Biden Administration Responds to Death of Alexey Navalny with Additional Sanctions Against Russia Federation

Following the death of opposition politician Alexey Navalny, the Biden Administration announced a large swath of new and additional sanctions on the Russian Federation.  The U.S. Department of Treasury’s Office of Foreign Assets Control (”OFAC”), in conjunction with the Department of State and the Department of Commerce, added almost 300 individuals and entities to the Specially Designated Nationals List (“SDN List”).  Later in the day, OFAC additionally designated Joint Stock Company Sovcomflot (“Sovcomflot”), Russia’s state-owned shipping company, in another major blow to the country’s oil export industry.  These sanctions also coincide with the second anniversary of Russia’s further invasion of the Ukraine. 

OFAC broadly categorized the initial tranche of sanctions into four groups: (1) Russia’s financial infrastructure; (2) Sanctions evasion, circumvention, and backfill; (3) Alabuga UAV procurement network; and (4) Russia’s military-industrial base and other sectors of the Russian Federation economy.  The designation of Sovcomflot ultimately removes the entity from the Non-SDN Menu-Based Sanctions List and now moves the company to the SDN List.  The designation of Sovcomflot includes the designation of 14 maritime vessels in which Sovcomflot has an interest:

1. ANATOLY KOLODKIN (IMO 9610808)
2. NS ANTARCTIC (IMO 9413559)
3. NS LION (IMO 9339313)
4. NS CONSUL (IMO 9341093)
5. NS BURGAS (IMO 9411020)
6. NS CAPTAIN (IMO 9341067)
7. NS COLUMBUS (IMO 9312884)
8. SAKHALIN ISLAND (IMO 9249128)
9. NEVSKIY PROSPECT (IMO 9256054)
10. GEORGY MASLOV (IMO 9610793)
11. LITEYNY PROSPECT (IMO 9256078)
12. KRYMSK (IMO 9270529)
13. NS CREATION (IMO 9312896)
14. NS BRAVO (IMO 9412359)

These additional sanctions come with related General Licenses and FAQs that provide additional context and guidance.  Notably, OFAC specifically emphasizes in FAQ 1092 that non-U.S. companies do indeed risk sanctions exposure for violations of the Russian sanctions program.  For clarity, this ultimately suggests that the latest round of sanctions continues to carry potential secondary sanctions risk.  Entities throughout the world must be cognizant of these prohibitions and ensure compliance.  Furthermore, many of these Russian sanctions entail parallel prohibitions from US allies, including the European Union, Australia, and New Zealand, among others. 

These latest round of sanctions included the following General Licenses:

General License 88A – Authorizing the Wind Down of Transactions Involving Certain Entities Blocked on February 23, 2024

GL88 provides for a wind down period for any transaction currently in process that involve 17 entities added the OFAC’s Specially Designated Nationals List (“SDN List”).  These transactions must be completed or dissolved by April 8, 2024 at 12:01am eastern daylight time.  Any further transactions with these entities after this date will require a Specific License from OFAC.  The 18 entities included in GL88 are as follows:

1. PJSC Transcontainer;
2. Publichnoe Aktsionernoe Obshchestvo Mechel;
3. JSC SUEK;
4. ILLC Geopromining Investment;
5. LLC Holding GPM;
6. Joint Stock Company Samara Metallurgical Plant;
7. Joint Stock Company Rimera;
8. Public Joint Stock Company Pipe Metallurgical Company;
9. Vostochnaya Stevedoring Company LLC;
10. JSC Rosgeologia;
11. National Payment Card System Joint Stock Company;
12. Limited Liability Company BSF Capital;
13. Limited Liability Company Investment Consultant Elbrus Capital;
14. Limited Liability Company Orbita Capital Partners;
15. Nonprofit Organization Investment and Venture Fund of the Republic of Tatarstan;
16. Obshchestvo S Ogranichennoi Otvetstvennostyu Guard Kapital;
17. Limited Liability Company Shipbuilding Complex Zvezda;
18. Joint Stock Company Sovcomflot; and
19. Any entity in which one or more of the listed entities, whether individually or in the aggregate, holds a 50-percent ownership interest. 

