SANCTIONS IMPOSED ON RUSSIA BY THE UNITED STATES.
U.S. Government sanctions against Russia are imposed through various Executive Orders, issued directly by the President of the United States, and Laws.
These regulations establish restrictions on certain economic transactions and on certain persons expressly listed, as well as some of their assets.
1. SUBJECTIVE SCOPE OF US SANCTIONS: WHICH PERSONS OR ENTITIES ARE BOUND BY THEM?
Sanctions imposed by the United States directly bind both US Persons and, indirectly, natural and legal persons who are nationals of third States and not US Persons.
In this sense, they following are considered US Persons:
a) Any natural person with U.S. nationality.
b) Foreigners residing in the U.S.
c) Any person who is in the U.S.
d) Legal persons constituted under the laws of the United States or its States, including foreign subsidiaries. This includes legal persons of foreign nationality who are subsidiaries of U.S. companies and who meet one of the following criteria:
a) More than 50% of its capital is owned by the U.S. company;
b) The U.S. company has a majority on its board of directors;
c) The U.S. company manages the operations of the foreign subsidiary.
2. OBJECTIVE SCOPE: WHICH TRANSACTIONS ARE PROHIBITED BY U.S. SANCTIONS?
i. Executive Order 13660, of March 6, 2014:
Blocks the assets of certain persons contributing to the situation in Ukraine:
‘…All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person (including any foreign branch) of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:
(i) to be responsible for or complicit in, or to have engaged in, directly or indirectly, any of the following: (A) actions or policies that undermine democratic processes or institutions in Ukraine; (B) actions or policies that threaten the peace, security, stability, sovereignty, or territorial integrity of Ukraine; or (C) misappropriation of state assets of Ukraine or of an economically significant entity in Ukraine;
(ii) to have asserted governmental authority over any part or region of Ukraine without the authorization of the Government of Ukraine;
(iii) to be a leader of an entity that has, or whose members have, engaged in any activity described in subsection (a)(i) or (a)(ii) of this section or of an entity whose property and interests in property are blocked pursuant to this order; (iv) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any activity described in subsection (a)(i) or (a)(ii) of this section or any person whose property and interests in property are blocked pursuant to this order; or
(iv) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any activity described in subsection (a)(i) or (a)(ii) of this section or any person whose property and interests in property are blocked pursuant to this order; or
(v) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this order..`
ii. Executive Order 13661, of March 17, 2014:
Freezes the assets of other persons that contribute to the situation in Ukraine and expands the previous Executive Order 13660:
‘… (i) the persons listed in the Annex to this order; and
(ii) persons determined by the Secretary of the Treasury, in consultation with the Secretary of State:
(A) to be an official of the Government of the Russian Federation;
(B) to operate in the arms or related materiel sector in the Russian Federation;
(C) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly:
(1) a senior official of the Government of the Russian Federation; or
(2) a person whose property and interests in property are blocked pursuant to this order; or
(D) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of:
(1) a senior official of the Government of the Russian Federation; or
(2) a person whose property and interests in property are blocked pursuant to this order..’
iii. Executive Order 13662, of March 20, 2014:
Another freezing of assets belonging to other persons contributing to the situation in Ukraine. Expands previous Executives Orders 13660 and 13661:
‘ (…) any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:
(i) to operate in such sectors of the Russian Federation economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State, such as financial services, energy, metals and mining, engineering, and defense and related materiel;
(ii) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person whose property and interests in property are blocked pursuant to this order; or
(iii) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this order. ’
iv. Executive Order 13685, of December 19, 2014:
Deals with the blocking of assets of certain persons and the prohibition of certain transactions in relation to the Crimea region:
‘Section 1. (a) The following are prohibited:
(i) new investment in the Crimea region of Ukraine by a United States person, wherever located;
(ii) the importation into the United States, directly or indirectly, of any goods, services, or technology from the Crimea region of Ukraine;
(iii) the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of any goods, services, or technology to the Crimea region of Ukraine; and
(iv) any approval, financing, facilitation, or guarantee by a United States person, wherever located, of a transaction by a foreign person where the transaction by that foreign person would be prohibited by this section if performed by a United States person or within the United States.
