The United States and its allies proceed to ramp up strain on Russia and Belarus in response to Russia’s continued hostilities in Ukraine. In this alert, we describe the most recent export, import, and funding bans and restrictions carried out by the United States, the European Union, and the United Kingdom (see our prior alert discussing latest earlier measures).
Key developments embody:
- Additional U.S. and EU export prohibitions and new funding prohibitions involving the Russian vitality sector;
- New U.S. bans on imports of oil and energy-related commodities of Russian origin;
- Excluding a number of Russian and Belarusian banks from SWIFT on March 12, 2022 (for the Russian banks) and March 20, 2022 (for the Belarusian banks);
- Blocking and asset freezing sanctions on extra Russian and Belarusian events by the United States, the European Union, and the United Kingdom; and
- Expanding sanctions on Belarus by the United States and the European Union.
U.S. Measures
I. Export Restrictions
Expanded Prohibitions on Exports to the Russian Energy Sector. On March 8, 2022, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) expanded the scope of the prevailing normal prohibition on exports, reexports and in-country transfers of sure gadgets topic to the Export Administration Regulations (the “EAR”) the place an individual has information that the merchandise will likely be used immediately or not directly in exploration for, or manufacturing of, oil or fuel in Russian deepwater, Arctic offshore, or shale tasks or the individual is unable to find out whether or not the merchandise will likely be utilized in such tasks in Russia. These restrictions have been initially added to the EAR in 2014. The expanded normal prohibition, which incorporates no information requirement, additionally covers exports, reexports and in-country transfers to or inside Russia of any gadgets wanted for oil refining topic to the EAR and listed in a brand new complement to half 746 of the EAR.
New Export Controls on Belarus and Russia. On March 8, 2022, BIS imposed the identical export management measures on exports, reexports and in-country transfers to or inside Belarus that it imposed on Russia in late February (together with a brand new export license requirement for exports, reexports, and in-country transfers to or throughout the nation of many gadgets topic to the EAR, growth of the scope of U.S. export controls by way of two new “foreign direct product rules,” and expanded controls related to “military end users” and “military end uses” (see our prior alert)). BIS additionally expanded licensing necessities related to exports, reexports and transfers to or inside Russia of encryption gadgets (see our prior alert).
Export Ban on Luxury Goods. On March 11, 2022, President Biden issued Executive Order 14,068, prohibiting, amongst different issues, the direct or oblique provide of “luxury goods” to any individual situated in Russia from the United States or by U.S. individuals. A brand new BIS rule, efficient on the identical day, implements these new prohibitions by imposing license necessities on, and adopting a normal coverage of denial with respect to license purposes for, all exports, reexports and in-country transfers of “luxury goods” to or inside Russia or Belarus, and to sure Russian and Belarusian individuals now topic to sanctions administered by the Treasury Department’s Office of Foreign Assets Control (“OFAC”). The “luxury goods” embody sure alcoholic drinks, tobacco merchandise, perfumes and cosmetics, leather-based items, attire, footwear, jewellery, marine engines, watches, vehicles, bikes, and art work.
Export Ban on U.S. Dollar-Denominated Banknotes. Executive Order 14,068 additionally prohibits the exportation, reexportation, sale, or provide, immediately or not directly, from the United States or by U.S. individuals, of U.S. dollar-denominated banknotes to the Russian authorities or to anybody in Russia. Certain transactions which are ordinarily incident and essential to the switch of U.S. dollar-denominated banknotes for noncommercial, private remittances are approved.
II. Import Restrictions
Ban on Imports of Russian Oil. On March 8, 2022, regardless of earlier U.S. reluctance to sanction the Russian vitality sector, President Biden issued Executive Order 14,066, banning the import into the United States of oil and energy-related commodities (crude oil, petroleum, petroleum fuels, oils and merchandise of their distillation, liquefied pure fuel, coal, and coal merchandise) of “Russian origin.” Items of “Russian origin” embody items produced, manufactured, extracted, or processed in Russia, however exclude any Russian-origin good included or considerably reworked right into a foreign-made product. OFAC has approved, till April 22, 2022, transactions which are ordinarily incident and essential to such imports pursuant to written contracts entered into earlier than March 8, 2022.
