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Note: This previously published client update has been revised to provide links to the official notices published by the Departments of Commerce and State on March 18, 2021.

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On March 2, 2021, the Departments of Commerce, State and the Treasury imposed sanctions and export restrictions on numerous Russian officials and government entities in response to the Russian Federation’s imprisonment and alleged previous poisoning of opposition figure Aleksey Navalny. These actions follow similar sanctions imposed by the European Union and the United Kingdom.

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In a brief press statement, Secretary of State Antony Blinken stated that the United States has “exercised its authorities to send a clear signal that Russia’s use of chemical weapons and abuse of human rights have severe consequences. Any use of chemical weapons is unacceptable and contravenes international norms.” It is understood that Mr. Navalny was poisoned with Novichok nerve agents, chemicals created by the former Soviet Union, accessible only to Russian state authorities.

Chemical and Biological Weapons Control and Warfare Elimination Act (CBW Act) Sanctions

Pursuant to the CBW Act, the State Department has issued a <a href="https://www.govinfo.gov/content/pkg/FR-2021-03-18/pdf/2021-05527.pdf" target="_blank" rel="noopener">notice of sanctions</a> imposing sanctions which will be effective March 18 for a minimum of 12 months (or until the president determines and certifies to Congress that the Russian government has met four specific conditions). The department has waived some of the potential sanctions but those in effect include:

Countering America’s Adversaries Through Sanctions Act (CAATSA) Section 231 Sanctions

Under CAATSA Section 231, the State Department has <a href="https://www.state.gov/caatsa-section-231d-defense-and-intelligence-sectors-of-the-government-of-the-russian-federation/" target="_blank" rel="noopener">listed six Russian entities</a> as persons determined to be a part of or working on behalf of the defense or intelligence sectors of Russia. Persons, including foreign persons, who knowingly engage in any significant transactions with these persons are subject to mandatory sanctions. The entities added are:

A “significant transaction” is determined on the totality of the circumstances including but not limited to its impact on U.S. national security interests, the nature and magnitude of the transaction and its impact on the defense and intelligence sectors of Russia. The mandatory sanctions include, among others, prohibitions concerning property transactions, export license restrictions, Export-Import Bank assistance restrictions, debt and equity restrictions, visa ramifications for corporate officers, and U.S. government procurement prohibitions.

Treasury’s Office of Foreign Assets Control (OFAC) Sanctions

Pursuant to <a href="https://www.govinfo.gov/content/pkg/FR-2014-03-19/pdf/2014-06141.pdf" target="_blank" rel="noopener">E.O. 13661</a> (Blocking Property of Additional Persons Contributing to the Situation in Ukraine) and&nbsp;<a href="https://2009-2017.state.gov/documents/organization/135435.pdf" target="_blank" rel="noopener">E.O. 13382</a> (Blocking Property of Weapons of Mass Destruction Proliferators), OFAC has <a href="https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20210302" target="_blank" rel="noopener">designated nine senior Russian government officials and five Russian government entities</a> to the Specially Designated Nationals and Blocked Entities (SDN) List. The SDNs are:

These persons are now designated to the SDN List. Effective immediately, all property and interests in property of these individuals and entities that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, U.S. persons are generally prohibited from engaging in transactions with them. In addition, any entities that are owned, directly or indirectly, 50 percent or more by the designated persons and entities are also blocked.

While only some of these entities are on the CAATSA 231 List, OFAC has stated that any foreign person who knowingly facilitates a significant transaction or transactions for or on behalf of one of these persons or entities risks also being sanctioned.

State’s Directorate of Defense Trade Controls (DDTC) Export Restrictions

DDTC has issued a <a href="https://www.govinfo.gov/content/pkg/FR-2021-03-18/pdf/2021-05530.pdf" target="_blank" rel="noopener">final rule</a> effective March 18, 2021, amending the International Traffic in Arms Regulations (ITAR) at § 126.1 to include Russia in the list of countries “subject to a policy of denial for exports of defense articles and defense services.” Limited exceptions include:

Commerce’s Bureau of Industry and Security’s (BIS) Commerce Control List Export Restrictions

On March 4, 2021, the BIS <a href="https://public-inspection.federalregister.gov/2021-04505.pdf" target="_blank" rel="noopener">added 14 entities</a> located in Russia, Germany and Switzerland to the Entity List due to their support of Russia’s weapons of mass destruction programs and chemical weapons activities. These entities are:

Being placed on the Entity List means that the export, reexport, and in-country transfer of items subject to the Export Administration Regulations (EAR) to these entities requires a license from BIS. These license requirements and restrictions apply in any instances where these 14 entities act as the purchaser, intermediate consignee, ultimate consignee, or end-user. No license exceptions are available under the EAR for these entities.

In addition, under the CWB Act BIS has issued a <a href="https://www.govinfo.gov/content/pkg/FR-2021-03-18/pdf/2021-05488.pdf" target="_blank" rel="noopener">notice of implementation</a> that exports under the EAR of national security (NS) controlled items to Russia will be further restricted, including:

The following export license exceptions will still be useable for NS controlled items: 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).

Further, applications for export of NS items to Russia for the following reasons will be reviewed on a case-by-case basis:

Any further developments in these actions toward Russia will be reported on Thompson Hine’s<a href="https://www.thompsonhinesmartrade.com/" target="_blank" rel="noopener">SmarTrade blog</a>, which offers timely news and analysis of the latest developments in international trade law. To receive an email notification whenever a new post is published, please <a href="https://www.thompsonhinesmartrade.com/subscribe/" target="_blank" rel="noopener">subscribe to the blog</a>.

Our International Trade group has extensive experience advising on compliance with U.S. sanctions and export restrictions. With any questions, please contact:

Francesca M.S. Guerrero Partner, International Trade 202.973.2774 <a href="mailto:Francesca.Guerrero@ThompsonHine.com">Francesca.Guerrero@ThompsonHine.com</a>

Samir D. Varma Partner, International Trade 202.263.4136 <a href="mailto:Samir.Varma@ThompsonHine.com"> Samir.Varma@ThompsonHine.com</a>

Brent Connor Senior Counsel, International Trade 202.263.4188 <a href="mailto:Brent.Connor@ThompsonHine.com">Brent.Connor@ThompsonHine.com</a>

Joyce Rodriguez Associate, International Trade 202.973.2724 <a href="mailto:Joyce.Rodriguez@ThompsonHine.com">Joyce.Rodriguez@ThompsonHine.com</a>

Scott E. Diamond* Senior Legislative &amp; Regulatory Policy Advisor, International Trade 202.263.4197 <a href="mailto:Scott.Diamond@ThompsonHine.com">Scott.Diamond@ThompsonHine.com</a> *Not licensed to practice law

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel.

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United States Implements Multiple Sanctions and Export Restrictions on Russia

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