The Bass, Berry & Sims international trade team is actively monitoring the situation in Russia and Ukraine and providing real-time advice to clients on managing the situation. This post summarizes new U.S. sanctions and export restrictions as of Wednesday, June 1. This post supplements our previous summaries, which are available by following the links at the end of this blog post.

Commerce Department Issues Temporary Denial Order against Rossiya, the Fifth Russian Airline to Face Export Restrictions

On May 20, the U.S. Commerce Department, Bureau of Industry & Security (BIS) issued a temporary denial order (TDO) against Rossiya citing ongoing violations of the comprehensive U.S. export controls imposed on Russia. Rossiya is headquartered in St. Petersburg and, according to BIS, has operated multiple U.S.-origin aircraft subject to the Export Administration Regulations (EAR) into and out of Russia without the required BIS authorization.

In announcing the TDO, BIS stated that Aeroflot Russian Airlines JSC (Aeroflot) is Rossiya’s majority shareholder. (Aeroflot is subject to a TDO imposed by BIS in April, as described in our April 7 post.) The Russian government, in turn, is the majority owner of Aeroflot. Rossiya is the fifth Russian airline against which the U.S. government has imposed a TDO. There are also TDOs in place against Aviastar, Utair, and Azur Air.  See our April 7 and April 27 posts on these previously issued TDOs.

The TDOs initially run for 180 days but will likely be extended. Under these TDOs, the airlines are not permitted to participate in transactions subject to the EAR, including exports from the United States and re-exports of EAR-controlled goods, software, or technology from abroad. In particular, this means that the airlines cannot operate U.S.-manufactured aircraft flown into Russia after March 2, 2022, nor obtain U.S.-manufactured parts for purposes of even routine repair or maintenance on their aircraft.

Commerce Department Adds Aircraft Owned by Oligarch Roman Abramovich to List of Aircraft Operated in Violation of the EAR and Removes Four Aircraft from List

Also on May 20, BIS added a Boeing 787 Dreamliner owned by Roman Abramovich to the list of aircraft that have flown into Russia and/or Belarus in apparent violation of the EAR. This is the second aircraft owned by Abramovich on the list. As with prior versions of the list, which has been updated several times, BIS is using the list to notify the public that providing any service to the listed aircraft would violate the EAR unless prior BIS authorization is obtained.  See our April 18, April 1, and March 21 blogs for more information about earlier versions of and updates to the list.

On May 26, BIS removed one Aeroflot, two Royal Flight, and one Utair aircraft from the above-noted list.

OFAC Issues Amended General License (GL), Notice of Non-renewal of a GL, and Amends Frequently Asked Questions

On May 25, the Office of Foreign Assets Control (OFAC) amended GL 13A. The updated GL, which expires on September 30, 2022, authorizes the payment of taxes, fees, or import duties, and the purchase and receipt of permits, licenses, registrations, or certifications involving Russia’s Central Bank, National Wealth Fund, and Ministry of Finance by U.S. persons or entities provided such transactions are ordinarily incident and necessary to the day-to-day operation in the Russian Federation of such U.S. persons or entities.  GL 13A supersedes GL 13, which was issued on March 2.

On May 24, OFAC announced that it would not renew the provisions of GL-9C, which expired on May 25. GL-9C authorized transactions ordinarily incident and necessary to dealings in debt or equity related to specified financial institutions, and certain transactions related to Russia’s Central Bank, National Wealth Fund, and Ministry of Finance.

Earlier in May, OFAC amended specific Russia-related FAQs as follows:

• FAQ 1034 defines “accounting,” “trust and corporate formation,” and “management consulting” services as they relate to the May 8, 2022 determination, “Prohibitions Related to Certain Accounting, Trust and Corporate Formation, and Management Consulting Services.”
• FAQ 1035 defines “credit rating services” and “auditing services” under GL-35.
• FAQ 1038 defines “accounting,” “trust and corporate formation services,” and “management consulting” sectors of the Russian Federation economy, as they relate to the May 8, 2022 determination, “Prohibitions Related to Certain Accounting, Trust and Corporate Formation, and Management Consulting Services.”