The Bass, Berry & Sims international trade team is actively monitoring the situation in Russia and Ukraine and providing real-time advice to clients on managing the situation. This post summarizes new U.S. sanctions and export restrictions as of Wednesday, April 27. This post supplements our previous summaries, which are available by following the links at the end of this blog post.

Commerce Issues Temporary Denial Order Against Russian Cargo Airline

On April 21, the U.S. Commerce Department, Bureau of Industry & Security (BIS) issued a temporary denial order (TDO) against Aviastar, citing ongoing violations of the comprehensive export controls imposed on Russia by the Commerce Department. Aviastar is headquartered in Moscow and provides various cargo services to Russia. Aviastar joins Russian airlines Aeroflot, Utair, and Azur Air, which are already subject to TDOs. See our April 7 blog on previously issued TDOs.

The TDOs initially run for 180 days but will likely be extended. Under these TDOs, the airlines are not permitted to participate in transactions subject to the Export Administration Regulations (EAR), including exports from the United States and re-exports from abroad. In particular, this means that the airlines cannot operate U.S.-manufactured aircraft nor obtain U.S.-manufactured parts for purposes of even routine repair or maintenance on their aircraft, whether manufactured in the United States or elsewhere.

OFAC Blocks Supporters of Sanctions Evaders

On April 20, the U.S. Treasury Department, Office of Foreign Assets Control (OFAC) designated entities and a global network of over 40 individuals and organizations led by Russian oligarch Konstantin Malofeyev. Malofeyev, who was designated by OFAC in 2014 in connection with Russia’s invasion of Crimea, is also designated by Canada, the European Union, and the United Kingdom, among others and serves as a reminder of the multilateral nature of many of the sanctions being imposed on Russian parties.

The designations announced on April 20 were due to the designated parties’ involvement in attempts to evade sanctions imposed by the United States and its partners and allies. In particular, OFAC designated Russian commercial bank Public Joint Stock Company Transkapitalbank (TKB) and its subsidiary Joint Stock Company Investtradebank for advising and suggesting options to their clients in Asia and the Middle East on how to evade international sanctions. According to OFAC this included advice on methods to conduct transactions outside the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network. As addressed in our February 28 post, the U.S. and other governments have removed a number of key Russian banks from the SWIFT system.

OFAC also designated Bitriver, a virtual currency mining company, and its ten subsidiaries due to these entities’ operations in the technology sector of the Russian economy. This is the first time the Treasury Department has designated a virtual currency mining company. The March 31 blog on the Treasury Department’s expanded authority to sanction companies in the Russian aerospace, marine, and/or electronics sectors can be found here.

OFAC Issues New GLs and Revises Certain Russia-Related GLs

  • General License (GL) 27, issued on April 19, allows certain transactions supporting nongovernmental organizations’ activities related to humanitarian projects, democracy-building in Russia and Ukraine, education, and non-commercial projects that directly benefit the people of Russia and Ukraine, and environmental and natural resource protection.
  • GL 28, issued on April 20, authorizes certain transactions involving Public Joint Stock Company TKB or any entity that is 50% or more owned by TKB, that are ultimately destined for or originating from Afghanistan.
  • GL 29, issued on April 20, allows transactions that are ordinarily incident and necessary to wind down transactions involving TKB and any entity that is 50% or more owned by TKB.
  • GL 15L, issued on April 25, allows transactions that are ordinarily incident and necessary to wind down transactions involving GAZ Group and any entity that is 50% or more owned by GAZ Group. The expiration date for authorization under GL 15L is May 25, 2022. This revised GL supersedes GL 15K, which was issued on January 24.
  • GL 13R, issued on April 24, allows transactions that are ordinarily incident and necessary to divest or transfer debt, equity, or other holdings of GAZ Group or any entity that is 50% or more owned by GAZ Group, to a non-U.S. person. The expiration date for authorization under GL 13R is May 25, 2022. This revised GL supersedes GL 13Q, which was issued on January 24.

Lastly, OFAC issued a series of Frequently Asked Questions (FAQ) related to Russia and Belarus sanctions. On April 20, OFAC issued a FAQ related to obligations of credit card operators in processing transactions involving sanctioned parties in Russia and Belarus. On April 25, OFAC issued a series of FAQs related to the GAZ Group activities. The FAQs offered explanatory notes on various general licenses issued by OFAC.