Section 2. (a) All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person (including any foreign branch) of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:
(i) to operate in the Crimea region of Ukraine;
(ii) to be a leader of an entity operating in the Crimea region of Ukraine; (iii) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this order; or
(iii) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this order; or
(iv) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person whose property and interests in property are blocked pursuant to this order.’
5. Chemical and Biological Weapons Control and Elimination Act of 1991: new sanctions of August 27, 2018.
Following the poisoning of Sergey Skripal and his daughter Yulia Skripal, new sanctions were imposed on exports of dual-use goods for national security reasons.
On 24 August 2018, the United States State Department notified Russia of these new sanctions under the Chemical and Biological Weapons Control and War Elimination Act of 1991 (the “CBW Act”).
Thus, on August 27, 2018, a ban was imposed on arms sales to Russia and financing to Russia for the acquisition of arms, the denial to Russia of U.S. government credit and other financial aid, a ban on exports of ‘sensitive’ goods to national security and most foreign aid to Russia, all under the terms of the CBW Act.
Specifically, these sanctions provide as follows:
- Foreign Assistance: Termination of assistance to Russia under the Foreign Assistance Act of 1961, except for urgent humanitarian assistance and food or other agricultural commodities or products. The Department of State has determined that it is essential to the national security interests of the United States to waive the application of this restriction.
- Arms Sales: Termination of (a) sales to Russia under the Arms Export Control Act of any defense articles, defense services, or design and construction services, and (b) licenses for the export to Russia of any item on the United States Munitions List. The Department of State has determined that it is essential to the national security interests of the United States to waive the application of this sanction with respect to the issuance of licenses in support of government space cooperation and commercial space launches, provided that such licenses shall be issued on a case-by-case basis and consistent with export licensing policy for Russia prior to the enactment of these sanctions.
- Arms Sales Financing: Termination of all foreign military financing for Russia under the Arms Export Control Act.
- Denial of United States Government Credit or Other Financial Assistance: Denial to Russia of any credit, credit guarantees, or other financial assistance by any department, agency, or instrumentality of the United States Government, including the Export-Import Bank of the United States.
- Exports of National Security-Sensitive Goods and Technology: Prohibition on the export to Russia of any goods or technology on that part of the control list established under Section 2404(c)(1) of the Appendix to Title 50.
The Department of State has determined that it is essential to the national security interests of the United States to waive the application of this sanction with respect to the following:
LICENSE EXCEPTIONS: Exports and reexports of goods or technology eligible under License Exceptions GOV, ENC, RPL, BAG, TMP, TSU, APR, CIV, and AVS.
SAFETY OF FLIGHT: Exports and reexports of goods or technology pursuant to new licenses necessary for the safety of flight of civil fixed-wing passenger aviation, provided that such licenses shall be issued on a case-by-case basis, consistent with export licensing policy for Russia prior to enactment of these sanctions.
DEEMED EXPORTS/REEXPORTS: Exports and re-exports of goods or technology pursuant to new licenses for deemed exports and reexports to Russian nationals, provided that such licenses shall be issued on a case-by-case basis, consistent with export licensing policy for Russia prior to enactment of these sanctions.
WHOLLY-OWNED U.S. SUBSIDIARIES: Exports and reexports of goods or technology pursuant to new licenses for exports and reexports to wholly-owned U.S. subsidiaries in Russia, provided that such licenses shall be issued on a case-by-case basis, consistent with export licensing policy for Russia prior to enactment of these sanctions.
SPACE FLIGHT: Exports and reexports of goods or technology pursuant to new licenses in support of government space cooperation and commercial space launches, provided that such licenses shall be issued on a case-by-case basis, consistent with export licensing policy for Russia prior to enactment of these sanctions.
COMMERCIAL END-USERS: Exports and reexports of goods or technology pursuant to new licenses for commercial end-users civil end-uses in Russia, provided that such licenses shall be issued on a case-by-case basis, consistent with export licensing policy for Russia prior to enactment of these sanctions.
