Article

US Announces New Round of Sanctions, Export Controls, and Trade Restrictions on Russia

Published Date
Feb 25, 2023
On February 24, 2023, the United States issued a new round of sanctions, export controls and trade restrictions on Russia, in coordination with allies and G7 partners, to mark the one-year anniversary of the ongoing conflict in Ukraine. Measures were taken by the Department of the Treasury’s Office of Foreign Assets Control (OFAC), Department of Commerce’s Bureau of Industry and Security (BIS), Office of the U.S. Trade Representative (USTR), and Department of State.

In the past year since the start of Russia’s war in Ukraine, the U.S. has issued approximately 1,500 new and 750 amended sanctions listings. As part of these new measures, the U.S. added over 2,500 Russia-related targets to the Specially Designated Nationals and Blocked Persons (SDN) List and has imposed sanctions on Russia’s largest financial institutions and restricted dealings with banks representing over 80% of Russian banking sector assets. Since our last update, “US, EU and UK Increase Pressure on Russia with Further Sanctions,” the U.S. implemented a price cap on Russian-origin oil and petroleum products, expanded its sanctions targeting Russia’s military-industrial complex, including through the designation of PMC Wagner as a significant transnational criminal organization, and continued to target third-country individuals and companies of key weapons and technology inputs to Russia or those deemed to have assisted in sanctions evasion.

These new actions demonstrate the continued focus of the U.S., its allies, and G7 countries to debilitate Russia’s economy and military-industrial complex and weaken Russia’s capabilities to continue its ongoing aggression against Ukraine.

Department of the Treasury’s Office of Foreign Assets Control (OFAC)

OFAC issued sweeping sanctions targeting a new sector, additional financial institutions, evasion efforts and military supplies associated with the war in Ukraine.

Metals and Mining Sectoral Sanctions. In one of its most significant sanctions actions to date, Treasury announced a new determination targeting the metals and mining sector of the Russian Federation economy pursuant to Section 1(a)(i) of E.O. 14024, which allows for sanctions to be imposed on individuals or entities determined to operate in this sector.

SDN Designations. OFAC also imposed sanctions on 22 individuals and 83 entities, including those operating in Russia’s financial services sector, deemed to be connected to Russia’s sanctions evasion efforts, operating in Russia’s technology and electronic sector, operating in Russia’s aerospace sector, and related to Russia’s military-industrial complex and war efforts. As part of these designations, OFAC designated:

  • Four entities for operating in Russia’s metals and mining sector, including Joint Stock Company Burevestnik Central Scientific Research Institute, OOO Metallurg-Tulamash, TPZ-Rondol OOO and Mtsenskprokat;
  • Over a dozen Russian financial institutions pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy, including Credit Bank of Moscow Public Joint Stock Company, one of Russia’s ten largest banks by asset value and Russia’s largest non-state public bank, and Public Joint Stock Company Commercial Bank Metallurgical Investment Bank (Metallinvestbank), which used alternative payment routes to facilitate the receipt of payments for Russian exports;
  • Several entities and individuals related to Russian wealth management, including, CONFIDERI Pte Ltd, IC Veles Capital LLC, Ulan Vladimirovich Ilishkin (Deputy Chairman of the Management Board of previously sanctioned entity Rosbank), Alina Olegovna Nazarova (Head of A-Club, the private banking department of previously sanctioned entity Alfa-Bank) and Evgeniya Sergeyevna Tyurikova (Lead of the private banking department of previously sanctioned entity Sberbank);
  • Swiss-Italian businessman Walter Moretti and his network of associates and companies that have covertly procured sensitive Western technologies and equipment for Russian intelligence services and the Russian military; and
  • Russian elite-linked businessman, Aleksandr Yevgenyevich Udodov and associated entities tied to illicit financial activity.

In conjunction with these actions, OFAC issued the following four Russia-related general licenses: GL60, authorizing the wind down and rejection of transactions involving certain financial institutions designated through 12:01 a.m. EDT, May 25, 2023; GL61, authorizing the wind-down of certain securities and derivatives transactions involving certain of these financial institutions through 12:01 a.m. EDT, May 25, 2023; Amended GL8F, adding certain of these financial institutions to the authorization to process certain energy-related transactions; and Amended GL13D, extending the time permitting certain administrative transactions prohibited by Directive 4 under E.O. 14024 through 12:01 a.m. EDT, June 6, 2023.

Department of Commerce’s Bureau of Industry and Security (BIS)

BIS released four rules targeting Russia’s defense industrial base and military and third countries supporting Russia, including Iran and China, among others. BIS revised the EAR, expanding the scope of the Russian and Belarusian industry sector restrictions on certain exports—including oil and gas production, commercial and industrial items, and chemical and biological precursors—along with luxury goods.

BIS also imposed new export control measures on Iran in order to address the use of Iranian Unmanned Aerial Vehicles (UAVs) by Russia, by imposing license requirements for a subset of generally low-technology (EAR99) items, including semiconductors, that are destined for Iran, regardless of whether a U.S. person is involved in the transaction.

Additionally, through two separate actions, BIS added 86 entities to the Entity List for activities in support of Russia’s defense-industrial sector and war effort, including ten third-country entities based in China (5), Canada (2), France (1), Luxembourg (1) and the Netherlands (1). Seventy-six of these entities are also being designated as “Russian/Belarusian Military End Users,” which effectively limits the ability of these entities to obtain U.S.-origin items, including certain foreign-produced items incorporating U.S.-origin components.

Office of the U.S. Trade Representative (USTR)

USTR announced additional tariff increases, including on most Russian-origin metal and mining products, doubling them from 35% to 70%, and certain additional Russian productions to 35%, including chemicals and minerals, pursuant to President Biden’s authority under the Suspending Normal Trade Relations with Russia and Belarus Act. These actions are complemented by the 200% tariff imposed on Russian aluminum that is being implemented pursuant to Section 232 of the Trade Expansion Act of 1962, as amended.

Department of State

Finally, the Department of State announced steps to impose visa restrictions on 1,219 members of Russia’s military pursuant to Section 212(a)(3)(C) of the Immigration and Nationality Act and designated three Russian military officials under Section 7031(c) of the Department of State, Foreign Operations, and Related Programs Appropriations Act 2023 for gross violations of human rights, making them and their immediate family members ineligible for entry into the United States.

The Department of State also designated nearly fifty Russian governors and ministers for being or having been a leader, official, senior executive officer, or member of the board of directors of the Russian government. These designations add onto the prior designations of Russian government officials, including President Vladimir Putin, Foreign Minister Lavrov, and all members of the Russian State Duma.

Key Takeaways

This new wave of sanctions, export controls and trade restrictions demonstrate that the U.S. and its allies are not slowing down in their continued efforts to support Ukraine and debilitate Russia’s economy and military-industrial complex. Accordingly, companies should keep abreast of likely new developments and, in particular, the increased targeting of third-country individuals and entities that provide weapons and technology support to Russia or enable Russia’s sanctions evasion networks.

In particular, companies should consider how the new determination targeting the metals and mining industry of the Russian Federation economy may impact their business and monitor possible additional designations in this sector. Companies should also be cognizant of the regulatory risk now associated with regard to certain low-technology items, including semiconductors, and perform due diligence to determine if the item is destined for Iran and thus may require a license.

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