UK Amends Designation of Arkady Rotenberg: On September 16, 2022, the UK replaced the designation entry for Arkady Romanovich Rotenberg.  The new entry description focuses on Mr. Rotenberg’s role in the construction of the Kerch Bridge, and the railway line on the bridge, which stretch from Russia to Crimea.  Mr. Rotenberg was originally designated by the UK on July 31, 2014, and is still subject to an asset freeze.

U.S. Adds Three Iranian Cargo Airlines to List of Export Controls Violators: On September 19, 2022, the Bureau of Industry and Security (“BIS”) added three Iranian-owned and -operated aircraft to its list of aircraft that have appeared to violate U.S. export controls.  The three aircraft are subject to the Export Administration Regulations (“EAR”) and are alleged to have flown into Russia and transported goods, including electronic items.  The aircraft are operated by Mahan Air, Qeshm Fars Air, and Iran Air, which have been previously designated by the U.S. for blocking sanctions.  A total of 183 aircraft have been identified to date for apparent violation of U.S. export controls.  Transactions with any of the listed aircraft are subject to General Prohibition Ten of the EAR, which prohibits proceeding with transactions with the knowledge a violation of the EAR has occurred, is about to occur, or is intended to occur.  This prohibits refueling, maintenance, repair, or the provision of spare parts or services, to the listed aircraft, among other restrictions.

EU Updates FAQs to Address Food and Energy Security: On September 19, 2022, the EU revised two FAQs to allow the transfer of certain goods listed in Annex XXI and XXII to third countries “to combat food and energy insecurity around the world.”  This applies to the transfer of the goods to third countries and to financing or financial assistance related to a transfer by EU operators or via the EU territory (including in transit) of:

  • Fertilizers falling under CN codes 310420, 310520; 310560; ex31059020 and ex31059080  -related, as listed in Annex XXI;
  • Animal feed falling under CN code 2303, as listed in Annex XXI;
  • Certain hydrocarbons falling under CN codes ex2901 and 2902, as listed in Annex XXI;
  • Essential goods falling under CN codes 44 (wood); 2523 and 6810 (cement products), as listed in Annex XXI; and
  • All the items listed in Annex XXII (coal and related products).

UK Adds Food and Fertilizer FAQs to Russia Sanctions Guidance: On September 21, 2022, the Office of Financial Sanctions Implementation (“OFSI”) added questions 24 to 26 to its Russia Guidance.  Questions 24 and 25 discuss the provision of insurance and financial services for food and fertilizer exports from Russia and Ukraine to a third country.  Question 26 states that the production and distribution of fertilizer is within the scope of the food security licensing purpose.

U.S. Senators Introduce Framework for Secondary Sanctions Related to Russian Oil: On September 20, Senators Chris Van Hollen (D-MD) and Patrick Toomey (R-PA) announced a framework for a bill that would expand sanctions on Russian oil exports, and punish any foreign financial institution that failed to comply with a global price cap on Russian oil.  Their proposal on the global cap on the price of Russian oil would take effect no later than March 2023, at a price determined with allies.  The cap would then be lowered by one third annually until Russia no longer made profit from its oil exports.  The proposed framework would subject to sanctions (1) any foreign financial institution assisting in the import of Russian oil exceeding the price cap, and (2) any country determined to be importing Russian oil in excess of the country’s pre-invasion imports.  These oil-related sanctions would last for seven years or until Ukraine and Russia reach a diplomatic agreement, as certified by the President.  The Senators said, “In order to successfully enforce the [G7’s] price cap, it’s clear the administration requires new authority from Congress, which is exactly what our framework will provide.”

EU Members Agree to Prepare New Sanctions: According to press reports, on September 21, 2022, EU foreign ministers agreed to prepare a new round of sanctions against Russia after President Vladimir Putin ordered additional mobilization in Russia.  According to EU foreign policy chief Josep Borrell, the EU’s eighth sanctions package would target “more relevant sectors of the Russian economy and continue targeting people responsible for the war of aggression in Ukraine.”  “Additional restrictive measures against Russia will be brought forward immediately, as soon as possible in cooperation with our partners,” Borrell said during a press conference on September 21, 2022.  The next formal meeting of EU ministers will be in mid-October 2022, and the sanctions package could be formalized then.  However, according to press reports, Hungary is already opposing any additional restrictions against Russia.

