New wave of US sanctions targets Russian Duma, additional elites, defense entities; BIS extends export controls to more than 100 Russian aircraft
On March 24, 2022, the White House announced new sanctions against additional members of the Duma of the Russian Federation, as well as additional Russian elites, bank board members, and defense entities. As a result of this announcement, approximately 400 additional persons and entities have been sanctioned by the US, in coordination with its allies and partners, bringing the total to over 600 sanctions targets. The White House’s statement was followed by related announcements by the Department of the Treasury, Department of State, and Office of Foreign Assets Control (OFAC).
These new measures supplement the extensive measures previously announced by the US government and described in our prior client alerts published on February 23, February 25, February 28, March 4, March 9, and March 16, 2022.
Sanctions on all members of the Russian State Duma, Russian elites, bank executives and board members, and Russian defense firms
The US imposed full blocking sanctions on an extensive group of Russian political leaders and other elites. These newly sanctioned persons include:
- 328 members of the Russian State Duma and the Duma as an entity, which are in addition to the sanctions previously imposed on 12 key Duma members on March 11, 2022
- Herman Gref, the chairman and CEO of Sberbank, who the White House indicates is a close ally and advisor of Vladimir Putin. As described in our February 25 alert, on February 24, 2022, Directive 2 under Executive Order 14024 prohibited US financial institutions from opening or maintaining a correspondent account or payable-through account, or processing transactions involving Sberbank and its 50 percent or more owned subsidiaries. However, the addition of Herman Gref as a Specially Designated National does not appear to impact or expand the existing sanctions against Sberbank.
- Gennady Timchenko, his companies, family members, and yacht. According to the US, Mr. Timchenko is an ally and close friend of Vladimir Putin and is most closely associated with the Volga Company, a holding company with diversified interests in energy, finance, and construction, including Transoil, which has also been sanctioned, and one of Russia’s largest energy railroads
- 17 board members of Russian financial institution Sovcombank, which was previously added to OFAC’s Specially Designated Nationals on February 24, 2022.
In addition, the US imposed blocking sanctions on 48 large Russian defense state-owned enterprises that are part of Russia’s defense-industrial base and produce weapons, including the following companies and their affiliates:
- JSC Russian Helicopters
- Tactical Missiles Corporation JSC and its General Director Boris Obnosov
- JSC NPO High Precision Systems
- NPK Tekhmash OAO
- JSC Kronshtadt
OFAC issues new general licenses and guidance
On March 24, 2022, OFAC issued additional guidance, including the following new or revised Russia-related general licenses:
- General License 17A authorizes until 12:01 am (EDT) on June 23, 2022 transactions otherwise prohibited by Executive Order 14068 that are ordinarily incident and necessary to the importation into the US of fish, seafood, and preparations thereof of Russian Federation origin pursuant to written contracts or written agreements entered into prior to March 11, 2022.
- General License 6A authorizes transactions that are ordinarily incident and necessary to ongoing clinical trials and other medical research activities that were in effect prior to March 24, 2022 in addition to the other matters covered under General License 6, which General License 6A supersedes.
- General License 20 authorizes US persons to engage in all transactions ordinarily incident and necessary to the official business of third-country diplomatic or consular missions located in the Russian Federation.
OFAC also issued General License 25 under the Ukraine/Russia-related sanctions, which authorizes journalistic activities and the establishment of news bureaus in the Donetsk (DNR) and Luhansk (LNR) regions of Ukraine, and new Frequently Asked Questions concerning transactions related to and imports of Russian goods under Executive Orders 14068 and 14024, including possible sanctionable gold-related transactions involving Russia or the Russian Federation.
White House announces information sharing initiative
On March 24, the White House also announced a new initiative, together with the European Union and members of the G7, to share information about and coordinate responses related to efforts to evade the economic sanctions and other measures that have been imposed.
BIS announces export controls now extend to services and transactions relating to certain Russian aircraft
On March 25, 2022, the Bureau of Industry and Security (BIS) identified 110 private and commercial aircraft which have allegedly violated the Export Administration Regulations (EAR)’s newly enacted export controls relating to Russia and Belarus.
These identifications clarify broad EAR prohibitions – which typically apply only to exports, reexports, and in-country transfers abroad – that include services performed and other transactions relating to specifically identified aircraft. BIS cited General Prohibition Ten of the EAR, which prohibits proceeding with any transaction with knowledge that a violation has occurred or is about to occur in connection with such items.
License Exceptions are not available to overcome General Prohibition Ten, so an export license issued by BIS is the only authorization in these situations. As a result, BIS put the public on notice that these aircraft, in particular, have violated the EAR, and General Prohibition Ten applies given this published knowledge. Therefore, US and non-US persons may not, anywhere in the world, “sell, transfer, export, reexport, finance, order, buy, remove, conceal, store, use, loan, dispose of, transport, forward, or otherwise service” the aircraft identified by BIS in its announcement.
Other aircraft subject to the EAR, including many commercial aircraft such as Boeing and Airbus models, may also now be subject to this prohibition if they have recently transited Russia without US authorization.
Our global team continues to monitor developments as they arise and will update this alert as changes take place. To learn more about these developments, please contact any of the authors or your usual DLA Piper relationship attorney.