On May 12, 2022, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Syria General License (GL) 22, which authorizes certain transactions, including processing or transfer of funds on behalf of third-country entities, otherwise prohibited under the Syrian Sanctions Regulations (SSR) that are ordinarily incident and necessary to activities in the areas of northeast and northwest Syria (i.e., non-regime held areas, as defined in the Annex to the GL) in agriculture, information and communications, power grid infrastructure, construction, finance, clean energy, transportation and warehousing, water and waste management, health services, education, manufacturing, and trade. This GL provides authorization for certain activities otherwise prohibited by the SSR, including the prohibitions on U.S. persons in engaging in new investments in, or exportation, reexportation, sale, or supply of any services to Syria. GL 22 also authorizes the purchase of refined petroleum products of Syrian origin for use in Syria that is ordinarily incident to the activities described in the GL. GL 22 authorizations exclude any transaction involving any person, including the government of Syria, blocked pursuant to Syrian Sanctions Regulations and Caesar Syria Civilian Protection Act of 2019.

OFAC issued five frequently asked questions (FAQs), FAQs 1041 – 1045, and updated FAQ 884 to reflect the new GL 22. Notably, OFAC explained in the new FAQs that the purpose of GL 22 is to improve the economic conditions in non-regime held areas of Syria and to support ongoing stabilization efforts, and is not intended to remove sanctions on the Assad regime.

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) recently issued several Russia-related general licenses under the Russian Harmful Foreign Activities Sanctions Regulations, 31 C.F.R. Part 587 (RuHSR). These licenses authorize certain activities which would otherwise be prohibited under OFAC sanctions toward Russia:

GL 26A extends until July 12, 2022 existing authorizations for transactions ordinarily incident and necessary to wind down transactions involving Joint Stock Company SB Sberbank Kazakhstan, Sberbank Europe AG, or Sberbank (Switzerland) AG, and supersedes and replaces GL 26. The general license also applies to transactions with entities owned 50% or greater by these Sberbank entities. This license does not authorize: (1) opening/maintaining Correspondent or Payable-Through Accounts (CAPTA) for entities subject to Directive 2 of Executive Order 14024; (2) transactions with the Central Bank of the Russian Federation (CBR), the National Wealth Fund of the Russian Federation (NWF), and the Ministry of Finance of the Russian Federation (MoF); and (3) transactions with other OFAC-blocked persons.

GL 30 authorizes  transactions involving Gazprom Germania GmbH (and any entities owned 50% or greater by this entity) that are prohibited by Directive 3 under Executive Order 14024 regarding the provision of new debt or new equity to certain Russian entities until September 30, 2022. This license does not authorize transactions with other OFAC-blocked persons. Directive 3 applies to certain Gazprom entities, but in early April 2022, Gazprom announced that it was relinquishing its business interests and assets in Gazprom Germania GmbH. German regulatory authorities subsequently took control of the company to ensure its continued operations.

GL 32 authorizes transactions ordinarily incident and necessary to wind down transactions involving OFAC-sanctioned Amsterdam Trade Bank NV (and any entities owned 50% or greater by this entity) until July 12, 2022. This license does not authorize: (1) opening/maintaining CAPTA for entities subject to Directive 2 of Executive Order 14024; (2) transactions with the CBR, NWF or MoF; and (3) transactions with other OFAC-blocked persons.

Key Notes:

  • Persons, including non-U.S. persons, providing accounting, trust and corporate formation, and management consulting services in Russia may be added to the SDN List.
  • U.S. persons are prohibited from providing these same services to Russian persons unless the recipient of the services is the subsidiary of a U.S. person.

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) has issued a Determination under Section 1(a)(i) under Executive Order (EO) 14071 which states that persons operating in the accounting, trust and corporate formation services, and management consulting sectors of the Russian economy may be subject to sanctions, including blocking designations. See Thompson Hine SmarTrade Update of April 7, 2022 for more information on EO 14071. This action follows previous determinations which allowed sanctions against Russian entities operating in the aerospace, marine, electronics, financial services, technology, and defense and related materiel sectors of the Russian economy.

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On May 5, 2022, the Treasury Department’s Office of Foreign Assets Control (OFAC) issued much anticipated Russia-related general license (GL) 31, “Authorizing Certain Transactions Related to Patents, Trademarks, and Copyrights.” GL 31 authorizes certain transactions otherwise prohibited by the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR Part 587 (“RuHSR”) with respect to intellectual property. Specifically, GL 31 authorizes transactions in connection with “patent, trademark, copyright or other form of intellectual property protection (collectively, the “IP Protection”)”:

  1. Filing and prosecution of applications to obtain IP Protection;
  2. Receipt of IP Protection;
  3. Renewal or maintenance of IP Protection; and
  4. Filing and prosecution of any opposition or infringement proceeding with respect to IP Protection or defense to any such proceeding.

