Latest Round of US and EU sanctions on Russia and the Russian Government Reaction

by Dechert LLP
Contact

In response to recent events in Ukraine, the United States and European Union imposed yet another round of sanctions this week. In response, Russia is considering a number of countermeasures that may affect U.S. and EU companies operating in Russia. The new measures are introduced after the perceived failure of the 17 April pact in Geneva to deescalate the situation in Ukraine. Below we discuss the specific sanctions imposed by the U.S., EU and Russia and highlight screening solutions that companies should implement as part of a broader compliance program. 

United States
The United States, acting pursuant to previous executive orders, designated additional Russian individuals and entities and has implemented a new policy with regard to export licenses on high technology items and services that may have military application. The United States strategy remains one of gradual ratcheting of pressure against Russia and notably did not include any sector-wide economic sanctions.

Additional Designations
The U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) designated seven Russian officials and seventeen Russian companies on the List of Specially Designated Nationals and Blocked Persons (SDN List) pursuant to previous Executive Orders. Two key individuals designated include Igor Sechin, President and Chairman of Rosneft, the giant state-owned oil company, and Sergey Chemezov, head of Rostec, a large holding company for military and industrial assets. Despite the designation of Sechin and Chemezov, neither Rosneft nor Rostec were sanctioned. All of the Russian companies designated are or are related to entities owned or controlled by individuals sanctioned previously—Arkady and Boris Rotenberg, Gennadi Timchenko, and Yuri Kovalchuk. The entities include a handful of financial institutions, but none of them is considered major. In sum, the U.S. has now designated 46 individuals and 18 companies since the crisis in Ukraine started. The new designations are in keeping with the gradual approach of U.S. economic sanctions against Russia, and include certain additional Russian individuals that were not targeted previously.

New Export Policy for High Technology Items
In conjunction with the additional sanctions, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) announced a new export policy expanding export restrictions on items subject to the Export Administration Regulations (EAR) and adding 13 Russian companies to the Entity List, which imposes additional export licensing restrictions on transactions involving such listed parties. BIS also announced that it would deny any pending applications for licenses to export or re-export any “high technology item” subject to the EAR to Russia or Crimea that contributes to Russia's military capabilities. While BIS has not publicly provided any information regarding what items are considered to be “high technology items” subject to the new policy of denial, we understand that certain microelectronics, at a minimum, are within scope. In addition, BIS announced that it would take actions to revoke any existing export licenses which meet these conditions. All other pending applications and existing licenses are expected to receive a case-by-case evaluation to determine, among other factors, their contribution to Russia's military capabilities.

Similarly, the U.S. Department of State’s Directorate of Defense Trade Controls (DDTC) announced a new export policy stating that it will deny all pending applications for the export or re-export of any high technology defense articles or services subject to the International Traffic in Arms Regulations (ITAR) to Russia or occupied Crimea that contribute to Russia’s military capabilities. DDTC, like BIS, is taking action to revoke any existing licenses which meet these conditions and will review all other pending applications and existing licenses on a case-by-case basis to determine, among other factors, their contribution to Russia’s military capabilities.

European Union
On 28 April, the Council of the European Union acting pursuant to Council Regulation (EU) No 269/2014 of 17 March 2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine, designated 15 additional Russian officials. The extension of the EU’s sanctions list includes Deputy Prime Minister Dmitry Nikolayevich Kozak, the Deputy Chairman of the Duma (the lower house of Russia's parliament) Ludmila Ivanovna Shvetsova and Valery Vasilevich Gerasimov, Chief of Staff of Russia's armed forces. Council Implementing Regulation (EU) No 433/2014 was published in the Official Journal of the European Union on 28 April and entered into force on 29 April.