U.S. Warns of Use Mixers to Use Cryptocurrencies to Evade Sanctions: During a September 20, 2022, Senate hearing on Russia, a representative from the U.S. Treasury Department’s Office of Terrorist Financing and Financial Crimes (“TFFC”) warned that digital assets could be used to evade U.S. and other sanctions, including those relating to Russia.  The representative went on to say that certain cryptocurrency technologies and tools can be used to provide anonymity and to hide digital transactions, and could complicate the enforcement of sanctions.

On Monday, lawmakers in the U.S. House of Representatives proposed a bipartisan bill aimed at providing relief to U.S. importers who paid tariffs on goods that would have been eligible for preferential treatment under the Generalized System of Preferences (GSP), which expired on December 31, 2020. This bill would retroactively apply preferential treatment to products that entered the U.S. between Dec. 31, 2020, and Sept. 1, 2022, if they would have been eligible for benefits under GSP, while not reauthorizing the program. The legislation would apply to approximately 3,400 products from 120 developing countries, refunding an estimated $1.8 billion worth of GSP-related tariffs.

The Generalized System of Preferences (GSP) is a preference program that allows duty-free imports for certain products from beneficiaries, which are predominantly lower-income and developing countries. U.S. imports from China on GSP-eligible goods have increased by hundreds of millions of dollars since the program’s expiration – imports of sports and duffle bags have increased by $50 million, trucks and suitcase materials have increased by $200 million, and air conditioner parts have increased by $600 million. Supporters of the new legislation argue that both the GSP program and the Miscellaneous Tariff Bill (MTB’s) incentivize U.S. trade investment outside of China and aid American companies in attaining component parts and other items free of duty if they are not readily available in the US. These signature trade items currently contribute to the inflation problem and their renewal would have a profound positive impact on the US economy.

On Tuesday, representatives from more than 60 major companies, including Target, Home Depot, and Samsonite were in Washington to urge Congress to consider the proposed legislation. Supporters of the bill claim that it will discourage imports from China while benefitting other developing economies throughout the world, being most helpful to companies that rely on specialized commodities from countries such as Indonesia, Thailand, and Brazil. House Oversight Committee member Rep. Debbie Wasserman Schultz (D-FL), who proposed the bill alongside fellow Florida Reps. Mario Diaz-Balart (R) and Darren Soto (D), highlighted in an email statement that GSP’s expiration has “caused our businesses to pay roughly $2 billion in excess tariffs, harming companies and workers in all 50 states,” adding that “it’s cost over $178 million in my home state of Florida alone, and small businesses were hit the hardest. I look forward to continuing to work together toward our shared goal of GSP reauthorization and to truly helping American businesses not just survive, but thrive.”

Efforts to renew GSP and MTB’s have failed to date – both the House and the Senate passed bills earlier this year that included the renewal of GSP and MTB’s, along with new eligibility requirements, but conferees tasked earlier this year to finalize a compromise China-focused competition bill failed to do so and the trade titles from both were not reconciled. Supporters of the bill have said that they hope Congress will act before the end of the year to renew GSP – possibly after the upcoming midterm elections in November. Dan Anthony, vice president of the Coalition for GSP, stated that “while we continue to seek a long-term GSP reauthorization after the November elections, a limited bill to refund GSP tariffs paid to date is the absolute floor for what Congress should pass this year.”

On September 15, 2022, the Biden Administration issued a new executive order (“EO”) and accompanying fact sheet, designed to sharpen the current U.S. foreign investment screening process as administered by the Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”).[1]  This EO is the first to specifically identify certain additional national security factors for CFIUS to consider when evaluating transactions involving foreign investors.

