US Government Modifies Sanctions Against Russia/Crimea
The U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) imposed sanctions on additional Russian and Crimean persons while also issuing a general license authorizing certain transactions with a previously-sanctioned Russian federal institution responsible for reviewing major engineering and construction projects on December 20, 2016. The actions do not represent a significant expansion of U.S. sanctions against Russia/Crimea notwithstanding media speculation to the contrary.
Seven individuals and eight companies were added to the U.S. List of Specially Designated Nationals and Blocked Persons (“SDN List”), primarily in connection with acting on behalf of previously-sanctioned entities or operating in Crimea. U.S. persons are prohibited from transacting with these persons and must block all property and interests in property of such persons. Twenty-six subsidiaries of OAO Novatek and Russian Agricultural Bank were added to the U.S. Sectoral Sanctions Identifications List (“SSI List”). These additions are meant to clarify that U.S. persons are prohibited from dealing in certain equity and/or debt instruments of such persons. Please see our previous updates (e.g., here and here) explaining the sectoral sanctions in more detail. The full list of newly-sanctioned entities is available in the OFAC release.
OFAC also issued General License 11 authorizing certain transactions with FAU Glavgosekspertiza Rossii (“FGR”), an entity that was added to the SDN List in September 2016. FGR is a Russian federal institution responsible for conducting official examinations of project documentation for significant construction works in Russia. Under the general license, U.S. persons now are permitted to engage in transactions with FGR’s Russian offices that are ordinarily incident and necessary to requesting, contracting for, paying for, receiving, or utilizing a project design review or permit. However, the activities must (i) relate to projects wholly within Russia (not including Crimea); and (ii) not involve any other sanctioned persons. U.S. persons involved in Russian engineering or construction projects therefore can rely on this general license to engage in most required regulatory interactions with FGR. The addition of FGR to the sanctions list in September resulted in projects sponsored by U.S. parties being delayed or terminated. The license will now allow these projects to continue.
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