The U.S. and EU Coordinate Sanctions Related to Navalny Poisoning and Sentencing: Biden Administration’s First Sanctions Against Russia, and the EU’s first use of its Global Human Rights Sanctions Regime

Dechert LLP

Executive Summary

On March 2, 2021, the Biden Administration, in a coordinated announcement by the U.S. Departments of Treasury, State, and Commerce, tightened export restrictions against Russia and imposed sanctions and other measures on certain Russian entities and individuals allegedly involved in the poisoning and subsequent imprisonment of Alexei Navalny, a Russian opposition leader and anti-corruption crusader who recently returned to Russia after being treated for Novichok poisoning in Germany. Earlier in the day, the EU had announced the addition of two of the same individuals identified by the U.S. to its sanctions list, which marked the first time the EU had implemented sanctions under the Human Rights Sanctions Regime which it introduced in early December 2020. The EU had already sanctioned six other individuals and one entity in October 2020 (many of whom were listed in the U.S. action on March 2) over the poisoning using the framework of the EU’s restrictive measures against the proliferation and use of chemical weapons.

The measures did not go as far as Navalny’s anti-corruption FBK organization had requested. However, some of these measures are broad and multifaceted, in particular the U.S. export restrictions.

The key points are:

  1. the Biden Administration is committed to holding Russia accountable for violation of laws and human rights abuses;
  2. the U.S. has returned to multilateral cooperation with its allies on santions;
  3. the UK had already sanctioned most of the individuals covered by the U.S. and EU sanctions under its sanctions regimes to address human rights abuses and chemical weapons issues;
  4. the sanctions were crafted to minimize their collateral impact, while targeting those directly culpable for the use of chemical weapons and the imprisonment of Navalny; and
  5. companies that provide products, software or technologies subject to U.S. export control laws to Russia should assess whether their activities are impacted by the change in licensing policies, removal of certain license exceptions, addition of certain companies to the Entity List, and imposition of a formal arms embargo on Russia.

U.S. Sanctions

The Biden Administration added nine government officials, including the director of the Federal Security Service (FSB), two deputy ministers of defense, the Prosecutor General of Russia and two intelligence officers to the Specially Designated Nationals (SDN) List and added another six companies to the list of Russian defense and intelligence entities (the “Section 231 List”). It did so under various legal authorities, including the U.S. Chemical and Biological Weapons Control and Warfare Elimination Act (CBW Act), Countering America’s Adversaries Through Sanctions Act (CAATSA) and Executive Order 13382 with respect to “Blocking Property of Weapons of Mass Destruction Proliferations and Their Supporters.” Significant transactions with entities on the Section 231 List may lead to the transacting person being subject to certain sanctions.

In accordance with the CBW Act, the State Department also formally determined that the Russian Government had used a chemical weapon and announced the imposition of certain mandatory sanctions, including a prohibition on exports of national security sensitive goods and technology to Russia. The export restrictions are discussed in more detail below. A number of the other sanctions announced had already been imposed in August 2018 following the application of the CBW Act in connection with the alleged use of the same nerve agent Novichok in the United Kingdom against former Russian spy Sergei Skripal and his daughter. The Biden Administration will be required to impose a second round of sanctions on Russia in connection with the alleged poisoning of Mr. Navalny within three months of March 2 unless President Biden certifies to Congress that Russia is no longer using chemical or biological weapons in violation of international law, has committed to ceasing such practices in the future, and is willing to allow inspections by the United Nations or other observers – none of which is likely to happen.

OFAC also issued Cyber-related General License 1B (and amended three related Frequently Asked Questions) authorizing transactions and activities with the FSB that are necessary and ordinarily incident to requesting and receiving certain licenses and authorizations for the importation, distribution, or use of certain products in the Russian Federation. For example, importers have to register certain encryption-capable IT products, and in those activities FSB is acting in its administrative and law enforcement capacities. A similar issue arose in late 2016, when FSB was sanctioned for U.S. election interference, and OFAC authorized limited regulatory activities such as those necessary to import encryption products to Russia. All other transactions with the FSB, remain prohibited unless exempt or otherwise authorized by OFAC.

In terms of the announced CAATSA measures, this is only the third application of the Section 231 sanctions by the U.S. Government, which mandates the imposition of at least five of the 12 sanctions listed in Section 235 of CAATSA against persons who knowingly conduct “significant” transactions with Russia’s defense or intelligence sectors. In December 2020, the U.S. imposed sanctions on the Republic of Turkey’s Presidency of Defense Industries in connection with its purchase in December 2017 of the S-400 surface-to-air missile system from Rosoboronexport (“ROE”), Russia’s primary arms export entity. ROE is identified on the Section 231 List as a person that is part of or operates for or on behalf of, the defense and intelligence sectors of the Government of the Russian Federation, and was designated as an SDN on April 6, 2018. Similar to those sanctions, any person who knowingly engages in a “significant” transaction with any of the six Russian entities sanctioned on March 2 will be subject to mandatory sanctions.