The implementation of additional EU measures, extending those persons subject to EU economic sanctions and travel bans, increases the number of individuals subject to EU measures to 48. As yet, the EU has not implemented any additional sector specific restrictions or prohibitions. However, should the current situation escalate, the EU is advanced in its consideration of potentially wide-ranging economic sanctions against certain sectors of the Russian economy, including the financial and energy sectors. Nor has the EU designated any Russian entities (state-owned or otherwise). However, under the existing EU measures any entity which is owned or controlled by any of the listed Russian individuals may also be deemed to be subject to the EU’s asset-freezing provisions. Any such assessment would be considered on a “case-by-case” basis by individual EU member states’ relevant competent authorities. As such, appropriate due diligence should be carried out to ensure that any potential transaction with any Russian (or wider) entity does not indirectly lead to an economic benefit accruing to those individuals designated under the EU measures.

The funds or wider assets of an individual subject to the EU measures which are either held in the European Union or held by any EU incorporated entity outside of the EU must be “frozen” (i.e. they cannot be dealt with in any way unless licensed). In addition, EU entities and EU nationals wherever they are located are prohibited from making any funds or assets available to or for the benefit of designated persons.

The additional EU designations follow on from wider EU trade measures aimed at restricting sensitive equipment, including military and high-tech dual use goods and technology or equipment which might be used for internal repression, for transfer either directly or indirectly from the EU to Russia. EU member states’ export control authorities are currently reviewing all outstanding export license applications and existing export licenses for the transfer of controlled goods and technology to Russia, as well as those for the transfer to and incorporation in wider third country destinations for eventual Russian end use. The impact on those companies currently exporting controlled goods and technology either directly or indirectly to Russia is likely to include the suspension of existing export authorisations and considerable delays in any outstanding export license applications.

Russian Federation
Russia has been considering countermeasures against U.S. and EU sanctions. To date, these measures, such as visa bans on public officials, have been targeted only at U.S. and Canadian public officials and do not currently include any EU public officials. Russia also has not yet targeted officials of other countries (such as Australia or Japan) that have imposed various degrees of sanctions against Russia. No law or draft law has been announced or adopted in Russia specifically targeting foreign businesses and President Putin has indicated that he is generally against imposing countersanctions at this stage, although members of his government have brought such proposals to him. In response to the EU’s designation of 15 Russian officials, the Russian Ministry of Foreign Affairs expressed its deep “disappointment” with the EU’s actions, stating that instead of following the U.S. lead on sanctions, the EU should have acted to cause the authorities in Kiev to negotiate with representatives of Ukraine’s eastern regions.

In a separate development, last week, in response to the previous designation of Bank Rossiya by the United States on the SDN List, the Russian Federation assigned to Bank Rossiya the right to process payments made on the Russian wholesale electricity market, which should enable the bank to earn more than $100 million per year from commissions. The move raises potential issues regarding compliance with U.S. sanctions laws for any U.S. person that acquires electricity in Russia. The U.S. Government’s views on whether this action may cause a problem for U.S. persons directly or indirectly transacting with Bank Rossiya as a result of wholesale or retail purchases of electricity in Russia remains under review by the State Department and OFAC.

Recommended Compliance Measures
In order to comply with the new U.S. and EU measures, we recommend that companies:

  • Assess exposure to certain sectors of the Russian economy in particular, including but not limited to financial services and energy
  • Assess whether they engage in exports of high technology items to Russia or Crimea that may be covered by revised U.S./EU export policies
  • Check that their current screening procedures or those provided by any third party service provider are immediately updated to include the additional designations
  • Screen all parties to contemplated transactions involving Russians or Ukrainians for connections to designated individuals or entities
  • Assess the risk that they currently maintain any accounts or hold any funds (including shares, derivative products or debt instruments) or economic resources for or on behalf of a designated person
  • Consider whether they are currently engaged in any commercial activity with any entity which may be “owned or controlled” by any designated person and undertake an immediate assessment as to whether such activity should be suspended
  • Immediately freeze any such accounts, and other funds or assets held for or on behalf of any designated person
  • Refrain from dealing with the funds or assets held for or on behalf of any designated person
  • Prevent the making available of any funds or assets to such persons unless licensed by a relevant competent U.S./EU authority
  • Report any relevant findings to the appropriate U.S./EU competent authority, if necessary

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Dechert LLP | Attorney Advertising

Written by:

Dechert LLP
Contact
more
less

Dechert LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.