In response to Russia’s ongoing aggression in Ukraine, both the United States and the European Union have imposed additional sanctions and further restricted exports to Russia and Iran. These new controls span many industries.

The U.S. Department of Treasury, Office of Foreign Assets Control (OFAC) has implemented a host of new Russia sanctions. OFAC designated over 100 entities and individuals found to support Russia’s war against Ukraine. It also sanctioned Russia’s metals and mining sector. While over 80 percent of Russia’s banking sector is already sanctioned, OFAC designated over a dozen more financial institutions and wealth management-related entities. Sanctioned persons include actors that have attempted to evade sanctions to enable Russia to gain access to the international financial system. OFAC also sanctioned Russian aerospace companies and carbon fiber producers. See Specially Designated Nationals List (SDN List) additions.

Regarding the Russian metals and mining sector, OFAC used its authority under Presidential Executive Order 14024 to designate four entities for having operated in the sector. OFAC issued several General Licenses to enable companies to wind down transactions with newly blocked entities.

II. U.S. Export Controls

In addition to the new OFAC sanctions, over one hundred pages of new export control regulations were made effective immediately on February 24, 2023 by the Department of Commerce, Bureau of Industry and Security (BIS) (whether you read frustration into that sentence is in the eye of the beholder). However, we note industry will be grateful to learn that not all of the rules impose additional controls, but rather many are clarifications of the existing rules to make the regulations more user-friendly.

a. New Export Controls on Russia (and Belarus): Industrial Sectors and Luxury Goods

The newest export restrictions on Russia and Belarus include new Entity List designations and additional restrictions on industrial sectors and luxury goods. The Entity List designations include many entities found to be Russian and Belarusian miliary end users, and Chinese entities that have significantly contributed to Russia’s military and defense industrial base. See BIS Additions of Entities to the Entity List Final Rule.

The additional restrictions on exports are designed to better align the U.S. controls with those of U.S. allies to make the Export Administration Regulations (EAR) stronger, more effective, and easier to understand (easier to understand is always welcome). Moreover, some of the changes further support certain companies continuing to wind down or close operations in Russia. In part, the new BIS rules do the following:

See Implementation of Additional Sanctions Against Russia and Belarus Under the Export Administration Regulations (EAR) and Refinements to Existing Controls Final Rule.

There are many other tweaks and updates that we do not delve into in this article for the sake of brevity. But should you have any questions on things like “thiafentanil,” reagents for oligonucleotide synthesis, or ultracentrifuges, please don’t hesitate to contact us.

b. New Export Control Measures on Iran

BIS also imposed new export license requirements to address Russia’s use of Iranian unmanned aerial vehicles (UAVs) in its ongoing war on Ukraine. There are already comprehensive export restrictions on Iran under U.S. Law. However, these controls impose license requirements for exports and reexports on certain EAR99 items destined to Iran, regardless of whether a U.S. person is involved. The items subject to these controls are described by six-digit HTS codes and descriptions in a new Supplement no. 7 to part 746 and will require an license for export or reexport to Iran. Those items generally include internal combustion piston engines, spark-ignition parts, radio navigational aids, fixed capacitors, memories, amplifiers, and other electronic integrated circuits, which fall under EAR99.

The items listed include any modified or designed components, parts, accessories, and attachments regardless of the HTS Code (except screws, bolts, nuts, studs, etc. again).

BIS also expanded the scope of the Russia/Belarus Foreign Direct Product (FDP) rule and created an Iran FDP rule. Supplement no. 7 to part 746 items are now included in the Russia/Belarus FDP rule. The Iran FDP rule establishes jurisdiction over foreign-produced items that are the direct product of U.S.-origin software or technology classified in Categories 3 – 5 and 7 of the Commerce Control List (CCL) or are produced by a plant or major component of a plant which itself is the direct product of such software or technology. A license will be required to reexport or export from abroad to Iran any foreign-produced item subject to the EAR that is located in or destined to Iran in accordance with the Iran FDP rule, except for countries described in Supplement no. 3 to part 746 in most circumstances. Notably, the export and reexport to Iran of the listed items will be subject to the regulatory authority and licensing jurisdiction of OFAC.

On February 25, the EU issued its tenth package of sanctions and an FAQ detailing further the new measures. The new measures comprise of:

In addition to this new package, the EU Commission has taken steps to reach out to third countries to ensure strict implementation of sanctions and prevent circumvention. On February 23, the first Sanctions Coordinators Forum took place in Brussels, gathering international partners and Member States to strengthen enforcement efforts.

On February 24, to mark the 1-year anniversary of Russia’s actions in Ukraine, the UK likewise announced additional sanctions on Russia. Those new sanctions comprise of:

We will continue to monitor U.S., EU and UK new sanctions regulations on Russia and their impact and provide our updates here.

*Claire Le Tollec is a legal consultant in the Governmental Practice Group in the firm’s Brussels office.

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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