SOEs/SFEs: Exports and reexports of goods or technology pursuant to new licenses for Russian state-owned or state-funded enterprises will be reviewed on a case-bycase basis, subject to a “presumption of denial” policy.’
vi. Executive Order 13849, of September 20, 2018:
Authorizes the implementation of certain sanctions set forth in the Countering America’s Adversaries Through Sanctions Act:
‘Section 1. (…)
(i) prohibit any United States financial institution from making loans or providing credits to the sanctioned person totaling more than $10,000,000 in any 12-month period, unless the person is engaged in activities to relieve human suffering and the loans or credits are provided for such activities;
(ii) prohibit any transactions in foreign exchange that are subject to the jurisdiction of the United States and in which the sanctioned person has any interest;
(iii) prohibit any transfers of credit or payments between financial institutions, or by, through, or to any financial institution, to the extent that such transfers or payments are subject to the jurisdiction of the United States and involve any interest of the sanctioned person;
(iv) block all property and interests in property of the sanctioned person that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person, and provide that such property and interests in property may not be transferred, paid, exported, withdrawn, or otherwise dealt in;
(v) prohibit any United States person from investing in or purchasing significant amounts of equity or debt instruments of the sanctioned person; or
(vi) impose on the principal executive officer or officers of the sanctioned person, or on persons performing similar functions and with similar authorities as such officer or officers, the sanctions described in subsections (a)(i)–(a)(v) of this section, as selected by the President, the Secretary of State, or the Secretary of the Treasury. (b) The prohibitions in subsection (a)(iv) of this section include: (i) the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any sanctioned person whose property and interests in property are blocked pursuant to this order; and (ii) the receipt of any contribution or provision of funds, goods, or services from any such sanctioned person.
Section 2. (…)
(i) The Export-Import Bank shall deny approval of the issuance of any guarantee, insurance, extension of credit, or participation in an extension of credit in connection with the export of any goods or services to the sanctioned person;
(ii) Departments and agencies shall not issue any specific license or grant any other specific permission or authority under any statute that requires the prior review or approval of the United States Government as a condition for the export or reexport of goods or technology to the sanctioned person;
(iii) The United States executive director of each international financial institution shall use the voice and vote of the United States to oppose any loan from the international financial institution that would benefit the sanctioned person;
(iv) With respect to a sanctioned person that is a financial institution: the Board of Governors of the Federal Reserve System and the Federal Reserve Bank of New York shall not designate, or permit the continuation of any prior designation of, the sanctioned person as a primary dealer in United States Government debt instruments; and departments and agencies shall prevent the sanctioned person from serving as an agent of the United States Government or serving as a repository for United States Government funds;
(v) Departments and agencies shall not procure, or enter into a contract for the procurement of, any goods or services from the sanctioned person;
(vi) The Secretary of State shall deny a visa to, and the Secretary of Homeland Security shall exclude from the United States, any alien that the President, the Secretary of State, or the Secretary of the Treasury determines is a corporate officer or principal of, or a shareholder with a controlling interest in, the sanctioned person by treating the person as covered by section 1 of Proclamation 8693 of July 24, 2011 (Suspension of Entry of Aliens Subject to United Nations Security Council Travel Bans and International Emergency Economic Powers Act Sanctions); or
(vii) The heads of the relevant departments and agencies, as appropriate, shall impose on the principal executive officer or officers of the sanctioned person, or on persons performing similar functions and with similar authorities as such officer or officers, the sanctions described in subsections (a)(i)–(a)(vi) of this section, as selected by the President, the Secretary of State, or the Secretary of the Treasury.