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Sanctions Designations:

  • U.S. Designates Numerous Individuals and Entities: On September 15, 2022, the U.S. added a number of individuals and entities to the Specially Designated Nationals and Blocked Persons (“SDN”) List.  The sanctions target Russia’s financial system, including the heads of Russia’s state-run card payment system (NSPK), central securities depository, stock exchange’s clearing service provider, and an entity the Kremlin uses to liquidate financial institutions and access foreign assets.  Other designations include three Russian military space entities, 13 Russian entities in the technology sector, and 14 entities in the Russian electronics sector, among others.
  • EU Removes Individuals from Annex I to Regulation (EU) No 208/2014 and Annex I to Regulation (EU) No 269/2014: On September 12, 2022, the EU removed four individuals from the Annex I to Regulation (EU) No 208/2014, because sanctions restrictions on these persons expired on September 6, 2022.  The four included Viktor Fedorovych Yanukovych, Viktor Pavlovych Pshonka, Oleksandr Viktorovych Yanukovych, and Artem Viktorovych Pshonka.  The EU removed an additional three individuals (Vladimir Volfovich Zhirinovsky, Olga Ayziman, and Saodat Narzieva) from Annex I to Regulation (EU) No 269/2014 on September 14, 2022.

U.S. General Licenses:

  • On September 15, 2022, the Office of Foreign Assets Control (“OFAC”) issued General License (“GL”) 51.  GL 51 authorizes the wind down of any transaction involving Limited Liability Company Group of Companies Akvarius (Aquarius), or any entity in which it owns a 50 percent or greater interest.  The license expires on October 15, 2022.
  • The U.S. also published GL 52, which permits certain transactions ordinarily incident or necessary to journalistic activities or to the establishment or operation of a news reporting organization, provided that the only involvement of blocked persons is the processing of funds by financial institutions blocked pursuant to Executive Order (“EO”) 14024.  For the purposes of GL 51, the term “news reporting organization” means “an entity whose primary purpose is the gathering and dissemination of news to the general public.”  Certain Russian news organizations are excepted from GL 52.  This license currently has no expiration date.

U.S. OFAC Determinations and FAQs:

  • On September 15, 2022, OFAC issued two determinations.  In the first, OFAC determined that section 1(a)(i) of EO 14024 applies to the Russian quantum computing sector, meaning that any person determined by the Secretary of Treasury to operate or have operated in the sector is subject to blocking sanctions.  The determination took effect the same day, September 15, 2022.
  • In the second determination, OFAC explains that, effective October 15, 2022, the export, reexport, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of quantum computing services to any person located in the Russian Federation is prohibited by section 1(a)(ii) of EO 14071.
  • On September 15, 2022, OFAC published seven new FAQs (1080-1086).  FAQs 1080 and 1081 address obligations of U.S. persons with accounts at blocked Russian banks and the requirements for utilizing GL 50, including the filing of blocking reports and unblocking reports with OFAC.  FAQ 1082 discusses the secondary sanctions risks non-U.S. financial institutions face in new or expanded agreements with NSPK and the use of Russia’ MIR National Payment Card System.  FAQs 1083 to 1086 explain OFAC’s quantum computing prohibitions and the scope of their application.

U.S. Expands Export Controls on Russia and Belarus: On September 15, 2022, the Commerce Department’s Bureau of Industry and Security (“BIS”) issued a rule effective immediately.  Among other provisions, the rule:

  • Expanded the scope of the Russian industry sector sanctions to include items potentially useful for Russia’s chemical and biological weapons production capabilities, and items needed for advanced production and development capabilities that enable advanced manufacturing across various industries;
  • Imposed controls on quantum computing-related hardware, software, and technology;
  • Added Belarus to the scope of industry sector sanctions that currently apply only to Russia;
  • Expanded the “military end user” and “military-intelligence end user” controls.  Specifically, it applies the Russian/Belarusian-Military End User Foreign Direct Product (“FDP”) rule to entities located outside of Russia and Belarus that were previously added to the Entity List for having continued to supply Russian entities on the Entity List, or are under sanctions since Russia’s further invasion of Ukraine; and
  • Refined existing controls on Russia and Belarus to more closely align with requirements implemented by allies, by adding additional dollar-value exclusion thresholds for “luxury goods.”

