September 14, 2023, Imposing Further Sanctions in Response to Russia’s Illegal War Against Ukraine; OFAC August 24, 2023, OFAC Russia-related Designations; OFAC August 16, 2023, Treasury Sanctions Entities Tied to Arms Deals Between North Korea and Russia; OFAC August 11, 2023, Treasury Imposes Sanctions on Russian Elites and a Russian Business Association; OFAC July 24, 2023, Treasury Targets Malian Officials Facilitating Wagner Group; OFAC July 20, 2023, Russia-related Designations; OFAC June 27, 2023 Russia-related Designations, OFAC June 23, 2023 Russia-related Designations, OFAC June 15, 2023 Russia-related designations, OFAC June 5, 2023 Russia-related Designations, OFAC May 25, 2023 Russia-related Designation, State Department May 19, 2023 United States Imposes Additional Sanctions and Export Controls on Russia in Coordination with International Partners, OFAC May 19, 2023 With Over 300 Sanctions, U.S. Targets Russia’s Circumvention and Evasion, Military-Industrial Supply Chains, and Future Energy Revenues, OFAC February 24, 2023 Targeting Key Sectors, Evasion Efforts, and Military Supplies, Treasury Expands and Intensifies Sanctions Against Russia; OFAC December 22, 2022 Russia-Related Designations; OFAC December 15, 2022 Further Constraining Russia’s Financial Sector Services; OFAC November 14, 2022 Sanctions Kremlin Linked Networks Procuring Technology for Russian Military; OFAC October 19, 2022 Targeting Military Procurement Operatives; OFAC September 30, 2022 Announcement of Response to Ukraine Annexation; OFAC September 15, 2022 Announcement Targeting Facilitators of Russian Aggression; OFAC August 2, 2022 Announcement Sanctioning Elites and Revenue-Generating Companies for Russian War Effort; OFAC June 28, 2022 Announcement Regarding SDN Designations; OFAC April 6, 2022 Announcement Regarding SDN Designations; OFAC March 31, 2022 Announcement; OFAC March 24, 2022 Announcement; OFAC Announcement of February 25, 2022; and OFAC Announcement of February 24, 2022.
To ensure that you do not engage in business with an SDN or other sanctioned party, it is essential that all parties to the transaction, including all potential end users and intermediaries, be screened against OFAC’s SDN List and other applicable U.S. sanctioned persons lists, which may include the BIS Entity List and the BIS List of Denied Persons. As a best practice, sanctioned-person screening should be done at the time the order comes in or negotiations begin, before engaging in the transaction, and before shipping. Dynamic screening is recommended to ensure that designations do not occur between screenings. Penalties for violations of the OFAC economic sanctions may be imposed on a strict liability basis. You also should verify that no party to a transaction is owned 50 percent or more, individually or in the aggregate, by one or more SDNs.
To screen for sanctioned persons, you may use the free online U.S. government screening tool.
IX. Humanitarian-Related Authorizations for Certain Activities In or Involving Russia Sanctions
The U.S. government and its allies have repeatedly stated that the purpose of the sanctions is not to harm or impede humanitarian activities to those in Ukraine and in Russia or humanitarian actors (including nongovernmental organizations and international organizations) and the people they serve in Russia. For example, 31 C.F.R. § 587.510 (RuHSR) authorizes the official business of the United Nations, International Centre for Settlement of Investment Disputes, Multilateral Investments Guarantee Agency, African Development Bank Group, Asian Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank Group (IDB Group), International Committee of the Red Cross and the International Federation of Red Cross and Red Crescent Societies (and its employees, grantees, or contractors) that would otherwise be prohibited under the RuHSR. Additionally, 31 C.F.R. § 587.508 authorizes activities associated with emergency medical services. On June 28, 2023, OFAC and the U.K. Office of Financial Sanctions Implementation (OFSI) issued a Joint Fact Sheet in order to highlight and summarize the available humanitarian-related authorizations. The Fact Sheet lists both U.S. and U.K. humanitarian authorizations in effect as of June 28, 2023 and U.S. and U.K. humanitarian guidance and FAQs.
For example, the Fact Sheet lists numerous general licenses involving humanitarian activities, including general licenses found in the RuHSR and various other general licenses, as follows:
There are also various general licenses under the Ukraine-/Russia-Relation Sanctions program that authorize certain humanitarian activities in Ukraine (Covered Regions).
Each one of these general licenses has very specific limitations, so it is important to carefully review the conditions of each general license before relying on it. If you are involved in providing humanitarian assistance, including food security, the Fact Sheet is a helpful resource, and more information on OFAC General Licenses can be found here.
To ensure that you have a full and proper understanding of the detailed sanctions, we recommend consulting legal counsel prior to relying on a general license or taking other actions subject to the sanctions.
[1] As noted above, actions taken by BIS are summarized in a separate alert.
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