Section 3. (…)
(i) block all property and interests in property of the sanctioned person that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person, and provide that such property and interests in property may not be transferred, paid, exported, withdrawn, or otherwise dealt in;
(ii) prohibit any transfers of credit or payments between financial institutions, or by, through, or to any financial institution, to the extent that such transfers or payments are subject to the jurisdiction of the United States and involve any interest of the sanctioned person;
(iii) prohibit any United States person from transacting in, providing financing for, or otherwise dealing in certain debt or equity of the sanctioned person, in accordance with section 4(c)(7) of UFSA; or
(iv) impose on the principal executive officer or officers of the sanctioned person, or on persons performing similar functions and with similar authorities as such officer or officers, the sanctions described in subsections (a)(i)–(a)(iii) of this section, as selected by the President, the Secretary of State, or the Secretary of the Treasury. (b) The prohibitions in subsection (a)(i) of this section include:
- the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any sanctioned person whose property and interests in property are blocked pursuant to this order; and
- (ii) the receipt of any contribution or provision of funds, goods, or services from any such sanctioned person.
Section 4. (…)
(i) The Export-Import Bank shall deny approval of the issuance of any guarantee, insurance, extension of credit, or participation in an extension of credit in connection with the export of any goods or services to the sanctioned person;
(ii) Departments and agencies shall not procure, or enter into a contract for the procurement of, any goods or services from the sanctioned person;
(iii) Departments and agencies shall prohibit the exportation, or provision by sale, lease or loan, grant, or other means, directly or indirectly, of any defense article or defense service to the sanctioned person and shall not issue any license or other approval to the sanctioned person under section 38 of the Arms Export Control Act (22 U.S.C. 2778);
(iv) Departments and agencies shall not issue any license, and shall suspend any license, for the transfer to the sanctioned person of any item the export of which is controlled under the Export Control Reform Act of 2018 (subtitle B of title XVII of Public Law 115–232), or the Export Administration Regulations under subchapter C of chapter VII of title 15, Code of Federal Regulations;
(v) The Secretary of State shall deny a visa to, and the Secretary of Homeland Security shall exclude from the United States, the sanctioned person by treating the person as covered by section 1 of Proclamation 8693; or
(vi) The heads of the relevant departments and agencies, as appropriate, shall impose on the principal executive officer or officers of the sanctioned person, or on persons performing similar functions and with similar authorities as such officer or officers, the sanctions described in subsections (a)(i)–(a)(v) of this section, as selected by the President, the Secretary of State, or the Secretary of the Treasury. ’
vii. Executive Order 13883, of August 3, 2019:
Administers sanctions against ‘proliferation’ and modification of Executive Order 12851:
‘Section 1. (a) When the President, or the Secretary of State pursuant to authority delegated by the President and in accordance with the terms of such delegation, pursuant to section 307(b)(1) of the CBW Act, selects for imposition on a country one or more of the sanctions set forth below and in section 307(b)(2) of that Act, the Secretary of the Treasury, in consultation with the Secretary of State, shall take the following actions, when necessary, to implement such sanctions:
(i) oppose, in accordance with section 701 of the International Financial Institutions Act (22 U.S.C. 262d), the extension of any loan or financial or technical assistance to that country by international financial institutions; and
(ii) prohibit any United States bank from making any loan or providing any credit to the government of that country, except for loans or credits for the purpose of purchasing food or other agricultural commodities or products.
(b) The prohibition in subsection (a)(ii) of this section applies except to the extent provided by statutes, or in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted prior to the date of this order.
Section 2. (a) Any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate the prohibition set forth in section 1(a)(ii) of this order is prohibited.
(b) Any conspiracy formed to violate the prohibition set forth in section 1(a)(ii) of this order is prohibited.
Section 3. Subsection (b) of section 1 of Executive Order 12851 of June 11, 1993 (Administration of Proliferation Sanctions, Middle East Arms Control, and Related Congressional Reporting Responsibilities), is amended by adding the following new paragraph 4 after paragraph 3: ‘‘(4) The authorities and duties vested in me to oppose certain multilateral development bank assistance and to prohibit certain bank loans as provided in section 307(b)(2)(A)–(B), pursuant to a determination made by the Secretary of State under section 307(b)(1), are delegated to the Secretary of the Treasury.’’
viii. Chemical and Biological Weapons Control and Elimination Act of 1991: second round of new sanctions (August 2, 2019).
