On April 6, 2018, the Trump Administration announced its most extensive Russia-related sanctions to date (the “April 6 Sanctions”). Specifically, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), in consultation with the U.S. Department of State, placed numerous Russian individuals and entities on the List of Specially Designated Nationals (“SDN List”), and it is possible that similar sanctions could be imposed on additional Russian individuals and entities in the near future.
In announcing the April 6 Sanctions, Treasury Secretary Mnuchin noted that “the Russian government operates for the disproportionate benefit of oligarchs and government elites,” and that “the Russian government engages in a range of malign activity around the globe, including continuing to occupy Crimea and instigate violence in eastern Ukraine, supplying the Assad regime with material and weaponry as they bomb their own civilians, attempting to subvert Western democracies, and malicious cyber activities.” Operating from these premises, Treasury Secretary Mnuchin indicated that the April 6 Sanctions were intended to demonstrate that “Russian oligarchs and elites . . . will no longer be insulated from the consequences of their government’s destabilizing activities.”
Pursuant to the April 6 Sanctions, the following seven Russian oligarchs have been added to the SDN List: Vladimir Bogdanov, Oleg Deripaska, Suleiman Kerimov, Igor Rotenberg, Kirill Shamalov, Andrei Skoch, and Viktor Vekselberg (collectively, the “Designated Oligarchs”). Twelve companies that are owned or controlled by the Designated Oligarchs and/or other SDN List entities also have been added to the SDN List, including: (1) B-Finance Ltd.; (2) Basic Element Limited; (3) EN+ Group; (4) EuroSibEnergo; (5) United Company RUSAL PLC; (6) Russian Machines; (7) GAZ Group; (8) Agroholding Kuban; (9) Gazprom Burenie; (10) NPV Engineering Open Joint Stock Company; (11) Ladoga Menedzhment, OOO; and (12) Renova Group (collectively, the “Designated Companies”).
OFAC also added two Russian government-owned entities to the SDN List: (1) Rosoboroneksport, a weapons trading company with longstanding ties to the Syrian government; and (2) the Russian Financial Corporation Bank. In addition, OFAC placed the following 17 Russian government officials on the SDN List: Andrey Akimov, Mikhail Fradkov, Sergey Fursenko, Oleg Govorun, Alexey Dyumin, Vladimir Kolokoltsev, Konstantin Kosachev, Andrey Kostin, Alexey Miller, Nikolai Patrushev, Vladislav Reznik, Evgeniy Shkolov, Alexander Torshin, Vladimir Ustinov, Timur Valiulin, Alexander Zharov, and Viktor Zolotiv (collectively, the “Designated Government Officials”).
All U.S. citizens, U.S. permanent resident aliens, U.S. incorporated entities and their foreign branches, and all persons and entities within the United States (collectively, “U.S. Persons”) are now generally prohibited from engaging in dealings with the Russian individuals and entities that have been placed on the SDN List as a result of the April 6 Sanctions. Additionally, non-U.S. persons could face sanctions for knowingly facilitating significant transactions for, or on behalf of, the Russian individuals and entities that have been placed on the SDN List. Significantly, OFAC has established two general licenses that will permit U.S. Persons, subject to certain criteria and for a limited time, to wind down existing contracts with or to divest or transfer holdings in certain Designated Companies.
The April 6 Sanctions were imposed pursuant to authority provided under the Countering America’s Adversaries Through Sanctions Act of 2017 (“CAATSA”), as well as Executive Order 13582 of August 17, 2011 (relating to the prohibition of certain transactions with respect to Syria). The Designated Oligarchs and the Designated Government Officials were chosen from among many oligarchs and government officials that were identified in a report that the Treasury Department submitted to Congress in January 2018 in accordance with requirements set forth under Section 241 of the CAATSA (the “Section 241 Report”). [The unclassified version of the Section 241 Report can be accessed at http://prod-upp-image-read.ft.com/40911a30-057c-11e8-9650-9c0ad2d7c5b5.] Given that over 90 oligarchs and over 110 government officials were identified in the Section 241 Report, and considering that U.S.-Russian relations appear to be deteriorating rapidly as a result of events occurring in Syria, it seems quite possible that OFAC could soon add more oligarchs and government officials to the SDN List.
In light of the severity of the April 6 Sanctions, and considering that similar sanctions could be imposed on additional Russian oligarchs and government officials in the near future, U.S. and non-U.S. companies should consider how to modify their compliance policies and procedures to address such sanctions-related risks. For additional information regarding the April 6 Sanctions or other sanctions-related matters, please contact either of the FisherBroyles international trade attorneys listed below.