Sanctions database

*** The US Department of Commerce’s Bureau of Industry and Security (“BIS”) issued a final rule updating the scope of License Exceptions Authorized Cybersecurity Exports (“ACE”) and Encryption Commodities, Software, and Technology (“ENC”) related to cybersecurity items in response to public comments on the interim final rule related to cybersecurity items published on October 21, 2021. The interim final rule established a new control on certain cybersecurity items for National Security (NS) and Anti-terrorism (AT) reasons and created License Exception ACE in Section 740.22 of the Export Administration Regulations (“EAR”), which authorizes exports of identified cybersecurity items to most destinations except in certain circumstances. These items warrant controls because these tools could be used for surveillance, espionage, or other actions that disrupt, deny or degrade the network or devices on it. The Final Rule makes the following revisions to the EAR, as follows: - An illustrative list of “Government end users” was added to License Exception ACE, which includes (i) international government organizations, (ii) government-operated research institutions, (iii) “more-sensitive government end users,” (iv) “less-sensitive government end users” (as both of these terms are already defined in Section 772.1 of the EAR), and (v) utilities, transportation hubs and services, and retail or wholesale firms wholly or partially operated or owned by a government or governmental authority. “Partially operated or owned by a government or governmental authority” means that a foreign government owns or controls, directly or indirectly, 25 % or more of the voting securities of the foreign entity or a foreign government or governmental authority has the authority to appoint a majority of board members of the foreign entity. - In respect of exports of “digital artifacts” (related to a cybersecurity incident involving information systems owned or operated “government end user”) to “government end users” in Country Group D, License Exception ACE has been narrowed to only allow for such exports to police or judicial bodies in Country Group D countries that are also listed in Country Group A:6 and only for purposes of criminal or civil investigations or prosecutions of such cybersecurity incidents. - A new end use restriction was added to License Exception ENC in Section 740.17(f) of the EAR such that ENC is not authorized for the following items if an exporter “knows” or has “reason to know” that the following items will be used to affect the confidentiality, integrity, or availability of information or information systems, without authorization of the owner, operator, or administrator of the information system: “Cryptanalytic items,” classified in ECCNs 5A004.a, 5D002.a.3.a or c.3.a, or 5E002; Network penetration tools described in Section 740.17(b)(2)(i)(F) of the EAR, and ECCN 5E002 technology therefor; Automated network vulnerability analysis and response tools described in Section 740.17(b)(3)(iii)(A) of the EAR, and ECCN 5E002 technology therefor. BIS considered this change necessary to prevent evasion of one of the end-use restrictions in License Exception ACE, i.e., by adding cryptographic or cryptanalytic functionality to a cybersecurity item and exporting, reexporting, or transferring (in-country) the resulting item under License Exception ENC. Link to the original

BIS removed one Aeroflot, two Royal Flight, and one Utair aircraft from the list of aircraft that have flown into Russia and/or Belarus in apparent violation of the EAR. Link to the original

OFAC issued a Determination pursuant to E.O. 14068 of March 11, 2022 (“Prohibiting Certain Imports, Exports, and New Investment With Respect to Continued Russian Federation Aggression”) prohibiting import of gold of Russian origin. Russian-origin gold includes gold produced, manufactured, extracted, or processed in Russia but not gold that has been incorporated or substantially transformed into a foreign-made product (FAQ 1019). Link to the original

Pursuant to the Suspending Normal Trade Relations with Russia and Belarus Act, U.S. President on 27 June announced a significant increase in ad valorem tariff rates (35 %), effective on July 27, 2022, on more than 570 categories of Russian-origin goods, covering a wide range of steel, aluminum, minerals, ores, metals, chemicals, arms and ammunition, wood and paper products, aircraft and parts, and automotive parts. Higher tariff rate will be implemented on Russian products worth approximately $2.3 bn. Products of Russia that are subject to the increased tariffs and classified in one of the categories of Russian-origin goods will also continue to be subject to antidumping, countervailing, or other duties, fees, exactions, and charges that apply to such products. Link to the original