EU Extends Ukraine-Related Sanctions: On September 9, 2022, the EU amended Decision 2014/119/CFSP to apply until March 6, 2023.  Decision 2014/119/CFSP describes asset freezes imposed on persons that misappropriated Ukrainian state funds or committed human rights abuses in Ukraine.

U.S. Department of Treasury Publishes Preliminary Guidance on Russian Oil Price Cap: On September 9, 2022, the U.S. Department of the Treasury published preliminary guidance on implementation the G7’s proposed price cap on Russian oil.  The G7, EU, and U.S. will implement a ban on maritime services for Russian oil, but will exempt jurisdictions or actors that purchase seaborne Russia oil at or below the price cap.  The ban will take effect on December 5, 2022, for maritime transportation of crude oil and on February 5, 2023, for maritime transportation of petroleum products.  The preliminary guidance sets forth OFAC’s diligence and recordkeeping expectations for various participants involved in the purchase, transport, financing, and insurance of the sale and shipment of Russia-origin oil and petroleum.  The price cap will be set by the participating countries through a consultative process.  Russian-origin oil is still prohibited from being imported into the U.S. under Executive Order 14066.

EU Suspends Visa Agreement with Russia: On September 9, 2022, the EU announced it would suspend its reciprocal visa agreement with Russia.  The agreement previously allowed EU and Russian citizens to obtain visas for stays of no more than 90 days per period of 180 days to promote economic and cultural ties.  The EU suspended the short-stay visas effective September 12, 2022.

In ruling N327712 (Sept. 2, 2022), Customs and Border Protection (CBP) discusses the country of origin of an electronic vaping device.  The device under review, identified as the Vuse Alto Power Unit, is an electronic vaping device comprised of the following components:

  • Metal enclosure containing a printed circuit board assembly (PCBA);
  • Rechargeable battery;
  • Battery plugs;
  • Flexible printed circuit assembly (FPCA);
  • LED lights;
  • Neodymium magnets; and
  • Gasket.

The device allows a user to attach a cartridge with e-liquid to be vaporized at one end.  The cartridge acts as a heating element as well as a mouthpiece through which a user can draw out the vapor.  In this case, the cartridge was not imported with the device and, therefore, was not subject to the ruling. 

To determine the country of origin of the device, CBP reviewed the device’s manufacturing process.  The PCBA was manufactured in Vietnam using surface mount technology (SMT), a manufacturing method by which electrical components are mounted onto the surface of a printed circuit board, which creates a PCBA.  Afterwards, the completed PCBA was sent to China, where it was combined with the remaining components of the finished device.  All of the remaining components were Chinese origin.

Under the customs regulations, in relevant part, an article’s “country of origin” is “the country of manufacture, production, or growth of any article of foreign origin entering the United States.  Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the ‘country of origin’ within the meaning of this part.” 19 C.F.R. 134.1(b).  Citing numerous court cases, CBP articulated that a substantial transformation takes place when “an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing.”

Upon reviewing the manufacturing process, CBP found that the Vietnam-origin PCBA—which is the primary controlling apparatus of the vaping device—served as the essential functional component of finished device.  In addition, the secondary assembly process in China was not sufficiently complex to cause the individual components to lose their identities.  Nor did this secondary assembly process transform the Vietnamese PCBA into a new and different article with a new name, character, or use.  Therefore, CBP ruled that the country of origin of the electronic vaping device was Vietnam.

Crude Oil and Petroleum Price Cap: On September 2 2022, the G7 Finance Ministers issued a statement demonstrating their intent to implement a price cap on Russian-origin crude oil and petroleum products.  The G7 countries plan to prohibit the provision of services that enable maritime transportation of these products unless the products are purchased at or below the price cap.  The price cap will be set based on a range of technical inputs and will be decided upon by the countries participating in the regulation.  The G7 Finance Ministers explained that the purpose of the price cap is to reduce Russian revenues and Russia’s ability to fund the war in Ukraine while limiting the impact on energy prices.  The G7 indicated that it will seek a broad coalition of countries to adhere to and implement the price cap.

