The U.S. government has continued to impose additional Russia-related sanctions measures in response to Russia’s invasion of Ukraine. We previously discussed Russia-related sanctions and export control measures imposed by the U.S. on July 7, July 6, June 13, and in earlier posts.
In the U.S. Department of the Treasury’s Office of Foreign Assets Control’s (“OFAC”) latest Russia-related sanctions measures, the agency has designated additional individuals and entities on its Specially Designated Nationals and Blocked Persons (“SDN”) list for operating “in economic sectors that generate substantial revenue for the Russian regime, including from sources outside of Russia.” OFAC also issued additional guidance to clarify that entities owned less than 50% by SDNs are not automatically considered “blocked.” In addition, OFAC issued additional guidance which emphasizes that Russian agricultural commodities (including fertilizer), agricultural equipment, and medicine are not the target of U.S. sanctions. We discuss these updates in further detail below.
On August 2, 2022, OFAC designated individuals and entities as SDNs for: (i) operating or having operated in the accounting and management consulting sector the Russian economy; (ii) for operating or having operated in the financial services sector of the Russian economy; or (iii) for being owned or controlled by, or having acted or purported to act for or on behalf of the Russian government, pursuant to Executive Order (“E.O.”) 14024. These individuals and entities include the following:
- Andrey Grigoryevich Guryev, the founder and former Deputy Chairman of PhosAgro, a leading Russian chemical company, and his son;
- Viktor Filippovich Rashnikov, the majority owner and chairman of the Board of Directors of Publichnoe Aktsionernoe Obschestvo Magnitogorskiy Metallurgicheskiy Kombinat (“MMK”), one of the world’s largest steel producers,
- Two subsidiaries of MMK;
- Investitsionnaya Kompaniya MMK-FINANS, a Russian investment company that provides a wide array of investment, financial, and consulting services for the stock market for individuals and legal entities, including its main client, MMK;
- MMK Metalurji Sanayi Ticaret Ve Liman Isletmeciligi Anonim Sirketi (“MMK Metalurji”), MMK’s Turkish subsidiary that manufactures steel products; and
- Joint Stock Company Promising Industrial and Infrastructure Technologies, a financial institution owned by the Russian Federal Agency for State Property Management.
Unless authorized by OFAC, all property and interests in property of the individuals and entities referenced above, that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50% percent or more by one or more of the individuals and/or entities referenced above are also blocked.
New General Licenses
On August 2, 2022, OFAC published new and amended general licenses (“GLs”), which are summarized below.
- GL 40A replaces and supersedes GL 40, and authorizes all transactions ordinarily incident and necessary to the provision, exportation, or reexportation of goods, technology, or services to ensure the safety of civil aviation involving, inter alia, Joint Stock Company State Transportation Leasing Company, provided that: (i) the aircraft is registered in a jurisdiction solely outside of Russia; and (ii) the goods, technology, or services that are provided, exported, or reexported are for use on aircraft operated solely for civil aviation purposes.
- GL 43A replaces and supersedes GL 43, and authorizes U.S. financial institutions to unblock the debt or equity of Public Joint Stock Company Severstal or Nord Gold PLC (or any entity owned 50% or more by these entities), that was blocked on or after June 2, 2022 but before June 28, 2022, provided that the unblocked debt or equity is solely used to effect transactions authorized by GL 43A (e.g., certain transactions in connection with divestments of stakes in these entities).
- GL 47 authorizes all transactions ordinarily incident and necessary to the wind down of any transaction involving one or more specified SDNs, through September 1, 2022, provided that any payment to a blocked person is made into a “blocked account.”
- GL 48 authorizes all transactions that are ordinarily incident and necessary to the divestment or transfer, or facilitation of the divestment or transfer, of debt or equity of one or more specified SDNs, purchased prior to August 2, 2022, to a non-U.S. person, through October 3, 2022.
- GL 49 authorizes all transactions ordinarily incident and necessary to the wind down of any transaction involving MMK Metalurji (or any entity owned 50% or more by MMK Metalurji), until January 31, 2023, provided that any payment to a blocked person is made into a “blocked account.”
Finally, on August 3, 2022, OFAC amended GL 40A, GL 47, and GL 48, to clarify that these licenses apply to “Joint Stock Company State Transportation Leasing Company,” correcting the misnaming of this entity in the original licenses.
New Frequently Asked Questions
On August 2, 2022, OFAC published three Frequently Asked Questions (“FAQs”), which are summarized below.
- FAQ 1075 clarifies that OFAC has not designated PhosAgro PJSC and, based on information available to OFAC, PhosAgro PJSC is not owned 50% or more by blocked persons or otherwise considered the blocked property of Andrey Grigoryevich Guryev and Andrey Andreevich Guryev. FAQ 1075 also reiterates that agricultural and medical trade are not the target of sanctions imposed by the U.S. as a result of the crisis in Ukraine.
- FAQ 1074 clarifies that OFAC has not designated EuroChem Group AG and, based on information available to OFAC, EuroChem Group AG is not owned 50% or more by blocked persons or otherwise considered the blocked property of Andrey Igorevich Melnichenko.
- FAQ 1073 clarifies that OFAC has not designated Sheremetyevo International Airport and, based on information available to OFAC, Sheremetyevo International Airport is not owned 50% or more by blocked persons or otherwise considered the blocked property of Alexander Anatolevich Ponomarenko.
New Fact Sheet on Russian Food and Fertilizer-Related Authorizations
On July 14, 2022, OFAC issued a Fact Sheet to further clarify that agricultural commodities (including fertilizer), agricultural equipment, or medicine relating to Russia are not the target of U.S. sanctions (the “Fact Sheet”).
On the same day, OFAC issued additional GLs, including GL 6B, which broadly expands the agricultural and medical authorizations to cover transactions related to agricultural equipment. OFAC also published three amended Russia-related FAQs, which reference the Fact Sheet and GL 6B.