*** OFAC, in consultation with the State Department, issued a determination pursuant to E.O. 14024 that authorizes the imposition of economic sanctions against any individual or entity that operate or have operated in the quantum computing sector of Russian economy. This action builds on previous determinations providing for sanctions against those that operate or have operated in the accounting, trust and corporate formation, management consulting, aerospace, marine, electronics, financial services, technology, and defense and related materiel sectors of Russian economy.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 of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: (a) the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to this order; and (b) the receipt of any contribution or provision of funds, goods, or services from any such person. FAQ 1085 clarifies that the Determination Pursuant to Section 1(a)(i) of EO 14024 authorizes the imposition of economic sanctions against persons that operate or have operated in the quantum computing sector of the Russian Federation economy and that not all persons operating in the quantum computing sector are sanctioned by OFAC. A determination exposes persons that operate or have operated in an identified sector to sanctions risk; however, a sector determination does not automatically impose sanctions on all persons who operate or have operated in the sector. Only persons determined, pursuant to EO 14024, by the Secretary of the Treasury in consultation with the Secretary of State, or by the Secretary of State in consultation with the Secretary of the Treasury, or their delegates, to operate or have operated in the above-identified sectors are subject to sanctions. FAQ 1086 states that OFAC interprets the term “quantum computing sector of the Russian Federation economy” to include activities related to products and services in or involving the Russian Federation in research, development, manufacturing, assembling, maintenance, repair, sale, or supply of quantum computing, quantum computers, electronic assemblies thereof, or cryogenic refrigeration systems related to quantum computing. OFAC also interprets the term “quantum computing sector of the Russian Federation economy” to include any of the following services when related to quantum computing: “infrastructure, web hosting or data processing services; custom computer programming services; computer systems integration design services; computer systems and data processing facilities management services; computing infrastructure, data processing services, web hosting services, and related services; repairing computer, computer peripherals, and communication equipment; other computer-related services; as well as the exportation, reexportation, sale, or supply, directly or indirectly, of quantum computing, quantum computers, electronic assemblies thereof, or cryogenic refrigeration systems related to quantum computing to or from the Russian Federation.” Link to the original

A new visa restriction policy under Section 212(a)(3)(C) of the Immigration and Nationality Act that applies to Russia-backed or Russia-installed purported authorities who are believed to have been involved in human rights abuses, violations of international humanitarian law, or public corruption in Ukraine, including in the so-called “Donetsk People’s Republic” or “Luhansk People’s Republic.” Family members of those who fall under the policy will also be ineligible for visas. Link to the original

A new visa restriction policy under Section 212(a)(3)(C) of the Immigration and Nationality Act that applies to Russia-backed or Russia-installed purported authorities who are believed to have been involved in human rights abuses, violations of international humanitarian law, or public corruption in Ukraine, including in the so-called “Donetsk People’s Republic” or “Luhansk People’s Republic.” Family members of those who fall under the policy will also be ineligible for visas. Link to the original

BIS issued the “Russia Industry Sector Sanctions Expansion” rule expanding the Russian industry sector sanctions to cover additional items subject to the Export Administration Regulations (the “EAR”) beyond restrictions targeting the Russian energy sector. The final rule imposes a U.S. license requirement on exports, reexports, and transfers of hundreds of items with industrial and commercial applications. Under the Russia industry sector sanctions, all items identified in Supplement No. 4 to part 746 of the EAR that are subject to the EAR trigger a licensing requirement when they are exported, reexported, or transferred (in-country) to or within Russia. The items in Supplement No. 4 are classified as EAR99 and would not otherwise require authorization for export, reexport, or transfer to or within Russia. Covered list of goods include industrial equipment and materials that are widely used by Russian industry and deemed to support Russian military capabilities. The items are classified by both Harmonized Tariff Schedule (HTS) and U.S. Schedule B number. In total, 205 HTS codes at the 6-digit level and 478 corresponding 10-digit Schedule B numbers were added to the list of items subject to Russian industry sector export controls. The list consists of a wide range of wood products, machinery, parts, and related industrial items, such as, among others, certain boring machines, gear grinding or finishing machines, planing machines, industrial engines, boilers, motors, fans, and ventilation equipment, bulldozers, bending or assembling machines, doweling machines, sorting machines, machine tools, wood veneer, barrels and casks, hydraulic power engines, parts of air or vacuum pumps, air conditioning machines, automotive air condemner, heat exchangers, icemaking machines, refrigerated drinking water coolers, soda fountain and beer dispensing equipment, oil or fuel filters for internal combustion engines, fire extinguishers, printing machines, and dry-cleaning machines. BIS will review license requests for exports, reexports, and transfers of such items pursuant to a policy of denial, unless the proposed shipments are necessary for health and safety reasons or to meet humanitarian needs. Link to the original

