Russia Sanctions: This week the United States designated dozens of additional entities and individuals as Specially Designated Nationals (“SDNs”).  Notable designations included State Corporation Rostec (“Rostec”), a large Russian state-owned company that operates in the automotive, defense, aviation, and metal industries; individuals who were part of a covert procurement network linked to Russia’s Federal Security Service (the “FSB”); the Interregional Social Organization Union of Donbas Volunteers, a veteran organization which has been recruiting fighters and providing direct support to the Russian military; and several Russian defense companies.  The Department of State also announced steps to impose visa restrictions on 511 Russian Federation military officers for “authorizing actions that threatened or violate the sovereignty, territorial integrity, or political independence of Ukraine” and on 18 Russian Federation officials for “suppressing dissent in Russia and abroad.” 

The UK designated an additional eight individuals and five entities.  The individuals designated include Vladimir Potanin, Russia’s second wealthiest man and owner of Rosbank PJSC, and Anna Tsivileva, the President of JSC Kolmar Group, a Russian coal mining company. 

General Licenses: The United States issued several new General Licenses (“GLs”).  GL 39 authorizes wind-down transactions involving Rostec until August 11, 2022.  GL 40 authorizes transactions ordinarily incident and necessary to ensure the safety of civil aviation involving certain blocked entities for aircraft registered outside of Russia and operated solely for civilian purposes.  GL 41 authorizes transactions ordinarily incident and necessary to the manufacture, sale, and maintenance of agricultural equipment, components, and spare parts produced by Nefaz Publicly Traded Company or Public Joint Stock Company Tutaev Motor Plant, through December 22, 2022.  GL 42 authorizes limited transactions with the FSB.  GL 43 authorizes transactions that are ordinarily incident and necessary to (i) the divestment or transfer of debt or equity from, or (ii) the wind-down of certain derivative contracts with, Public Joint Stock Company Severstal or Nord Gold PLC through August 31, 2022.  The UK issued GL INT/2022/1968500, which allows a 30-day wind-down period of positions involving Rosbank PJSC.

G7 Summit: The G7 issued a statement condemning Russia’s war in Ukraine and pledged to expand cooperation in intelligence sharing and information security, provide humanitarian assistance, support refugees from Ukraine, and intensify economic sanctions. 

Exports and Imports: The United States increased the “Column 2” duty rates to 35% ad valorem on certain Russian products classified within hundreds of specified harmonized tariff codes.  Column 2 duty rates are rates for countries that do not have normal trade relationships with the United States.  The United States also prohibited the importation of Russian gold into the United States.  Additionally, the United States issued temporary denial orders against three Russian airlines – Nordwind Airlines, Pobeda Airlines, and S7 Airlines – for operating in violation of U.S. export control laws.  Finally, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) and Commerce’s Bureau of Industry and Security (“BIS”) issued a joint alert advising financial institutions to remain vigilant against attempts to evade export controls.

BIS Updates: BIS made several announcements this week regarding the agency’s policies.  BIS highlighted four changes to its administrative enforcement p­­­rogram: (i) the imposition of significantly higher penalties; (ii) using non-monetary resolution for less serious violations; (iii) eliminating “No Admit, No Deny” settlements, and (iv) dual track processing of voluntary self-disclosures.  BIS also announced a new “Academic Outreach Initiative” to help academic institutions comply with export control laws.  The initiative will have four main components (i) strategically prioritized engagement; (ii) assignment of “Outreach Agents” for prioritized institutions; (iii) background briefings for foreign universities; and (iv) trainings for prioritized academic research institutions.

BIS also added six entities, Connec Electronic Ltd.; King Pai Technology Co., Ltd; Sinno Electronics Co., Ltd.; Winninc Electronic; World Jetta (H.K.) Logistics Limited; and Promcomplektlogistic Private Company, to the Entity List because they “contracted to continue to supply Russian military end users” and this activity is “contrary to U.S. national security and foreign policy interests under § 744.11(b) of the EAR.

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Photo of Anand Sithian Anand Sithian

For high-stakes internal and government investigations and complex regulatory and compliance matters, companies and individuals look to Anand to provide strategic advice and counseling, particularly on issues relating to the Bank Secrecy Act and Anti-Money Laundering (“BSA/AML”), economic sanctions, and digital assets. Anand

For high-stakes internal and government investigations and complex regulatory and compliance matters, companies and individuals look to Anand to provide strategic advice and counseling, particularly on issues relating to the Bank Secrecy Act and Anti-Money Laundering (“BSA/AML”), economic sanctions, and digital assets. Anand is resident in the firm’s New York office and a member of the firm’s International Trade, White Collar and Regulatory Enforcement, and Financial Services groups.

A former federal prosecutor, Anand leverages his government experience to guide clients through complex white-collar matters, including grand jury and regulatory investigations, enforcement proceedings, and internal investigations. Anand has deep experience in parallel criminal and civil investigations and proceedings, and often represents clients in defending against civil lawsuits related to government investigations.

Representing some of the world’s largest banks and technology companies, Anand has addressed a wide range of issues, including economic sanctions, BSA/AML; economic sanctions and national security; payments and cryptocurrency; securities laws; and cybersecurity enforcement. In the regulatory space, Anand prides himself on providing commercial and actionable advice, including in the developing areas of digital assets, FinTech, and payments.

Photo of Rachel Schumacher 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.