As the U.S. continues to tighten Russia export controls (see 2203110056), more companies may ask customers to sign end-use statements as a way to document their due diligence, said Marwa Hassoun, a trade lawyer with ArentFox Schiff. Businesses must also make sure they are taking certain minimum compliance steps to comply with U.S. sanctions, said ArentFox Schiff sanctions lawyer Matthew Tuchband, including more regular screening of restricted party lists.
OFAC sanction activity
The Office of Foreign Assets Control designated one individual and nine entities as part of its efforts to combat illicit gold trade. On March 17, OFAC sanctioned Alain Goetz, a Belgian businessman who operates the African Gold Refinery in Uganda as well as companies in the UAE that receive illicit gold from mines in regions of the Democratic Republic of the Congo that are controlled by armed groups involved in destabilizing activities in the Congo. Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson said that "[c]onflict gold provides the largest source of revenue to armed groups in eastern DRC where they control mines and exploit miners,” in a press statement.
The Office of Foreign Assets Control added 15 Russian and Belarusian individuals and one entity to the Specially Designated Nationals list, it said in a March 15 announcement. Four individuals and one entity were listed under Magnitsky Act designations for "gross human rights violations" involving events surrounding the death of renowned Russian whistleblower Sergei Magnitsky" or against Russian human rights defender Oyub Titiev. In a separate press release, OFAC lists sanctions blocking the property of President Alyaksandr Lukashenka of Belarus, Judge Natalia Mushnikova, Nurid Salamov, and Dzhabrail Akhmatov in connection with human rights abuses in Russia and Belarus. The State Department also announced sanctions in a second notice, listing 11 Russian military leaders "who operate or have operated in the defense and related materiel sector of the Russian Federation economy." OFAC Director Andrea Gacki said the designations, "demonstrate the United States will continue to impose concrete and significant consequences for those who engage in corruption or are connected to gross violations of human rights."
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The U.S. announced a set of new export controls and sanctions against Russia last week, including new restrictions on luxury goods and full blocking sanctions on Russian government officials and bank executives. The measures, outlined in a March 11 executive order, also include new banking and financing-related restrictions meant to further cut Russia’s economy off from the global financial system and target Russian oligarchs.
The Office of Foreign Assets Control on March 11 sanctioned Russian people and entities for aiding North Korea's weapons of mass destruction and ballistic missile programs. The designations target Russia-based Apollon OOO; Zeel – M Co., Ltd; and RK Briz, OOO for providing procurement, financial or technological support for North Korea's military industry. OFAC also sanctioned Apollon OOO director Aleksandr Andreyevich Gayevoy and Zeel – M Co., Ltd director Aleksandr Aleksandrovich Chasovnikov.
The Office of Foreign Assets Control announced sanctions on eight Russian individuals, six entities, one water vessel and one aircraft. OFAC determined that the property and interests in property subject to U.S. jurisdiction of the designated persons and entities are blocked. The sanctions were pursuant to Executive Order 14024, which targets members of the Russian government, technology sector, and their families and businesses.
The Office of Foreign Assets Control announced sanctions on 26 Russian individuals and seven entities connected with cyber attacks and election interference in the U.S. OFAC determined that the property and interests in property subject to U.S. jurisdiction of the designated persons and entities are blocked.
The U.S.’s new Russia export controls could lead to a short-term spike in license applications, but volumes will likely taper off later this year as businesses divest from Russia, said Nazak Nikakhtar, a former senior U.S. export control official.
As global trade restrictions against Russia continue to increase, some companies are grappling with whether to fully exit the Russian market or rely on sanctions screening and temporary carve-outs to keep their operations afloat, lawyers and experts said in interviews this month. But the risks for a majority of businesses are quickly becoming too high, especially as sanctions are expected to grow more punishing.