GL 31 does not authorize: (1) opening or maintaining correspondent or payable through accounts (CAPTA) for entities subject to Directive 2 of Executive Order 14024; (2) debits on the books of U.S. financial institutions of the Central Bank of Russia, National Wealth Fund of Russia or the Ministry of Finance of Russia; and (3) transactions prohibited by Executive Orders (EO) 14066 (March 8, 2022) and 14068 (March 11, 2022). Relevant transactions prohibited by EOs 14066 and 14068, among others, include any and all new investments in Russia and facilitation of any transaction by a foreign person where that transaction, if performed by a U.S. person, would be prohibited.

On May 8, 2022, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) implemented additional sanctions on several sectors of the Russian economy.  OFAC designated three Russian telecommunications companies and placed them on the Specially Designated Nationals (SDN) list, noting that they are Russian state-controlled television stations generating revenue for the Russian government.  The stations are: (i) Joint Stock Company Channel One Russia; (ii) Joint Stock Company NTV Broadcasting Company; and (iii) Television Station Russia-1.

General License (GL) 25 which authorizes transactions related to telecommunications and certain Internet-based communications has thus been revised.  As revised, GL 25A does NOT cover or authorize transactions with these entities (or any entity owned or controlled 50% or more by these listed entities).  GL 33 authorizes a wind down period of operations, existing contracts or other agreements involving these three Russian TV companies until June 7, 2022.

OFAC has also sanctioned and designated seven Russian shipping companies, 69 of their vessels; and one marine towing company.  It has also designated a private defense company that supplies Russia’s military and intelligence services and is closely associated with the Russian Government.

For detailed identifying information on these entities click here.  All property and interests in property of these newly designated SDN List 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, any entities that are owned, directly or indirectly, 50% or more by one or more blocked persons are also blocked. All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt.

 

The Department of Commerce’s Bureau of Industry and Security (BIS) issued on May 9, 2022, a Final Rule that greatly expands the list of items requiring a license to export to Russia. The export restrictions impact a broad range of inputs and products including wood products, industrial engines, boilers, motors, fans, and ventilation equipment, bulldozers, and many other items with industrial and commercial applications. These export control measures build upon the export controls and restrictions effective on March 3, 2022 (i.e., the Russian Industry Sector Sanctions rule codified at 15 C.F.R. 746.5). See Update of March 7, 2022. The March 3 rule created Supplement No. 4 to Part 746, which is a list of items primarily related to the oil sector and subject to a license requirement for export, reexport, and transfers (in-country) to or within Russia.

This final rule amends the Russian Industry Sector Sanctions to further expand the Supplement No. 4, by adding an additional 205 Harmonized Tariff Schedule codes at the 6-digit level and 478 corresponding 10-digit Census Schedule B numbers. BIS notes that this is intended to better align U.S. export controls with European Union controls. BIS further stated that it will continue to review any license applications for the export of any Supplement No. 4 items under a “policy of denial.”

Shipments of items en route aboard a carrier to a port of export, reexport, or transfer (in-country) on May 9, 2022, pursuant to actual orders for export, reexport, or transfer (in-country) to or within a foreign destination for which, prior to May 9 no license was required or a License Exception had been available, may proceed to that destination under the previous eligibility.

The Department of Commerce’s Bureau of Industry and Security (BIS) has created a web page offering “Resources on Export Controls Implemented in Response to Russia’s Invasion of Ukraine.” The web page provides convenient links to relevant BIS press releases, fact sheets, and Federal Register notices related to BIS actions involving export controls and compliance requirements regarding Russia. BIS has created this web page due to the fact that it is has imposed controls on a range of items subject to the Export Administration Regulations (EAR) that did not previously require export licenses when destined for Russia. It has also imposed similar export controls on items subject to the EAR that are destined for Belarus.

Importantly, the web page also provides BIS’ first set of Russia-related frequently asked questions (FAQs) to provide industry guidance on recent export controls on Russia. The FAQs cover the following topics:

On May 5, 2022, the U.S. International Trade Commission (ITC) announced the initiation of a general factfinding investigation that will examine the impact of tariffs on U.S. imports under section 232 of the Trade Expansion Act of 1962 and section 301 of the Trade Act of 1974 in effect as of March 15, 2022.  The ITC was directed to conduct this investigation, Economic Impact of Section 232 and 301 Tariffs on U.S. Industries, Inv. 332-591, as part of the Omnibus Appropriations Act, which was signed into law on March 15, 2022.  As a result, all currently active Section 232 national security tariffs (e.g., steel and aluminum tariffs) and the Section 301 tariffs against imports from China will be subject to review and the ITC will prepare a report on the impact of these tariffs on U.S. trade, production, and prices in the industries most affected by these tariffs.  If the tariffs change between now and the report’s submission, the analysis will only cover how the economy was affected by the tariffs that were in place as of March 2022. The ITC must submit this report to Congress by March 15, 2023.

