Sanctions Agencies Struggling to Give Timely, Helpful Russia Guidance, Lawyers Say
Amid the rapid pace of Russia-related sanctions and export controls, regulators around the world are sometimes struggling or unwilling to provide timely and clear answers to industry questions about the trade restrictions, lawyers said. The issue is especially problematic in Europe, they said, where sanctions guidance may differ among the 27 EU member states and U.K. general licenses can be delayed or unhelpful.
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Although the U.K. has issued “quite a few” Russia-related general licenses over the past month (see 2206080019), that hasn’t “always been the case,” Robert Price, a Latham & Watkins trade lawyer, said during a webinar this week hosted by Global Investigations Review. He said many licenses have had to be amended because they were “inconveniently narrow” and didn’t allow U.K. companies to “wind down their transactions in a sensible way.”
“That has, I think, been quite a running problem over the past month or so,” Price said. “People are waiting for a general license, they need to take steps to bring a relationship to an end, and the general license has just not been there.”
Companies can try to seek answers directly from U.K. regulators, but they’re unlikely to get a “definitive” response to their question, Price said, “particularly if it's a very fact-specific answer you want” or in the “time frame that you need.” The U.K.’s Office of Financial Sanctions Implementation didn’t immediately respond to a request for comment.
EU companies are facing similar issues, White & Case sanctions lawyer Genevra Forwood said, particularly because it’s unclear which authority should be giving guidance. “There isn't a single enforcer like [the Office of Foreign Assets Control] who can come in and just issue the FAQ, the clarifications and give you that guidance,” Forwood said during the webinar. “In the EU, obviously you have enforcement which is done by the authorities of the 27 member states, and they may or may not have the same view.”
Companies can turn to the European Commission, which has issued a range of FAQs for its Russia sanctions, but the commission doesn’t have “the final word either in enforcement or in the interpretation of EU law,” Forwood said. “In some ways, it's a little bit harder to get clear views” on “where the lines really are.”
The commission is also “completely inundated” and may not be able to answer the more difficult sanctions questions that companies are dealing with, she said. “We've all seen the plethora of FAQs that have come out, and admittedly they are coming out fairly frequently now, but I wouldn't say they cover half of the real questions that people have,” Forwood said. “They really just kind of tell you the obvious, and they don't really take you to where you want to be.” A commission spokesperson didn’t immediately respond to a request for comment.
Seeking guidance in Europe is quite different than in the U.S., Price said, where there is “such great dialogue” with sanctions regulators. But even U.S. agencies are struggling to give timely answers, said Ryan Fayhee, a Hughes Hubbard trade lawyer. Although OFAC is a “great agency,” he said, “so much is asked from so few.” Some OFAC employees have worked 20-hour days to implement and enforce new sanctions against Russia in what has ranked among the busiest times for sanctions agencies in recent memory (see 2203280016).
“You can ask, but you should not expect to receive an answer at all,” said Fayhee, who previously worked as DOJ's lead export control and sanctions prosecutor. “The best you can hope for is if enough lawyers are asking the question to OFAC, oftentimes you'll get a new FAQ or you'll get some guidance.”
Fayhee also said agencies are generally not granting specific licenses for transactions involving the technology sector, including for servers and certain computers. “I can tell you that they're being very, very conservative,” he said, “particularly in the tech space.”