A broad intelligence assessment by the Biden Administration of its sanctions policies and their application to Russia is still ongoing. Further sanctions are still expected in connection with the SolarWinds hack, the “Afghan bounties” allegations and election interference, but we anticipate that all of these will likely be targeted at those culpable and not at the business community generally.

U.S. Export Measures

In addition to the sanctions measures described above, the U.S. Commerce Department’s Bureau of Industry and Security (BIS) announced several new export restrictions under the Export Administration Regulations (EAR) with respect to specific Russian entities and Russia more broadly. BIS added ten Russian entities to the Entity List (in addition to three German entities and one Swiss entity). That means any goods, software or technology subject to the EAR now require a license from BIS for any transaction where one of these entities is acting as a purchaser, recipient or end user. Any such applications generally will be subject to a policy of denial (with certain exceptions).

Apart from the Entity List designations, BIS also revoked the availability of several EAR license exceptions for transactions with Russia, including License Exceptions APR (Additional Permissive Reexports), RPL (Servicing and Replacement of Parts and Equipment), and TSU (Technology and Software – Unrestricted). Finally, the 2018 waiver under the CBW Act for exports and reexports of national security controlled items to commercial end-users in Russia for civil end-uses will be removed. Applications for such exports will now be reviewed under a “presumption of denial” policy.

Some of the 2018 export-related waivers under the CBW Act will continue:

  • export license exceptions: Temporary Imports, Exports, and Reexports (TMP); Governments, International Organizations, and International Inspections under the Chemical Weapons Convention (GOV); Baggage (BAG); Aircraft and Vessels (AVS); and Encryption Commodities and Software (ENC).
  • exports needed to ensure the safe operation of commercial passenger aviation;
  • exports to wholly-owned subsidiaries of U.S. and other foreign companies in Russia;
  • deemed export licenses for Russian nationals working in the United States; and
  • exports in support of government space cooperation.

The Biden Administration also used Russia’s violation of the CBW Act to impose comprehensive restrictions on defense trade with Russia. The State Department’s Directorate of Defense Trade Controls (DDTC), responsible for regulating global trade in U.S. defense article and services, amended the International Traffic in Arms Regulations (ITAR) to add Russia to its section “126.1” list of proscribed countries that are subject to a comprehensive arms embargo. Russia’s addition to this list means that applications to export U.S. defense articles and services to Russia will be subject to a presumption of denial, although DDTC has created a limited carve out for certain transactions relating to government space cooperation (including commercial space launches). The 126.1 list goes beyond the previous policy of denial for ITAR licenses involving Russia – it affirmatively prohibits proposals and presentations to sell defense articles (and defense services) to Russia, even in circumstances where the offer or presentation itself does not contain any defense information. Moreover, any person who knows of a sale or proposed sale to Russia (or any other 126.1 country) has an affirmative obligation to report the sales/proposal to DDTC.

As a result of these changes, companies engaged in activities involving EAR or ITAR-controlled items, services, and technologies – particularly in the defense sector – will need to carefully evaluate their Russian-related sales activities.

EU Sanctions

On March 2, 2021, the Council of the European Union confirmed its decision to impose restrictive measures on four Russian individuals allegedly involved in Navalny’s detention on his return to Russia from Germany in early 2021. The four individuals are now subject to a travel ban and an asset freeze and EU persons (both legal and natural) are forbidden from making funds available to these individuals either directly or indirectly.

The EU implemented these sanctions under its new EU Global Human Rights Sanctions Regime which was established in early December 2020 with the purpose of enabling the EU “to target those responsible for acts such as genocide, crimes against humanity and other serious human rights violations or abuses such as torture, slavery, extrajudicial killings, arbitrary arrests or detentions.” The sanctions against the four Russian individuals allegedly involved in Navalny’s detention in Russia are the first to be implemented under this new regime.

UK Sanctions

Following the end of the Brexit transition period, the UK is no longer bound to implement EU sanctions. The UK was not part of the coordinated announcement by the U.S. and the EU but the UK Foreign Secretary did release the following statement on March 2, 2021: “The UK welcomes EU and US sanctions against those responsible for the poisoning and arbitrary detention of Navalny. We will continue to work closely with international partners to hold Russia to account for failing to uphold their Chemical Weapons and Human rights obligations.”

In any event, the UK has already sanctioned most of those covered by the U.S. and EU sanctions announced on March 2, 2021. Those UK sanctions were introduced in 2020 under its Global Human Rights and Chemical Weapons regimes. It remains to be seen whether the UK will fill in the gaps between its sanctions and those of the U.S. and EU and, in addition, whether this could signal the start of further divergences between the EU, U.S. and UK (the UK’s own regime of Russian sanctions that came into force at the end of the Brexit transition period already demonstrated some divergences with the EU regime).


The key points for the business community and compliance officers are:

  • This is a reminder to check that any restricted parties screening software covers the most up-to-date databases, sanctions lists, and export restrictions lists.
  • Businesses with operations in or connected with Russia should consider the extent to which these sanctions and export restrictions may have an impact, including whether the divergence between the UK, EU and U.S. approach (as matters presently stand) has any impact.
  • Businesses should continue to monitor these issues carefully as the situation is clearly fluid and further sanctions could be announced in the near future.

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.

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