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Treasury issues guidance on Russian oil sales cap
On September 9, the U.S. Treasury Department announced preliminary guidance on implementing a maritime services policy and related price exception for seaborne Russian oil. As previously covered by InfoBytes, OFAC recently announced that it planned to publish preliminary guidance on implementing the price cap to provide a high-level overview of the directive, including how U.S. persons can comply in advance of formal guidance and legal implementation. According to the preliminary guidance, the policy is intended to establish a framework for Russian oil to be exported by sea under a capped price, and establish a ban on services for any shipments of seaborne Russian oil above the capped price. Objectives of the guidance include: (i) maintaining a reliable supply of seaborne Russian oil to the global market; (ii) reducing upward pressure on energy prices; and (iii) reducing the revenues the Russian Federation earns from oil after its own war of choice in Ukraine has inflated global energy prices. The policy contains an exception, which applies to “jurisdictions or actors that purchase seaborne Russian oil at or below a price cap to be established by the coalition (the “price exception”).” The policy, which relates to a broad range of services in connection with the maritime transportation of Russian Federation origin crude oil and petroleum products, will become effective December 5, 2022 for the maritime transportation of crude oil and on February 5, 2023 for the maritime transportation of petroleum products.
Treasury caps Russian oil sales; OFAC guidance coming soon
On September 2, the U.S. Treasury Department announced that G7 Finance Ministers confirmed their joint intention to implement a price cap on Russian-origin crude oil and petroleum products. According to the statement, G7 countries, along with other allies and partners, “plan to prohibit the provision of services that enable maritime transportation of such oil and products unless purchased at or below a price level determined by the coalition of countries adhering to and implementing the price cap.” Secretary of the Treasury Janet L. Yellen issued a statement commending the action. She noted that the price cap will “help deliver a major blow for Russian finances and will both hinder Russia’s ability to fight its unprovoked war in Ukraine and hasten the deterioration of the Russian economy,” while also maintaining supplies to global energy markets by keeping Russian oil flowing at lower prices.
In conjunction with the announcement, OFAC said it plans to publish preliminary guidance on implementing the price cap later this month. The guidance will provide a high-level overview of the mechanism, including how U.S. persons can comply in advance of formal guidance and legal implementation which will be issued at a later date.
OFAC sanctions Russian companies and other entities
On August 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced several new sanctions in response to Russia’s invasion of Ukraine. The new sanctions, issued pursuant to Executive Order 14024, target elites, a major multinational company, a sanctions evasion operation, and a yacht used by a sanctioned individual. The action was taken together with the U.S. Department of State, which imposed additional sanctions on entities and individuals, as well as visa restrictions. As a result of the sanctions, all property and interests in property belonging to the sanctioned persons that are in the U.S. or in the possession or control of U.S. persons, and “any entities that are owned, directly or indirectly, 50 percent or more” by the targeted persons are blocked and must be reported to OFAC. Additionally, U.S. persons are prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons, unless exempt or authorized by a general or specific OFAC license.
The following day, OFAC issued several new Russia-related General Licenses (GLs). OFAC also published three frequently asked questions regarding “Russian Harmful Foreign Sanctions.”
Treasury clarifies impact of sanctions on agricultural commodities, agricultural equipment, or medicine relating to Russia
On July 14, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued a Fact Sheet to clarify that the U.S. has not imposed sanctions on the production, manufacturing, sale, or transport of agricultural commodities, agricultural equipment, or medicine relating to Russia. Additionally, OFAC issued General License (GL) 6B to expand agricultural and medical authorizations to now cover transactions related to agricultural equipment that would normally be prohibited by the Russian Harmful Foreign Activities Sanctions Regulations. OFAC emphasized that U.S. sanctions on Russia issued in response to its war against Ukraine “do not stand in the way of agricultural and medical trade.” OFAC referred to guidance issued in April for more details on authorizations under U.S. sanctions related to agricultural and medical transactions, nongovernmental organization activities, and Covid-19 relief, among others, to support people impacted by Russia’s war (covered by InfoBytes here).
OFAC issues Notification of Blocked Property to sanctioned Russian oligarch’s trust
On June 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued a Notification of Blocked Property to a Delaware-based trust in which an OFAC-designated Russian oligarch holds a property interest. As previously covered by InfoBytes, in April 2018, OFAC sanctioned seven Russian oligarchs, including the Russian oligarch who holds a property interest, along with 12 companies they own or control, 17 senior Russian government officials, and a state-owned Russian weapons trading company and its Russian bank subsidiary pursuant to the Countering America’s Adversaries Through Sanctions Act of 2017 (CAATSA) and Executive Orders 13661, 13662, and 13582. According to OFAC, the trust holds assets valued at over $1 billion; therefore, this enforcement action ensures that those assets continue to be blocked and inaccessible to the OFAC-designated Russian oligarch. As a result of the Notification of Blocked Property, the trust is subject to the same prohibitions applicable to the OFAC-designated Russian oligarch. All transactions by U.S. persons or within (or transiting) the U.S. involving any property or interests in property of designated or otherwise blocked persons are prohibited, unless exempt or authorized by a general or specific license issued by OFAC. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.
