This UPDATED post summarizes the situation as of late evening on Monday, March 7, concerning current U.S. sanctions and export restrictions related to Russia and Ukraine. This post supplements our post of late evening on Wednesday, February 23, which is available here; our post of late evening on Thursday, February 24, which is available here; our post of late evening on Friday, February 25, which is available here; our post of late evening Monday February 28 is available here; and our post of late evening Thursday March 3, which is available here. 

U.S. State Department Targets Russian Defense Enterprises for Sanctions

The U.S. State Department has identified 22 Russian defense-related entities that design, develop, and produce weaponry for Russia. Each has been designated as a Specially Designated National (SDN) by the U.S. Treasury Department, Office of Foreign Assets Control (OFAC). The designated entities include companies involved in the design, development, and production of unmanned aerial vehicles, electronic warfare, missile and missile defense systems, fighter aircraft, armored vehicles, and procurement of foreign technology for Russia’s military.

As SDNs, all property and interests in property of these entities that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entity that is owned, directly or indirectly, 50% or more by one or more blocked persons is also considered an SDN, even if the entity is not specifically identified on the SDN List. Generally speaking, U.S. entities and individuals are prohibited from conducting any transaction with an SDN, including providing to or receiving from an SDN any funds, goods, or services.

Commerce Adds South Korea to the List of Countries Exempt from the Licensing Requirement Under the FPD Rule for Russia and Belarus

On March 4, the U.S. Department of Commerce (Commerce) added South Korea as one of the countries exempt from the licensing requirement under the Foreign-Produced Direct Product (FDP) Rule for Russia and Belarus. With the addition of South Korea, there are now 33 countries exempt from FDP Rule license requirements to Russia and Belarus.

Commerce stated that the addition was due to South Korea’s commitment to implement substantially similar export controls on Russia and Belarus under its domestic laws as those the United States has implemented. The exclusion for South Korea pertains to a new Russia license requirement enacted by Commerce to restrict exports to Russia, especially Russian military end-users, of foreign direct products of U.S. technology. A similar rule was also introduced with respect to Belarus.

For further details on the expansion of the FDP Rule, please refer to our posts from February 25 (related to Russia) and March 3 (related to Belarus).

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.