Transactions to unwind current commitments or redirect shipments which are in course of are permitted. Non-U.S. individuals importing such merchandise exterior of the United States should not uncovered to sanctions dangers beneath Executive Order 14,066, supplied such imports don’t contain a sanctioned individual or an in any other case prohibited transaction.
Ban on Imports of Certain Russian Goods. Executive Order 14,068 prohibits the importation into the United States of fish, seafood, and preparations thereof, alcoholic drinks, and non-industrial diamonds, and different gadgets of Russian origin because the U.S. authorities could decide. Until March 25, 2022, transactions which are ordinarily incident and essential to such importation pursuant to written contracts entered into earlier than March 11, 2022 are permitted.
III. Investment Bans
Ban on New Investment within the Russian Energy Sector and Authorization to Impose Further Bans. Executive Order 14,066 prohibits new (March 8, 2022 or later) funding by U.S. individuals, wherever situated, within the Russian vitality sector. “New investment” broadly means commitments or contributions of funds or different property for, or loans or different extensions of credit score to, new vitality sector actions occurring in Russia. Executive Order 14,068 authorizes the Secretary of the Treasury to impose extra bans on new funding in any sector of the Russian financial system.
IV. Other
Additional Blocked Parties. On March 3, 11, and 15, 2022, OFAC imposed “blocking” sanctions on extra events, together with Belarusian President Alyaksandr Lukashenka and events described as “Russian elites.” As a consequence, U.S. individuals are usually prohibited from dealing immediately or not directly with the blocked events, entities which are immediately or not directly owned 50% or extra by a number of of such events, and their property or property pursuits. Non-U.S. individuals will be held answerable for “causing” violations by U.S. individuals involving transactions with the blocked events and can be topic to the U.S. secondary sanctions dangers.
Closure of U.S. Air Space to Certain Russian Persons. On March 1, 2022, President Biden introduced closure of U.S. airspace to Russian plane. The subsequent day, the Federal Aviation Administration (the “FAA”) issued an implementation discover that prohibited all Russian air carriers and operators, Russian plane, and plane owned or operated by Russian residents from utilizing U.S. airspace. On March 10, 2022, the FAA revised its earlier discover, narrowing the scope to Russian air carriers and operators, Russian plane, and plane owned by Russian individuals or entities recognized on the International Trade Administration’s consolidated screening listing. This restriction doesn’t apply to sure humanitarian or approved operations and these involving in-flight emergencies.
EU Measures
Since our prior alert, the European Union has launched the next additional sanctions towards Russia and new sanctions towards Belarus:
SWIFT. The European Union prohibited offering specialised monetary messaging providers used to alternate monetary knowledge to sure Russian and Belarusian banks. As a consequence, on March 12, 2022, Belgian-based SWIFT disconnected from the SWIFT community seven Russian banks (Bank Otkritie, Novikombank, Promsvyazbank, Rossiya Bank, Sovcombank, Vnesheconombank, and VTB Bank) and introduced that it’s going to disconnect three Belarusian banks (Belagroprombank, Bank Dabrabyt, and the Development Bank of the Republic of Belarus) on March 20, 2022.[1]
Financial Sanctions. The European Union banned transactions associated to the administration of the Russian Central Bank’s reserves and property. The competent authorities could authorize sure transactions which are strictly crucial to make sure the monetary stability of the European Union as an entire or of the Member State involved.
Further, the European Union launched a ban on investing, taking part or in any other case contributing to future tasks co-financed by the Russian Direct Investment Fund and on promoting, supplying, transferring or exporting euro banknotes to Russia or to any particular person or entity in Russia.
Economic Sanctions. The European Union imposed an extra bundle of financial sanctions together with a ban on (i) all transactions with sure Russian state-owned enterprises, (ii) the supply of credit standing providers to any Russian individual or entity, and (iii) new investments within the Russian vitality sector. In addition, the European Union launched commerce restrictions for iron, metal and luxurious items in addition to additional restrictive measures with regard to the export of maritime navigation items and radio communication know-how to Russia.