U.S. Secretary of the Treasury, Janet L. Yellen, issued a statement on the price cap praising the G7’s commitment, and emphasizing the impact the price cap could have on Russia’s ability to fund the war in Ukraine.  Treasury announced that OFAC anticipates publishing preliminary guidance regarding the price cap this month, which will provide a high-level overview of the price cap regime, including how U.S. persons can comply, in advance of to-be-issued formal guidance and legal implementation.

Russia Sanctions: This week the United States designated Safiran Airport Services, an Iranian company, under Executive Order (“EO”) 14024 for providing drones to Russia for its war on Ukraine.  Additionally, the United Kingdom made four amendments/corrections to designated individuals and entities.  The updates corrected Cyrillic names and added an “also known as” (“aka”) name.

General Licenses: The United States issued general license (“GL”) 13b which supersedes GL 13a.  The GL allows U.S. persons and entities owned or controlled by U.S. persons to pay taxes, fees, or import duties, and purchase or receive permits, licenses, registrations, or certifications otherwise prohibited by Directive 4 under Executive Order 14024.  This exemption only applies when the transaction is ordinarily incident and necessary to the U.S. person or entity’s day-to-day operations in the Russian Federation.  The new GL extends the validity of the exemption until December 7, 2022.  It was originally set to expire on September 30, 2022.

On September 2, 2022, the Office of the U.S. Trade Representative (USTR) announced that its statutory four-year review of Section 301 tariffs imposed on Chinese goods on July 6 and August 23, 2018 will be extended, with the tariffs remaining in effect while the agency conducts a more comprehensive review of their necessity. USTR stated that it will separately announce the process for its larger review, but confirmed that it will accept written submissions from interested parties regarding issues including the effectiveness of the tariffs, their impact on the U.S. economy, and additional actions beyond tariffs that the U.S. could consider moving forward.

Section 301 (Title III of the Trade Act of 1974, 19 U.S.C. §§2411-2420) authorizes the USTR to take action to encourage foreign countries to abandon or mitigate unfair trade practices affecting U.S. commerce. In 2018, the USTR determined that China’s acts, policies, and practices related to technology transfer, intellectual property (IP), and innovation were “unreasonable or discriminatory and burdened or restricted U.S. commerce”.[1] In order to counter them and obtain their elimination, the Trump Administration used Section 301 authorities to impose four rounds of increased tariffs on approximately two-thirds of all U.S. imports from China, sparking a heavily publicized and controversial trade war with Beijing.

 U.S.-China Section 301 tariffs currently apply to approximately $375 billion in annual U.S. imports of Chinese merchandise – the USTR’s statute requires that such tariffs terminate after four years, unless requests for continuation of the tariffs are made by domestic companies that benefit from the tariffs. USTR confirmed that it had received numerous requests to continue the tariffs from domestic industries, including 244 requests from domestic producers and 32 requests from trade associations. Representatives of multiple domestic industries reported that the tariffs imposed on July 6 and August 23, 2018 “have created more leverage to induce China to eliminate the policies and practices that are the subject of the Section 301 action, and have helped to address unfair competition resulting from China’s technology transfer policies and practices and encourage better policies and practices”.[2] As such, the USTR determined that the tariffs did not terminate on their four-year anniversary dates (July 6, 2022 and August 23, 2022), and will remain in effect because “at least one representative of a domestic industry which benefits from each action has submitted a written request for the continuation of such action” within the last 60 days. 

Thousands of importers have filed law suits in the U.S. Court of International Trade (CIT) challenging the USTR’s imposition of List 3 and 4 tariffs.  The CIT has preliminarily ruled that these tariffs are unlawful, because the USTR did not comply with the Administrative Procedures Act.  However, the CIT has not yet ordered that the government must refund or stop imposing these 301 tariffs.         

Crowell & Moring, LLP continue to monitor this development and the potential impact to businesses and consumers moving forward.

[1] “Section 301 of the Trade Act of 1974 – Congress.” Accessed September 8, 2022. https://crsreports.congress.gov/product/pdf/IF/IF11346.

[2] Federal Register: Accessed September 8, 2022. https://www.federalregister.gov/documents/2022/09/08/2022-19365/continuation-of-actions-chinas-acts-policies-and-practices-related-to-technology-transfer.

