Dentons’ International Trade and Public Policy teams are closely following sanctions developments targeting Russia related to the situation in Ukraine, including actions by the Biden administration and in Congress. We will provide updates below as this very fluid situation evolves.

If you have questions, please reach out to our key contacts here.

Use the links below to navigate to specific updates.

• March 11, 2022: BIS restricts exports to Russia and Russia-linked SDNs of “luxury goods” – including alcohol, tobacco, and passenger vehicles
• March 11, 2022: OFAC issues FAQ on virtual currency and Russia sanctions
• March 11, 2022: The President issues EO banning Import of Russian fish, diamonds, alcohol and export of luxury goods and US dollar banknotes to Russia
• March 8, 2022: BIS expands Russian industry sector sanctions with no-knowledge-requirement export prohibition for certain items.
• March 8, 2022: President Biden issues EO prohibiting import of Russian oil, LNG, and coal, and prohibiting new investment in Russian energy sector
• View updates: February 21, 2022 – March 4, 2022

March 11, 2022: BIS restricts exports to Russia and Russia-linked SDNs of “luxury goods” – including alcohol, tobacco, and passenger vehicles

BIS published a final rule on March 16, 2022 – which took effect on March 11 – that prohibits the export, reexport or transfer without a license of “luxury goods” subject to the EAR in two circumstances: when such goods are destined to either Russia or to a “Russian or Belarusian oligarch or malign actor.” The new restrictions are in a new section in 15 CFR Part 746 – the “Embargoes and other special controls” portion of the EAR to which BIS has recently added other significant new licensing requirements as to Russia and Belarus.

“Luxury goods” are those identified in new Supplement No. 5 to Part 746 by HTS Code. While the goods in Supp. 5 include a number of items typically considered “luxury goods” – such as furs; clothing valued at greater than $1,000 per unit; and precious metals, gemstones, and jewelry – the newly-restricted goods include many items that people may not consider luxury items. For instance, Supplement 5 also includes beer, wine, and liquor (including bourbon whiskey); tobacco; handbags and similar items regardless of value; and a wide range of marine and land passenger vehicles and passenger vehicle parts and engines. Such items will now require a license to Russia.

The items will also require a license to a “Russian or Belarusian oligarch or malign actor” - defined as any person designated pursuant to Executive Orders 13660, 13661, 13662, 13685, or 14024 (relating to Russia and the Crimea region of Ukraine) or 13045 or 14038 (relating to Belarus) -- regardless of where in the world they may be located. The rule also restricts use of certain EAR licensing exceptions, including AVS, which applies to aircraft stores and supplies, and does not provide for any exception not specified in new Section 746.10 (such as GFT, applicable to certain gift parcels).

In short, the March 11 BIS rule pertaining to “luxury goods” imposes novel export control requirements on a wide range of US-origin consumer goods designated EAR99 and will increase compliance challenges both with respect to ultimate destination and end users or other parties to the transaction.

March 11, 2022: OFAC issues FAQ on virtual currency and Russia sanctions

Along with a number of FAQs addressing EO 14068, OFAC issued FAQ 1,021, addressing sanctions and virtual currency. FAQ 1,021 reiterates OFAC’s long-standing position that Russia-related sanctions prohibitions extend in all respects to virtual currency. The new FAQ is noteworthy in a number of respects. First, it emphasizes that virtual currencies are a particular concern with respect to Russia and potential sanctions evasion, and again directs readers to its compliance guidelines for the virtual currency industry. Second, it gives illustrative examples specific to recent Russia-related sanctions under EO 14024 concerning how sanctions apply to virtual currency transactions – including transactions involving the Russian Central Bank, Russian National Wealth Fund, Russian Ministry of Finance, and financial institutions subject to CAPTA sanctions. Third, it emphasizes that non-US persons – while generally not obligated to comply with US sanctions absent a US nexus – are nevertheless prohibited from causing sanctions violations, conspiring to violate sanctions, or evading or avoiding US sanctions. It also reiterates the circumstances under which such persons can themselves be subject to sanctions, such as involvement in deceptive or structured transactions to circumvent US sanctions, operating in the financial services sector of the Russian economy, or providing material, technological, or financial support or assistance to blocked persons. In short, FAQ 1,021 is as much guidance as it is a warning concerning how OFAC intends to pursue enforcement in connection with virtual currency and sanctions targeting Russia.