OFAC sanctions nearly 100 Russian targets; prohibits Russian gold imports
On June 28, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Orders (E.O.) 14024 and 14065 against 70 entities—many of which, according to OFAC, “are critical to the Russian Federation’s defense industrial base, including State Corporation Rostec, the cornerstone of Russia’s defense, industrial, technology, and manufacturing sector.” Twenty-nine Russian individuals were also designated. “We once again reaffirm our commitment to working alongside our partners and allies to impose additional severe sanctions in response to Russia’s war against Ukraine,” Treasury Secretary Janet L. Yellen said. OFAC’s designations occurred in tandem with actions taken by the U.S. State Department, which include sanctions against an additional 45 entities and 29 individuals as well as visa restrictions against “officials believed to have threatened or violated Ukraine’s sovereignty, territorial integrity, or political independence.” Additionally, OFAC immediately prohibited the importation of Russian gold into the U.S. (unless licensed or otherwise authorized by OFAC). As a result of the sanctions, all property and interests in property belonging to the designated persons in the U.S. are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” OFAC noted that U.S. persons are prohibited from participating in transactions with the sanctioned persons unless authorized by a general or specific license.
A joint alert issued by FinCEN and the U.S. Department of Commerce’s Bureau of Industry and Security also urged financial institutions to remain vigilant against Russian and Belarusian export control evasion and to take a “risk-based approach” for identifying potentially suspicious activity, such as end-use certificates, export documents, or letters of credit-based trade financing. “Financial institutions and the private sector continue to play a key role in disrupting Russia’s efforts to acquire critical goods and technology to support its war-making efforts,” OFAC stated in its announcement.
On the same day, OFAC issued several new Russia-related general licenses (GL): (i) GL 39 authorizes the wind down of transactions ordinarily incident and necessary involving State Corporation Rostec that are normally prohibited by E.O. 14024; (ii) GL 40 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 one or more of” certain blocked entities; (iii) GL 41 authorizes certain transactions related to agricultural equipment that are normally prohibited by the Russian Harmful Foreign Activities Sanctions Regulations; (iv) GL 42 authorizes certain transactions with the Federal Security Services; and (v) GL 43 authorizes the divestment or transfer of debt or equity of, and wind down of derivative contracts involving the Public Joint Stock Company Severstal or Nord Gold PLC.
OFAC also published a Determination Pursuant to Section 1(a)(i) of Executive Order 14068 concerning prohibitions related to the importation of Russian gold and issued one new and one amended frequently asked question.
The Russian Elites, Proxies, and Oligarchs (REPO) Task Force also issued a joint statement summarizing actions taken by REPO members against sanctioned Russians. The efforts have led to more than $30 billion worth of sanctioned Russians’ assets being blocked or frozen and has heavily restricted sanctioned Russians’ access to the international financial system.
OFAC sanctions Nicaraguan persons
On June 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13851 against a state-owned Nicaraguan mining company and a high-ranking official for allegedly engaging in actions or policies that are used to “oppress the people of Nicaragua" and engaging "in activities that pose a threat to the security of the hemisphere.” According to OFAC, the company regulates gold mining through the issuance of land concessions to domestic and foreign companies, which feature several joint ventures with private firms. Furthermore, high-ranking members of the government regime have benefitted greatly from Nicaragua’s increase in gold exports, due in large part to the designated mining company. This oppressive regime has engaged in election rigging, OFAC said, and has deepened its relationship with Russia in its war against Ukraine, while using gold revenue to support its activities. As a result, all property and interests in property of the sanctioned individuals and entities, and any entities that own, directly or indirectly, 50 percent or more of such persons subject to U.S. jurisdiction, are blocked and must be reported to OFAC. U.S. persons are also generally prohibited from entering into transactions with the sanctioned persons.
DOJ seizes $300 million yacht as part of Task Force KleptoCapture; OFAC issues Russia-related general licenses and updated FAQs
On May 5, the DOJ executed a seizure warrant freezing a $300 million yacht owned by a sanctioned Russian oligarch, following a determination that the yacht is subject to forfeiture based on probable cause of violations of U.S. law, including the International Emergency Economic Powers Act, money laundering and conspiracy. The Russian oligarch was designated in 2018 by the U.S. Treasury Department’s Office of Foreign Assets Control pursuant to the Countering America’s Adversaries Through Sanctions Act and Executive Order (E.O.) 13582 (covered by InfoBytes here). According to the DOJ’s announcement, the sanctioned oligarch owned the yacht after his designation and “caused U.S. dollar transactions to be routed through U.S. financial institutions for the support and maintenance of the [yacht].” The seizure was coordinated through the DOJ’s Task Force KleptoCapture, which is “an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export controls, and economic countermeasures that the United States, along with its foreign allies and partners, have imposed in response to Russia’s unprovoked military invasion of Ukraine” (covered by InfoBytes here.)