In preparing the report, the ITC will seek public comments and hold a hearing.  Key dates for the investigation include:

  • July 6, 2022: Deadline for filing requests to appear at the public hearing.
  • July 8, 2022: Deadline for filing prehearing briefs and statements.
  • July 14, 2022: Deadline for filing electronic copies of oral hearing statements.
  • July 21, 2022: Public hearing. Information about the hearing, including how to participate or observe, will be posted on the ITC’s website no later than June 21, 2022, at https://usitc.gov/research_and_analysis/what_we_are_working_on.htm.
  • August 12, 2022: Deadline for filing posthearing briefs and statements.
  • August 24, 2022: Deadline for filing all other written submissions.

Currently, because the ITC’s Office of the Secretary is accepting only electronic filings, the filing of any documents in this investigation must be made through the ITC’s Electronic Document Information System (EDIS, https://edis.usitc.gov). No in-person paper-based filings or paper copies of any electronic filings will be accepted.  Procedures are available for filing confidential business information; however, while it will be considered, no confidential information will be included in the final report to Congress.

On May 2, 2022, new amendments to the Ukraine Related Sanctions Regulations, renaming them “Ukraine-/Russia-Related Sanctions Regulations” (URSR), were published by U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) in the Federal Register. The Ukraine-/Russia-Related Sanctions Regulations went into effect May 2.

OFAC’s new URSR replace the Ukraine Related Sanctions Regulations that were published in abbreviated form on May 8, 2014 with a more comprehensive set of regulations that includes additional interpretative and definitional guidance, general licenses, and other regulatory provisions that will provide further guidance. The revised regulations implement provisions of several statutes related to Ukraine as well as Executive Order 13685.

OFAC also added seven new general licenses which generally authorize certain transactions relating to investment and reinvestment of funds, official business of the U.S. government, and official business of certain international organizations. Specifically, new sections 589.509, 589.510 and 589.511 incorporate general licenses authorizing certain transactions relating to investment and reinvestment of funds, official business of the U.S. government, and official business of certain international organizations and entities. New sections 589.518, 589.519 and 589.520 authorize activities specific to the Crimea region of Ukraine: “Transactions necessary and ordinarily incident to publishing, emergency landings and air ambulance services, and the export of certain services in support of nongovernmental organizations’ activities.” New section 589.521 authorizes transactions related to closing a correspondent or payable-through account. OFAC noted in the final rule that the “addition of these general licenses to the Regulations do not represent a significant alteration of the United States’ foreign policy with regard to the Russian Federation.”

Additionally, OFAC also announced that it is revising several FAQs for the Ukraine-/Russia-Related Sanctions Regulations to reflect these changes.

On May 3, 2022, the Securities and Exchange Commission’s Division of Corporation Finance issued a sample comment letter outlining public company disclosure requirements relating to the business impact of Russia’s invasion of Ukraine and the international response.

To the extent material or otherwise required under the SEC’s disclosure framework, the SEC advises that companies should provide tailored disclosures relating to:

  1. their direct or indirect exposure to Russia, Belarus and/or Ukraine, whether through operations, employees, investments, sanctions or legal or regulatory uncertainty associated with operating in or exiting business in Russia or Belarus;
  2. direct or indirect reliance on goods or services sourced in Russia, Ukraine and, as applicable, in countries supportive of Russia;
  3. actual or potential supply chain disruptions and volatility related to commodity prices;
  4. cybersecurity risks related to these activities;
  5. business relationships, connections to, or assets in, Russia, Belarus and Ukraine; and
  6. the quantitative and qualitative impact on their financial statements from any related impairment of assets, changes in inventory valuation, deferred tax asset valuation allowance, dispositions, de-consolidations, and business exits, fluctuations in exchange rates, and changes in contracts with customers or the ability to collect consideration.

The SEC highlights other areas of interest, including the company’s evaluation of the effectiveness of disclosure controls, procedures and internal controls over financial reporting. The SEC also draws attention to the oversight role of the board of directors, and particularly concerning whether to continue or to cease activity in Russia and/or Belarus. When reviewing company filings, the SEC is likely to continue issuing comment letters, and may request additional details and further discussions related to these issues.