A new visa restriction policy under Section 212(a)(3)(C) of the Immigration and Nationality Act that applies to Russian Federation military officials who are believed to have been involved in human rights abuses, violations of international humanitarian law, or public corruption in Ukraine, including in the so-called “Donetsk People’s Republic” or “Luhansk People’s Republic.” Family members of those who fall under the policy will also be ineligible for visas. Link to the original

OFAC issued a Determination pursuant to E.O. 14071 that prohibits the export, reexport, sale, or supply (directly or indirectly) of any accounting, trust and corporate formation, or management consulting services to any person located in Russia. This prohibition applies to all U.S. persons (wherever they are located) and all persons located in the U.S. (whatever their nationality). This Determination takes effect on June 7, 2022. The E.O. 14071 established both a ban on all new investment in Russia and a ban on the provision of certain services to be identified by OFAC. The Determination implements the sections of the EO that target services. In consultation with the Department of State, OFAC may exercise its authority under the EO to ban additional services in the future. The Determination restricts the provision of the following services to persons located in Russia: - Accounting services include services related to the measurement, processing, and transfer of financial data about economic entities. - Trust and corporate formation services include: services related to assisting persons in forming or structuring legal persons, such as trusts and corporations; acting or arranging for other persons to act as directors, secretaries, administrative trustees, trust fiduciaries, registered agents, or nominee shareholders of legal persons; providing a registered office, business address, correspondence address, or administrative address for legal persons; and providing administrative services for trusts. - Management consulting services include services related to: strategic advice; organizational and systems planning, evaluation, and selection; marketing objectives and policies; mergers, acquisitions, and organizational structure; staff augmentation and human resources policies and practices; or brand management. Section 4 of the Executive Order 14071 states that for the purposes of the Order, the definitions for the terms are as follows: ‘‘US person’’ means any US citizen, lawful permanent resident, entity organized under the laws of the US, or any jurisdiction within the US (including foreign branches), or any person in the US. ‘‘person’’ means an individual or entity. ‘‘entity’’ means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization. FAQ 1058 clarifies that the term “person located in Russia” includes (i) persons in Russia, (ii) individuals ordinarily resident in Russia, and (iii) entities incorporated or organized under the laws of Russia or any jurisdiction within Russia. FAQ 1060 notes that the OFAC Service Ban does not, in itself, prohibit US persons from serving as directors of companies located in Russia, although it does prohibit US persons from providing nominee officer or director services in which a US person is contracted to serve as a nominee officer, director, shareholder, or signatory of a legal person on behalf of a person located in Russia. FAQ 1062 confirms that the OFAC Service Ban applies to services provided to a parent company located in Russia by any US Person, including the Russian company’s US subsidiary. FAQ 1063 clarifies that the OFAC Service Ban does not distinguish between new and existing trusts and companies, meaning that US Persons are prohibited from providing trust and corporate formation services to persons located in Russia, regardless of whether the services are performed as part of the formation of a new trust or company, or as part of the administration or maintenance of an existing trust or company. FAQ 1064 clarifies that the prohibitions on management consulting services include executive search and vetting services. OFAC interprets management consulting services to include services related to strategic business advice; organizational and systems planning, evaluation, and selection; development or evaluation of marketing programs or implementation; mergers, acquisitions, and organizational structure; staff augmentation and human resources policies and practices; and brand management. FAQ 1065 provides that the OFAC Service Ban prohibits US persons from serving as voting trustees on behalf of, or for shares of, persons located in Russia, unless exempt or authorized by OFAC. FAQ 1066 notes that the OFAC Service Ban does not prohibit the provision of educational services, such as online university courses, on the subjects of accounting, management consulting, or trust and corporate formation to persons located in Russia, provided such services do not serve to evade or avoid the primary prohibitions. FAQ 1067 confirms that the OFAC Service Ban does not prohibit US persons from exporting, reexporting, selling, or supplying, directly or indirectly, software to Russia, nor does it prohibit US persons from providing services associated with the export of such software, such as software design and engineering, provided that such associated services do not fall within the categories of management consulting, accounting, or trust and corporate formation. Note that US export controls further regulate the export or reexport of certain software to Russia. FAQ 1068 clarifies that, for purposes of the OFAC Service Ban, “accounting services” include tax preparation and filing services. Link to the original