Russia Sanctions:  The EU and UK each made several amendments regarding previously-designated individuals and entities.  The amendments included corrections to names and dates of birth.

General Licenses:  The U.S. made two announcements related to general licenses (“GLs”).  The U.S. announced that it will not renew GL 9C.  The specific provisions that expired are:

  • (a)(1) – authorizing “all transactions” prohibited by the Russian Sanctions (31 CFR part 587), that are “ordinarily incident and necessary to dealings in debt or equity of” VEB, Otkritie, Sovcombank, Sberbank, and VTB (and any entity 50% or more owned, directly or indirectly, by the foregoing entities) issued prior to February 24, 2022, (“Russian financial institution debt or equity”) provided that such transactions are divestment or transfer of Russian financial institution debt or equity to a non-U.S. person, or the facilitation thereof;
  • (b)(1)(i) – authorizing U.S. persons to facilitate, clear, and settle trades of Russian financial institution debt or equity where such trades were placed prior to Feb. 24, 2022 (4 PM ET); and
  • (c) – authorizing all transactions “ordinarily incident and necessary to the receipt of interest, dividend, or maturity payments in connection with debt or equity of the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation issued before March 1, 2022.”

As a result of the expiration of GL9C(c), U.S. persons, including U.S. person banks involved in the processing of in-scope interest, dividend, or maturity payments in any currency, are now prohibited from processing those payments, and instead must start to reject and report those payments to OFAC.  OFAC’s decision not to renew this provision may cause a default on Russian sovereign debt.

The U.S. also issued GL 13A, superseding GL 13.  GL 13A authorizes payment of taxes, fees, or import duties to the Central Bank of Russia and other Directive 4 entities by U.S. persons, and also by non-U.S. entities “owned or controlled, directly or indirectly” by U.S. persons, so long as the payments relate to the day-to-day operations in Russia of the paying entity, to the extent prohibited by Directive 4 under Executive Order 14024.  GL13A is valid until September 30, 2022, and clarifies that it does not authorize transactions otherwise prohibited by the Russian Harmful Foreign Activities Sanctions Regulations.

EU Standardization of Sanctions Violations:  The EU announced that it is seeking to standardize penalties for violations of EU sanctions regulations across the Union.  Currently, penalties for violating EU sanctions vary by Member State.  The Commission called for sanctions violations to be included in the EU’s official unionwide crime list.  The Commission explained that this would make it easier to investigate, prosecute, and punish violations in all Member States.

Aviation:  The U.S. issued an order denying export privileges of a fifth Russian airline, Rossiya Airlines, due to ongoing export violations.  The Temporary Denial Order terminates the right of the airline to participate in transactions subject to the Export Administration Regulations.

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Photo of Anand Sithian Anand Sithian

Anand Sithian is a counsel in Crowell & Moring’s New York office. He is a member of the International Trade and the White Collar & Regulatory Enforcement groups. Anand advises clients on a variety of regulatory issues and investigations relating to anti-money laundering…

Anand Sithian is a counsel in Crowell & Moring’s New York office. He is a member of the International Trade and the White Collar & Regulatory Enforcement groups. Anand advises clients on a variety of regulatory issues and investigations relating to anti-money laundering (AML), the Bank Secrecy Act (BSA), U.S. economic sanctions, including those administered by the Office of Foreign Assets Control (OFAC), and asset forfeiture matters. Anand routinely counsels clients on the novel application of these laws and regulations to issues involving financial institutions, technology and social media, virtual currency and digital assets (including the seizure and forfeiture of virtual currencies), and the evolving cannabis industry.

Rachel Schumacher

Rachel Schumacher is an associate in the International Trade and Government Contracts groups in Crowell & Moring’s Washington, D.C. office. Rachel’s practice focuses on transactions, investigations, and compliance and advisory matters involving a variety of government contracts and international trade issues.