Russia Sanctions: This week the European Union designated three additional individuals.  Two of the individuals are members of the Duma who undermined the territorial integrity, sovereignty, and independence of Ukraine by voting in favor of a resolution regarding the need to recognize the so-called Donetsk People’s Republic and Luhansk People’s Republic.  The other sanctioned person is a member of the Federation Council, which ratified the “Treaty of Friendship, Cooperation and Mutual Assistance between the Russian Federation and the Donetsk People’s Republic and between the Russian Federation and the Luhansk People’s Republic.”

Enforcement: The U.S. Department of Commerce issued a charging letter alleging that PJSC LUKOIL (“Lukoil”), a Russian multinational oil and gas corporation, violated the Export Administration Regulations (“EAR”) by reexporting a U.S. origin Boeing 737-7EM aircraft to Russia without the required reexport license.  Relatedly, the U.S. Department of Justice (“DOJ”) obtained a warrant to seize the aircraft.  The forfeiture action was coordinated through the DOJ’s Task Force KleptoCapture which was created to enforce sanctions, export controls, and economic countermeasures that the United States imposed in response to Russia’s invasion of Ukraine.  The U.S. District Court for the Southern District of Texas issued the warrant.  The court found that the airplane was subject to seizure based on probable cause of violation of the EAR.  The airplane is estimated to be worth $45 million. 

In ruling N327192 (Aug. 17, 2022), Customs and Border Protection (CBP) discussed the tariff classification of semiprecious stones from China.  The item under review was referred to as the “National Geographic 2 lbs. Premium Polished Gemstone Set.”  The stones came tumbled and polished, and could be used by collectors, placed in aquariums, used in crafts, handmade jewelry, healing crystal displays, and as home décor.  The set included the following items:

  • Two pounds (total) of the following semiprecious gemstones, each up to ½-inch in size and varying in quantity:
    • Agate, Amethyst, Blue Quartz, Dalmatian Jasper, Green Aventurine, Hematite, Howlite, Jasper, Obsidian, Red Jasper, Rose Quartz, Sodalite, Tigers Eye, Unakite, and White Quartz;
  • A rock identification card;
  • A learning guide.

CBP established that, based upon the General Rules of Interpretation (GRIs), the item was considered a set for classification purposes.  Goods put up in sets for retail sale are goods that (a) consist of at least two different articles that are, prima facie, classifiable in different headings; (b) consist of articles put together to meet a particular need or carry out a specific activity; and (c) are put up in a manner suitable for sale directly to end users without repacking.

Per GRI 3(b), “mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.”  The factor determining essential character will vary as between different kinds of goods.  For example, essential character may be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.  In this instance, CBP found that the essential character of the gemstone set was imparted by the semiprecious gemstones.

As such, CBP ruled that the “National Geographic 2 lbs. Premium Polished Gemstone Set” would be classified under subheading 7103.99.5000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Precious stones (other than diamonds) and semiprecious stones, whether or not worked or graded but not strung, mounted or set…: Otherwise worked:  Other:  Other.”  The rate of duty is 10.5% ad valorem.

Additionally, pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, Chinese-origin products under subheadings 7103.99.5000, HTSUS, unless specifically excluded, are subject to an additional 7.5% ad valorem duty rate.  As such, the chapter subheading 9903.88.15 must be reported in addition to subheading 7103.99.5000, HTSUS.

UK Sanctions Removal and Other Amendments: On August 23, 2022, the UK delisted Mikhail Vladimirovich Razvozhayev, the Governor of Sevastopol, who had been subject to a UK asset freeze since late July 2022.  The UK published amendments for 42 other individuals and entities, primarily revising descriptions of the parties.

