Client Alert 26 Feb. 2024

OFAC Marks Second Anniversary of Russo-Ukrainian War with Record Number of Designations

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On the second anniversary of the Russo-Ukrainian war and in response to the death of opposition politician and anticorruption activist Aleksey Navalny, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned approximately 300 individuals and entities, adding them to its list of Specially Designated Nationals and Blocked Persons, commonly referred to as the SDN List.

These designations align with coordinated efforts among the U.S. and its allies, seen in the European Union’s adoption of the 13th package of sanctions against Russia and the United Kingdom’s announcement of over 50 new sanctions targeting Russia’s weapons arsenal and war chest.

Additionally, this round of designations reflects collaborative efforts among U.S. agencies regarding Russia-related sanctions. Alongside actions from the U.S. Department of State, nearly 500 individuals and entities have been sanctioned by both the State Department and OFAC, marking the largest number of sanctions imposed since the war began. Additionally, the Department of Commerce added 93 companies to the Entity List.

Furthering the theme of coordination, Secretary of State Antony J. Blinken emphasized in a press release the outcomes of collaboration among the Departments of State, Treasury, and Commerce, along with the United States’ allies and partners, in collectively addressing what he described as “Russia’s full-scale war against Ukraine, its global malign influence, and the tragic death of Aleksey Navalny."

In line with this unified approach, OFAC stated that the purpose of this round of sanctions is to:

  1. Target Russia’s core financial infrastructure, including banks, investment firms, financial technology companies, and the Mir National Payment System;
  2. Tackle sanctions evasion and circumvention, particularly as it relates to the transfer of critical technology and equipment to Russia’s military-industrial base;
  3. Target the Alabuga UAV Procurement Network, through which Russia has acquired and produced deadly unmanned aerial vehicles (UAVs), including designating the Iranian Ministry of Defense and Armed Forces Logistics for cooperating with the Russian Ministry of Defense to produce Iranian-designed one-way attack UAVs; and
  4. Disrupt and degrade Russia’s military-industrial base, with a focus on advanced manufacturing and technology such as machine tools, including computer numerically controlled machines.

Additionally, OFAC targeted Russia’s revenue from oil sales by designating Joint Stock Company Sovcomflot, Russia’s largest state-owned shipping company and fleet operator, along with 14 crude oil tankers in which it has interest in.

General Licenses

In line with prior actions, OFAC simultaneously issued various general licenses alongside the designations. These licenses facilitate wind-down transactions, transactions related to debt or equity, and limited safety and environmental transactions involving specific blocked vessels. Moreover, two of these general licenses were issued to amend previously issued licenses on the same day. The licenses, subject to certain restrictions such as deadlines and the requirement to make payments to blocked persons into blocked accounts as per the Russian Harmful Foreign Activities Sanctions Regulations, include:

  • General License No. 88A authorizes the wind down of transactions involving certain entities blocked on February 23, 2024. General License 88A was issued subsequent to General License 88 to amend it, with the sole modification being the inclusion of Joint Stock Company Sovcomflot to the list of covered entities. No other changes were made.
  • General License No. 89 authorizes the wind down and rejection of transactions involving certain financial institutions blocked on February 23, 2024.
  • General License No. 90 authorizes certain transactions related to debt or equity of, or derivative contracts involving, certain entities blocked on February 23, 2024.
  • General License No. 91A authorizes limited safety and environmental transactions involving certain blocked persons or vessels. General License 91A was issued following General License 91, similarly amended to include Joint Stock Company Sovcomflot among the covered entities, with no other alterations made.
  • General License No. 92 authorizes the offloading of cargo from Sovcomflot vessels , provided that the cargo was loaded prior to February 23, 2024.
  • General License No. 93 authorizes transactions involving certain Sovcomflot vessels, provided that such vessels are not identified on the SDN List.

Frequently Asked Questions

OFAC also issued three new Russia-related Frequently Asked Questions (FAQs). The newly issued FAQs elaborate on the prohibitions related to the importation of certain categories of diamonds and diamond jewelry under Executive Order (E.O.) 14068.

FAQ 1164 provides an overview of OFAC’s implementation of prohibitions on non-industrial diamonds of Russian origin and discusses coordinated international efforts to restrict the importation of certain Russian diamonds. FAQ 1165 details the “Diamonds Determination,” which prohibits the importation of certain categories of diamonds from Russia, with varying weight thresholds and effective dates. Additionally, FAQ 1166 outlines the “Diamond Jewelry Determination,” prohibiting the importation of diamond jewelry and unsorted diamonds from the Russian Federation, effective March 1, 2024.

OFAC also amended eight existing FAQs related to various Executive Orders, including E.O. 14024, E.O. 14068, and E.O. 14114, covering topics such as the blocking of property related to harmful foreign activities of the Russian Federation government, sanctions on ammunition and military goods to Russia, import/export prohibitions, definitions of “Russian Federation origin,” and the impact on Russia-related General License 6C. These amendments provide further clarity and guidance on compliance with the respective Executive Orders.

About Curtis

Curtis, Mallet-Prevost, Colt & Mosle LLP is a leading international law firm. Headquartered in New York, Curtis has 19 offices in the United States, Latin America, Europe, the Middle East and Asia. Curtis represents a wide range of clients, including multinational corporations and financial institutions, governments and state-owned companies, money managers, sovereign wealth funds, family-owned businesses, individuals and entrepreneurs.

Curtis’ multi-jurisdictional economic sanctions and export control and U.S. national security law practice groups provide full spectrum legal services comprised of expert practitioners throughout our global footprint.

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Attorney advertising. The material contained in this Client Alert is only a general review of the subjects covered and does not constitute legal advice. No legal or business decision should be based on its contents.

Please feel free to contact any of the persons listed if you have any questions on this important development.

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