On August 2, 2019, the United States announced the second round of sanctions required by the Chemical and Biological Weapons Control and War Elimination Act of 1991 (the “CBW Act”) after determining that on November 6, 2018, Russia had not provided reliable assurances that it would not participate in future chemical weapons attacks.
The sanctions are as follows:
‘1. Multilateral Development Bank Assistance: The United States Government shall oppose, in accordance with Section 701 of the International Financial Institutions Act (22 U.S.C. 262d), the extension of any loan or financial or technical assistance to Russia by international financial institutions.
- Bank Loans: The United States Government shall prohibit any United States bank from making any loan or providing any credit to the government of Russia, except for loans or credits for the purpose of purchasing food or other agricultural commodities or products.
The Secretary of State has determined that it is essential to the national security interests of the United States to waive the application of this sanction in all respects, except that the authority of Executive Order 13883 shall be used by the Department of Treasury to prohibit United States banks from (1) participating in the primary market for non-ruble denominated bonds issued by the Russian sovereign issued after the enactment of these sanctions; and (2) providing non-ruble denominated loans to the Russian sovereign after the enactment of these sanctions, in both cases as further described in a Federal Register Notice issued by the Department of Treasury and implemented through the Directive and guidance published on the Office of Foreign Assets Control’s website (http://www.treasury.gov/resource-center/sanctions/Programs/Documents/20190803_cbw_directive.pdf).
- Further Export Restrictions: The authorities of section 6 of the Export Administration Act of 1979 shall be used to prohibit exports to Russia of all other goods and technology (excluding food and other agricultural commodities and products). The Secretary of State has determined that it is essential to the national security interests of the United States to waive the application of this sanction with respect to the following:
CBW: Exports and reexports of goods or technology controlled for reason CB (Chemical and Biological Weapons) pursuant to new licenses for Russian state-owned or state-funded enterprises provided that such licenses will be issued on a case-by-case basis, subject to a “presumption of denial” policy.
Other Reasons for Control: Exports and reexports of goods or technology controlled for AT (Anti-Terrorism), CC (Crime Control), FC (Firearms Convention), MT (Missile Technology), NP (Nuclear Nonproliferation), and RS (Regional Stability), pursuant to new licenses, provided that such licenses will be issued on a case-by-case basis, consistent with export licensing policy for Russia prior to enactment of these sanctions. For information on exports or reexports of goods or technology controlled for NS (National Security), see the notices at 83 FR 43723 and 83 FR 47390.
License Exceptions: Exports and reexports of goods or technology eligible under License Exceptions GOV, ENC, RPL, BAG, TMP, TSU, APR, CIV, and AVS.
Safety of Flight: Exports and reexports of goods or technology pursuant to new licenses necessary for the safety of flight of civil fixed-wing passenger aviation, provided that such licenses shall be issued on a case-by-case basis, consistent with export licensing policy for Russia prior to enactment of these sanctions.
Deemed Exports/Reexports: Exports and re-exports of goods or technology pursuant to new licenses for deemed exports and reexports to Russian nationals, provided that such licenses shall be issued on a case-by-case basis, consistent with export licensing policy for Russia prior to enactment of these sanctions.
Wholly-Owned U.S. and Other Foreign Subsidiaries: Exports and reexports of goods or technology pursuant to new licenses for exports and reexports to wholly-owned U.S. and other foreign subsidiaries in Russia, provided that such licenses shall be issued on a case-by-case basis, consistent with export licensing policy for Russia prior to enactment of these sanctions.
Space Flight: Exports and reexports of goods or technology pursuant to new licenses in support of government space cooperation and commercial space launches, provided that such licenses shall be issued on a case-by-case basis, consistent with export licensing policy for Russia prior to enactment of these sanctions.
Commercial End-Users: Exports and reexports of goods or technology pursuant to new licenses for commercial end-users civil end-uses in Russia, provided that such licenses shall be issued on a case-by-case basis, consistent with export licensing policy for Russia prior to enactment of these sanctions.’