The same day OFAC also issued several Russia-related general licenses (GL), including GL 7A, which authorizes “transactions ordinarily incident and necessary to the receipt of, and payment of charges for, services rendered in connection with overflights of the Russian Federation or emergency landings in the Russian Federation by aircraft registered in the United States or owned or controlled by, or chartered to, U.S. persons that are prohibited by the Russian Harmful Foreign Activities Sanctions Regulations”; GL 26A, which authorizes all transactions ordinarily incident and necessary to the wind down of transactions involving Joint Stock Company SB Sberbank Kazakhstan or Sberbank Europe AG, or any entity that Sberbank subsidiaries owns, through July 12, provided certain criteria are met; GL 31, which authorizes certain transactions related to patents, trademarks, copyrights, or other forms of intellectual property protections in the U.S. or Russia that would otherwise be prohibited; and GL 32, which authorizes the wind down of transactions involving Amsterdam Trade Bank NV that would ordinarily be prohibited by E.O. 14024 through July 12. Additionally, OFAC issued one new and one amended Russia-related frequently asked questions.
OFAC issues Russian sanctions, general licenses, and expanded E.O.s
On May 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced “sweeping” sanctions, which include the designations of board members from two of Russia’s most important banks, a Russian state-owned bank and 10 of its subsidiaries, a state-supported weapons manufacturer, and three of Russia’s state-controlled television stations that generate revenue for the state. OFAC also published a Determination Pursuant to Section 1(a)(i) of Executive Order (E.O.) 14024 and a Determination Pursuant To Section 1(a)(ii) Of E.O. 14071. According to OFAC's press release, the sanctions, issued pursuant to E.O. 14071, “cut off access to services that are used by the Russian Federation and Russian elites to evade sanctions.” OFAC identified accounting, trust and corporate formation, and management consulting as categories of services that are subject to a prohibition on the export, reexport, sale, or supply, directly or indirectly, from the U.S., or by a U.S. person, wherever located, to any person located in the Russian Federation. Additionally, OFAC determined that these same services sectors of the Russian Federation economy are subject to sanctions pursuant to E.O. 14024. OFAC also issued four Russia-related general licenses (GLs): (i) GL 25A authorizes transactions related to telecommunications and certain internet-based communications; GL 33 authorizes the wind down of operations or existing contracts involving certain blocked entities; GL 34 authorizes the wind down of accounting, trust and corporate formation, and management consulting services; and GL 35 authorizes transactions involving credit rating and auditing services. OFAC also issued a new frequently asked question clarifying transactions related to telecommunications and certain internet-based communications that involve Joint Stock Company Channel One Russia, Television Station Russia-1, or Joint Stock Company NTV Broadcasting Company authorized by Russia-related GL 25A.
OFAC also recently published amended Russia-related frequently asked questions 1034, 1035, and 1038 clarifying, among other things, (i) terms related to Executive Order (E.O.) 14071’s prohibition on certain accounting, trust and corporate formation, and management consulting services; (ii) what “credit rating services” and “auditing services” mean under General License 35; and (iii) certain activities related to products and services in or involving the Russian Federation in relation to E.O. 14024.
Find continuing InfoBytes coverage on the U.S. sanctions response to Russia’s invasion of Ukraine here.
OFAC amends and reissues the Ukraine-Related Sanctions Regulations
On April 29, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it amended and reissued the Ukraine-Related Sanctions Regulations, renaming them the Ukraine-/Russia-Related Sanctions Regulations. According to OFAC, this action replaces the regulations that were published in abbreviated form on May 8, 2014 with a more comprehensive set of regulations, including additional interpretive and definitional guidance, general licenses, and other regulatory provisions. OFAC also announced that it is revising several FAQs for the Ukraine-/Russia-Related Sanctions Regulations. OFAC also noted that “[t[he publication of this final rule has triggered an automatic administrative update to a number of sanctions entries. The unique identifier numbers (UIDs) for the affected entries are listed . . . as part of this administrative update.” The Ukraine-/Russia-Related Sanctions Regulations take effect May 2.
The same week, OFAC published Russia-related General License 30, “Authorizing Transactions Involving Gazprom Germania GmbH Prohibited by Directive 3 under Executive Order 14024,” which authorizes all transactions involving Gazprom Germania GmbH, or any entity in which Gazprom Germania GmbH owns, under certain criteria.
Find continuing InfoBytes coverage on the U.S. sanctions response to Russia’s invasion of Ukraine here.