U.S. and UK Issue General Licenses:

  • On August 19, 2022, OFAC issued General License (“GL”) 50.  The license authorizes all transactions ordinarily incident and necessary to (1) the closing of an account of an individual, wherever located, who is not a blocked person (“the account holder”), held at a financial institution blocked pursuant to Executive Order (“EO”) 14024; and (2) the unblocking and lump sum transfer of all remaining funds and other assets in the account to the account holder, including to an account of the account holder held at a non-blocked financial institution.  This license currently has no expiration date.
  • On August 19, 2022, UK General License INT/2022/1845976 took effect.  The license permits a Crown Servant, Contractor, Family Member or Visiting Family Member, as defined in the license, to carry out activities in their personal capacity in Russia, which would otherwise be prohibited by regulations 11-15 and 17A of OFSI’s Russia Regulations.  This license currently has no expiration date.
  • On August 22, 2022, the UK published General License INT/2022/2104808.  The license permits certain banks to take the payment of, or deduct, bank “Service Fees” from accounts frozen under OFSI’s Russia Regulations, such as fees arising from the routine maintenance of those accounts, with the specific scope provided in the license.  This license currently has no expiration date.

U.S. and UK Amend General Licenses:

  • On August 19, 2022, the U.S. issued GL 38A, which replaced GL 38.  General License 38 authorizes transactions incident and necessary to the processing of pension payments to U.S. persons, including transactions where funds are processed by financial institutions blocked pursuant to EO 14024.  General License 38A expands the scope of authorization to include payments to non-U.S. persons not located in Russia.
  • On August 22, 2022, the UK amended General License INT/2022/1280876, which allows VTB Capital plc, and any entity owned or controlled by: (1) VTB Capital plc incorporated in the United Kingdom; (2) Sberbank CIB (UK) Ltd. (“Sberbank UK”); or (3) any entity owned or controlled by Sberbank UK incorporated in the UK (together, the “UK Subsidiaries”) to make payments for their “basic needs” and related to Insolvency Proceedings of the UK Subsidiaries, as defined in the license.  This general license was amended to permit payments related to: (1) the basic needs of VTBC Asset Management International Limited and its Insolvency Proceedings; and (2) the basic needs of VTB Bank (Europe) SE (“VTBE”), and any entity owned or controlled by VTBE incorporated in Germany.

Seven EU Member Foreign Committee Chairs Call for Stronger Sanctions: On August 25, 2022, the Chairs of the Foreign Affairs Committees of Estonia, Latvia, Lithuania, the Czech Republic, Poland, Finland, and Denmark issued a joint statement that unequivocally condemned Russia’s actions in Ukraine and urged additional sanctions on Russia.  The nations also requested that EU members and Western allies “immediately suspend tourism and limit the issuance” of tourist visas for Russian citizens.

U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) Press Release Summarizes Russia/Belarus-Related Export Controls: On August 25, 2022, BIS released a statement summarizing various export controls restrictions BIS has implemented since Russia’s invasion of Ukraine.  It lists a number of actions taken against Russia and Belarus, including the issuance of over a dozen regulations, which it said had resulted in a decrease of 97 percent by value of U.S. exports of newly-controlled items to Russia and Belarus.  BIS also highlighted actions it has taken with the U.S. Department of Justice, and its first-ever joint alert with the Financial Crimes Enforcement Network identifying export controls evasion risks for financial institutions.

U.S. State Department Publishes International Sanctions Fact Sheet: On August 22, 2022, the U.S. Department of State published an article regarding Kremlin-backed disinformation relating to Ukraine.  The article disputed Russia’s claim that international sanctions will not significantly impact Russia, and its assertion that sanctions are harming the West more than Russia.  “Economically, the sanctions we’ve imposed on Russia to end its aggression are having a powerful and also growing effect,” said Secretary of State Antony Blinken.  “Now, Moscow has been cherry-picking economic data to support President Putin’s insistence that everything is fine and the Russian economy is going strong.  It’s simply not true.”

Turkey Business Association Warned of Possible U.S. Sanctions: According to media reports, U.S. Deputy Treasury Secretary Wally Adeyemo sent a letter to both the Turkish Industry and Business Association (“TUSIAD”) and the American Chamber of Commerce highlighting that Turkish companies risked facing sanctions if they conducted business with sanctioned Russian persons.  This follows an August 19, 2022, discussion between Secretary Adeyemo and Turkey’s Deputy Finance Minister about U.S. concerns that Russian entities and individuals may use Turkey to evade U.S. and international sanctions.