General License 89 – Authorizing the Wind Down and Rejection of Transactions Involving Certain Financial Institutions Blocked on February 23, 2024

Similar to GL 88A, GL89 provides for a wind down period for several Russian financial institutions subject to the recent round of sanctions.  This period also ends April 8, 2024 at 12:01am eastern daylight time.  The eight financial institutions include: 

1. Avangard Joint Stock Bank;
2. Bank RostFinance;
3. Joint Stock Commercial Bank Chelindbank;
4. Joint Stock Commercial Bank International Financial Club;
5. Joint Stock Commercial Bank Modulbank;
6. Joint Stock Company Databank;
7. Maritime Joint Stock Bank Joint Stock Company;
8. Public Joint Stock Company Bystrobank; and
9. Any entity in which one or more of the listed entities, whether individually or in the aggregate, holds a 50-percent ownership interest. 

General License 90 – Authorizing Certain Transactions Related to Debt or Equity of, or Derivative Contracts Involving, Certain Entities Blocked on February 23, 2024

Similar to the prior licenses, GL90 provides for the same wind down period relating to the issuance of debt or equity from six Russian entities.  These entities include:

1. LLC Holding GPM;
2. Limited Liability Company Geopromaining Verkhne Menkeche;
3. Joint Stock Company Sarylakh Surma;
4. Joint Stock Company Zvezda;
5. ILLC Geopromining Investment;
6. Public Joint Stock Company PIK Specialized Homebuilder; and
7. Any entity in which one or more of the listed entities, whether individually or in the aggregate, holds a 50-percent ownership interest. 

General License 91A – Authorizing Limited Safety and Environmental Transactions Involving Certain Blocked Persons or Vessels

GL 91A authorizes certain types of transactions with five Russian maritime entities for a limited period of time.  The specific transactions are all related to safety and environmental concerns, including:

1. The safe docking and anchoring in port of any vessels in which any person listed in paragraph (b) of this general license has a property interest (“blocked vessels”);
2. The preservation of the health or safety of the crew of any of the blocked vessels; or
3. Emergency repairs of any of the blocked vessels or environmental mitigation or protection activities relating to any of the blocked vessels.

GL 91A applies to the following entities:

1. Ladoga Shipping Company Limited Liability Company;
2. JSC Polar Marine Geosurvey Expedition;
3. Yuzhmorgeologiya AO;
4. Sevmorneftegeofizika AO;
5. Amige AO;
6. Joint Stock Company Sovcomflot; and
7. Any entity in which one or more of the listed entities, whether individually or in the aggregate, holds a 50-percent ownership interest. 

Any payments to be made pursuant to GL91 must be made into a blocked account in accordance with the Russian Harmful Foreign Activities Sanctions Regulations. 

Furthermore, GL91 makes clear that the license cannot be used to circumvent other sanctions prohibitions, such as offloading any cargo, such as oil and petroleum products of Russian-origin, unless doing so is absolutely necessary to address an emergency.

General License 92 – Authorizing the Offloading of Cargo from Sovcomflot Vessels

GL92 provides for a wind down period for transactions incident and necessary to the delivery and offloading of cargo from a vessel listed on the SDN List solely due to a property interest from Sovcomflot.  Transactions involving these vessels, specifically the 14 listed previously (at least for the time being), are authorized through 11:59pm EDT on April 8, 2024 (provided the cargo was loaded prior to February 23, 2024).  This license, however, does not authorize any transactions that would otherwise violate other Executive Orders or other sanctions restrictions. 

General License 93 – Authorizing Transactions Involving Certain Sovcomflot Vessels

GL93 authorizes all transactions with vessels in which Sovcomflot holds a 50-percent or greater interest in and that are not otherwise identified on OFAC’s SDN List.  This means that any vessel owned by Sovcomflot that is not among the 14 vessels designated with this latest tranche will not yet be affected by Sovcomflot’s designation.  Should the sanctions on Russia continue to increase in the future, which seems likely at this point, the revocation of this GL would be an easy target.  Please keep in mind that transacting with any Sovcomflot vessel pursuant to this General License carries that risk.