Belarus. In response to Belarus’ latest actions within the Ukraine disaster, the European Union adopted extra measures concentrating on the Belarusian monetary sector. These measures embody: (i) the exclusion of the three Belarusian banks from SWIFT, as famous above, (ii) the prohibition of transactions with the Central Bank of Belarus, (iii) the prohibition of the itemizing and provision of providers associated to shares of Belarusian state-owned firms on EU buying and selling venues, (iv) the restriction of economic inflows from Belarus to the European Union, and (v) the prohibition of the availability of euro-denominated banknotes to Belarus.
Individual Sanctions. The European Union has considerably elevated the variety of sanctioned individuals, together with oligarchs, people energetic within the oil, banking and finance sectors, individuals linked to Russia’s protection and industrial base, members of the Russian authorities, alleged propagandists, and individuals concerned in key financial sectors offering a considerable income to the Russian Federation. The restrictive measures embody an asset freeze and a prohibition from making funds obtainable to such individuals. In addition, tighter export restrictions have been imposed on dual-use items destined to particular individuals and on items and know-how which could contribute to Russia’s technological enhancement of its protection and safety sector.
The European Union additionally prolonged the sanctions towards individuals chargeable for undermining or threatening the territorial integrity, sovereignty and independence of Ukraine (see our prior alert) for an extra six months till September 15, 2022.
Other. The European Union made it obligatory for Member States to disclaim permission to land in, take off from, or overfly the territory of, the European Union to any plane operated by Russian air carriers, together with as a advertising service in code-sharing or blocked-space preparations, or to any Russian registered plane, or to any non-Russian-registered plane which is owned or chartered, or in any other case managed by any Russian particular person or entity. This restriction doesn’t apply within the case of an emergency touchdown or an emergency overflight. EU Member States could grant exemptions for touchdown, take-off or overflight that are required for humanitarian functions.
Further, the European Union permitted the suspension of the broadcasting actions within the European Union of the Russian media shops Sputnik and Russia Today.
UK Measures
Since our prior alert, the United Kingdom has continued to tighten sanctions towards Russia, together with by:
- Expanding the listing of sanctioned people by including 386 members of the Russian Parliament and 378 extra people, together with Roman Abramovich, the proprietor of the Chelsea Football Club. The funds and financial sources of designated individuals are required to be frozen instantly by any UK individual in possession or management of them;
- Prohibiting Russian ships to enter UK ports and setting up legislative authority for beforehand introduced measures to ban Russian plane from UK airspace;
- Restricting the supply of economic providers for the aim of international alternate and asset administration to the Russian Central Bank, the Russian National Wealth Fund, the Russian Ministry of Finance, or individuals owned or managed by, or performing on behalf of, or on the route of, these entities;
- Adding to the listing of aviation- and space-related items that are prohibited from export to Russia from the United Kingdom, in addition to banning associated insurance coverage/reinsurance providers; and
- Announcing a ban on the exportation of high-end luxurious items to Russia whereas growing import tariffs on a whole lot of key merchandise.
Possible Further Actions
G7 Measures. On March 11, 2022, leaders of the G7 nations and the European Union resolved to implement additional measures, together with revocation of Russia’s most favored nation standing which might, amongst different issues, elevate tariffs on Russian items.
U.S. Congressional Proposals. In addition, the U.S. Congress is contemplating a number of payments that may impose extra measures, akin to banning U.S. monetary establishments and companies topic to the Bank Secrecy Act from offering any services or products to Russia- or Belarus-based companies, requiring the delisting of Russian and Belarussian firms from U.S. exchanges and indexes, and prohibiting the underwriting and buying and selling of securities of Russia-based firms.
UK Legislative Developments. The UK Parliament is anticipated to enact laws to each (i) “phase out” imports of Russian oil by the tip of 2022, and (ii) create a register of the possession of abroad firms which maintain property within the United Kingdom.
[1] OFAC beforehand designated all the banks – besides Belagroprombank – as Specially Designated Nationals and Blocked Persons.