On February 23, 2024, marking the two-year anniversary of Russia’s invasion of Ukraine, the U.S. Departments of Commerce, State, and Treasury announced new U.S. sanctions and export controls targeting Russia. In addition, the U.S. government issued a business advisory regarding “Risks and Considerations for Doing Business in the Russian Federation and Russia-Occupied Territories of Ukraine”.

Blocking Sanctions

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the U.S. Department of State designated over 500 individuals and entities on the Specially Designated Nationals and Blocked Persons List (the SDN List, and persons thereon, SDNs). The latest round of OFAC designations targeted: (i) Russia’s financial infrastructure; (ii) sanctions evasion, circumvention, and backfill; (iii) the Alabuga UAV procurement network; and (iv) Russia’s military-industrial base and certain other sectors of the Russian Federation economy. The Department of State also sanctioned three individuals in connection with the death of opposition politician and anticorruption activist Aleksey Navalny, as well as individuals and entities engaged in sanctions evasion and circumvention, and those bolstering Russia’s future energy and metals and mining production.

Notable designations included:

• National Payment Card System, the state-owned operator of Russia’s Mir National Payment System;
• Samara Metallurgical Plant, Russia’s largest producer of fabricated aluminum;
• Siberian Coal Energy Company (SUEK), one of the world’s largest integrated energy companies;
• TransContainer, an intermodal container operator that manages the largest fleet of containers and flatcars in Russia;
• Several Russia-based banks, investment firms, venture capital funds, and fintech companies; and
• 26 individuals and entities outside Russia in 11 countries, including China, Serbia, the United Arab Emirates, and Liechtenstein, for facilitating, orchestrating, engaging in, and otherwise supporting the transfer of critical technology and equipment to Russia’s military-industrial base.

In a separate action, OFAC designated Sovcomflot, Russia’s state-owned shipping company, and 14 of its crude oil tankers.

As a result of these designations, all property and interests in property of these individuals, entities, and vessels that are in the United States or 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 blocked persons are also blocked. All transactions or dealings by U.S. persons or within (or transiting) the United States, or by non-U.S. persons involving a nexus with the United States, involving blocked persons, or their property or interests in property, are prohibited. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked persons and the receipt of any contribution or provision of funds, goods, or services from any such persons. OFAC also has the authority to impose blocking sanctions on non-U.S. persons for providing material support or assistance to any blocked persons.

Importantly, OFAC issued the following general licenses in connection with the designations announced on February 23:

• Russia-related General License 88A (“Authorizing the Wind Down of Transactions Involving Certain Entities Blocked on February 23, 2024”);
• Russia-related General License 89 (“Authorizing the Wind Down and Rejection of Transactions Involving Certain Financial Institutions Blocked on February 23, 2024”);
• Russia-related General License 90 (“Authorizing Certain Transactions Related to Debt or Equity of, or Derivative Contracts Involving, Certain Entities Blocked on February 23, 2024”);
• Russia-related General License 91A (“Authorizing Limited Safety and Environmental Transactions Involving Certain Blocked Persons or Vessels”);
• Russia-related General License 92 (“Authorizing the Offloading of Cargo from Sovcomflot Vessels”); and
• Russia-related General License 93 (“Authorizing Transactions Involving Certain Sovcomflot Vessels”).

These general licenses authorize activity that would otherwise be prohibited, including the wind down of transactions involving certain newly designated persons, the offloading of crude oil (or other cargo) from the 14 designated Sovcomflot vessels for a period of 45 days, and all transactions involving Sovcomflot-owned vessels not specifically designated on the SDN List.

Entity List Additions

In addition to the sanctions designations, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) added 93 entities to the Entity List for a variety of reasons related to their activities in support of Russia’s defense-industrial sector and war effort. 63 of the entities are based in Russia, eight in China, 16 in Turkey, four in the United Arab Emirates, two in Kyrgyzstan, and one each in India and South Korea.

The Entity List identifies non-U.S. persons “reasonably believed to be involved, or to pose a significant risk of being or becoming involved, in activities contrary to the national security or foreign policy interests of the United States.” Companies, both U.S. and non-U.S., may not, without prior authorization from BIS, export, reexport, or transfer (in‑country) certain technology, commodities, and software subject to the Export Administration Regulations to listed persons. BIS also considers transactions of any nature with listed persons to carry a “red flag” and recommends that companies proceed with caution when engaging in such transactions.

Business Advisory

Lastly, the U.S. Departments of State, Treasury, Commerce, and Labor issued a business advisory entitled “Risks and Considerations for Doing Business in the Russian Federation and Russia-Occupied Territories of Ukraine”. The advisory highlights the serious legal, financial, and reputational risks of doing business in Russia and the Russia-occupied territories of Ukraine.

Among other things, the advisory states that: “Businesses increasingly risk severe civil and criminal penalties in navigating the raft of economic sanctions, export controls, and import restrictions imposed on Russia by the United States and its allies and partners. In addition, businesses are being forced to cooperate in Russia’s military mobilization and could be implicated in Russia’s commission of war crimes and crimes against humanity as part of Russia’s brutal war against Ukraine. The serious risks stemming from this operating environment may be mitigated by rigorous due diligence, though substantial risk is likely to remain.”

Key Takeaways

Following these actions, the U.S. Departments of the Treasury and State have, since February 2022, designated over 4,000 individuals and entities pursuant to Russia-related sanctions authorities and BIS has added more than 900 parties to the Entity List. This signals that the United States will continue to use its sanctions and export controls authorities to target Russia and those supporting it. However, the latest actions were more limited than some were expecting. In particular, the U.S. government did not impose any new restrictions on goods or services or expand the scope of U.S. sanctions and export controls targeting Russia more broadly.