August 12, 2022

Volume XII, Number 224

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U.S. Imposes Further Rounds of Sanctions on Russia

As an update to our previous alerts of 24 February25 February, and 15 March, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) on 24 March announced an additional round of sanctions on Russia—one month to the date following Russia’s invasion of Ukraine. 

This most recent round of sanctions adds a significant number of entities and individuals to the OFAC-enforced Specially Designated Nationals and Blocked Persons List. Those targeted are: (1) Russia’s defense-industrial base, (2) additional Russian governmental officials, and (3) the chief executive officer (CEO) of Public Joint Stock Company Sberbank of Russia (Sberbank). This alert provides a brief overview of the supplemental actions and their anticipated effects. 

I.    RUSSIAN DEFENSE-INDUSTRIAL BASE 

Perhaps the most prominent action coming out of this round of sanctions is the imposition of blocking sanctions on 48 Russian defense companies. 

The designations include some major Russian defense entities: Tactical Missiles Corporation JSC (KTRV) and 28 related entities; JSC NPO High Precision Systems; NPK Tekhmash OAO; Joint Stock Company Russian Helicopters, as well as 15 of its subsidiaries; and Joint Stock Company Kronshtadt. The general director of KTRV was likewise designated. Each of the entities was targeted for their development and supply of various types of defense items, such as arms, ammunition, helicopters, aviation equipment, or weaponry, in support of Russia’s invasion of Ukraine. 

The blocking sanctions also prohibit U.S. persons from engaging in any transaction, directly or indirectly, with designated individuals or entities owned 50% or more by those individuals, and they also require blocking of their property and interests in property. 

This action adds to the prior sanctions and export controls already targeting Russian defense and military activities detailed in our alert of 25 February. Given the various layers of sanctions and export controls continuing to develop and their expansive effects beyond Russian borders, companies should take extra care when engaging in transactions with entities having possible ties to the Russian defense industry. 

II.    RUSSIAN OFFICIALS

OFAC likewise designated 328 members of The State Duma of the Federal Assembly of the Russian Federation (the State Duma), a governing body of Russia, as well as the State Duma itself, for its actions to support Russia’s continued invasion of Ukraine. 

These blocking sanctions build on an increasing number of sanctions coming out of OFAC targeting the Russian government and elites with ties to Russian Federation President Vladimir Putin. 

III.    SBERBANK CEO 

Finally, OFAC issued blocking sanctions on Herman Oskarovich Gref, the CEO of Sberbank. As detailed in our alert of 25 February, Sberbank is a major Russian financial institution that itself was previously sanctioned by OFAC with correspondent and payable-through account (CAPTA) restrictions. 

The further action of sanctioning Sberbank’s CEO could have ripple effects beyond the CAPTA restrictions for some transactions. In addition to complying with any CAPTA sanctions, U.S. persons doing business with Sberbank should therefore be alert to any involvement of Gref in the transaction. For some matters, this might require additional diligence. 

IV.    CONCLUSION

Our team continues to track ongoing developments relating to Russia sanctions. If you have any questions regarding the sanctions discussed in this alert, please do not hesitate to contact our International Trade team.

Copyright 2022 K & L GatesNational Law Review, Volume XII, Number 84
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About this Author

Steven F. Hill, KL Gates, enforcement matters lawyer, export controls attorney
Partner

Steven Hill is a partner in the firm’s Washington, D.C. office. He has nearly 20 years of experience in a broad array of international trade regulation compliance and enforcement matters, particularly export controls, including the Export Administration Regulations (EAR) and International Traffic in Arms Regulations (ITAR), sanctions laws enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), customs and other importation laws, anti-boycott laws, and anti-corruption laws, such as the Foreign Corrupt Practices Act (FCPA).

202-778-9384
Jeffrey Orenstein Trade Lawyer KL Gates Law Firm
Counsel

Jeffrey Orenstein is a counsel in the firm’s Washington, D.C. office. He has over 12 years of experience handling international trade and transportation matters. He specializes in providing strategic counsel in the areas of U.S. sanctions, export controls, customs, maritime, and railroad regulation. He is a trusted advisor for trade-related compliance, investigations, due diligence, training programs, and representation in enforcement actions, including matters before the Office of Foreign Assets Control (OFAC), the Bureau of Industry and Security (BIS), the Directorate of Defense Trade...

202.778.9465
Stacy Ettinger, KL Gates Law Firm, Public Policy and Financial Matters Attorney
Partner

Stacy J. Ettinger is a partner in the firm’s Washington, D.C. office and focuses her practice on public policy. She has over 20 years of experience working in Congress and the executive branch. Her experience spans a variety of fields, including international trade, intellectual property, and regulatory issues, as well as food and product standards, motor vehicle safety, and consumer financial services.

Ms. Ettinger has substantial experience working closely with senior U.S. and foreign government officials and Fortune 500 executives, navigating...

202-778-9072
Associate

Catherine Johnson is an associate at the firm’s Washington, D.C. office. She is a member of the Antitrust, Competition & Trade Regulation practice group. Prior to joining the firm Catherine served as an associate for a full-service law firm, and focused her practice on international trade compliance and transporation regulation. Through this role, Catherine researched and analyzed numerous international trade issues, including import and export classification, country of origin, qualification for free trade agreements, and compliance with customs regulations.

+1.202.778.9167
Erica L. Bakies, Antitrust, Competition, Attorney, KL Gates, Law Firm
Associate

Erica Bakies is an associate in the firm’s Washington, D.C. office. She works with both the Antitrust, Competition & Trade Regulation practice group and the Government Contracts & Procurement Policy practice group. Ms. Bakies’ government contracts and procurement policy practice focuses on a wide range of federal procurement issues, including bid protests and regulatory compliance. In international trade, Ms. Bakies concentrates on export controls such as the Export Administration Regulations, sanctions enforced by the United States Department of the Treasury’s...

202-778-9887
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