March 11, 2022: The President issues EO banning import of Russian fish, diamonds, alcohol and export of luxury goods and US dollar banknotes to Russia

On March 11, 2022, President Biden issued Executive Order (“EO”) 14068, banning (1) the import to the US of Russian origin fish, seafood, and preparations thereof, alcoholic beverages, and non-industrial diamonds; (2) the export, reexport, sale, or supply (collectively, “export”) from the US or by a US person of luxury goods to Russia; (3) new investment in any sector of the Russian economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State; and (4) the export from the US or by US persons of US dollar-denominated banknotes to the government of Russia or any person located in Russia.

OFAC also issued general licenses authorizing transactions that would otherwise be prohibited by EO 14068. GL 17 authorizes transactions to conclude certain pre-sanctions contracts to import the newly-banned items until March 25. GL 18 and GL 19 authorize certain USD banknote transactions for personal remittances to Russia and personal maintenance of US persons in Russia.

Each of these GLs is subject to specific conditions that must be met in order for them to authorize a transaction.

OFAC also issued eight new FAQs, addressing various questions as to the scope of EO 14068. These FAQs address, among other issues, permitted avenues for the transfer of banknotes for personal remittances and personal maintenance as authorized by GLs 18 and 19, identify newly-banned items by HTS code, and clarify that non-US persons do not risk sanctions by importing the banned items to non-US jurisdictions. Of note, FAQ 1,024 clarifies that US persons may find new buyers for or re-direct shipments of Russian origin fish, seafood, and preparations thereof; alcoholic beverages; and non-industrial diamonds to a country other than the United States without violating EO 14068.

March 8, 2022: BIS expands Russian industry sector sanctions with no-knowledge-requirement export prohibition for certain items.

On March 8, 2022, the US Department of Commerce’s Bureau of Industry and Security (“BIS”) further expanded existing controls on certain energy-related exports to Russia by adding a general prohibition on all exports, reexports and transfers (in country) to Russia of specified items related to Russia’s oil refinery sector. The new rule expands on existing Russia Industry Sector Sanctions, which prohibit exports of items specified by ECCN and HTS Code when the exporter “knows” that those items exported would be used in Russia’s energy sector for exploration or production of deepwater, Arctic offshore, or shale projects that have the potential to produce oil or gas, or is unable to determine whether the item would be used in such projects. Under the March 8 rule, there is now an additional list of items subject to the EAR, identified by description and HTS Code, that cannot be exported, reexported, or transferred to Russia. It does not contain a knowledge requirement and therefore applies in blanket fashion to the listed items.

Items subject to the new rule include oil and gas field wire line and downhole equipment such as visbreakers, vacuum gas oil hydrocracking units, thermal cracking units, and sulphur production units, among others. While the new controls became effective immediately, BIS has provided an exception for certain shipments that were already in-transit when the new rule was announced. Additionally, license applications for exports, reexports, and transfers subject to these new controls will be reviewed under a policy of denial, except for items that are necessary for health and safety, which will be reviewed on a case-by-case basis.

March 8, 2022: President Biden issues EO prohibiting import of Russian oil, LNG, and coal, and prohibiting new investment in Russian energy sector

On March 8, 2022, President Biden issued Executive Order (“EO”) 14066, prohibiting the importation into the US of Russian:

• Crude oil;
• Petroleum;
• Petroleum fuels, oils, and products of their distillation;
• Liquified natural gas (“LNG”);
• Coal; and
• Coal products.

Further, EO 14066 prohibits, “new investment in the [Russian] energy sector” by a US person, as well as “any approval, financing, facilitation, or guarantee” by a US person of a transaction by a non-US person where the transaction by that non-US person would be prohibited under EO 14066 if performed by a US person. OFAC has defined “new investment” as “a transaction that constitutes a commitment or contribution of funds or other assets for, or a loan or other extension of credit to, new energy sector activities (not including maintenance or repair) located or occurring in the Russian Federation beginning on or after March 8, 2022.” See FAQ 1,019.

Additional FAQs updated or newly issued in connection with the EO address, among other issues, the applicability (or lack thereof) of secondary sanctions and the treatment of in-process shipments to the US of the prohibited products.

In tandem with the president’s action, OFAC issued General License (“GL”) 16, authorizing transactions that would otherwise be prohibited by EO 14066. GL 16 authorizes through 12:01 AM EDT on April 22, 2022 any transactions that are ordinarily incident and necessary to the importation into the US of the prohibited products based on written contracts or written agreements entered into force before March 8, 2022.