On June 28, 2022, The Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned 70 entities and 29 individuals involved in Russia’s defense industrial base. In addition, the Department of State impose visa restrictions on 511 Russian military officers, and sanctioned an additional 45 entities and 29 individuals. The designations and placement of these entities and person on OFAC’s Specially Designated Nationals (SDN) List were taken pursuant to Executive Orders (EOs) 14024 and 14065, and are intended to diminish Russia’s development and deployment of weapons and technology in the war against Ukraine. The Department of the Treasury issued a press statement and the Department of State released a fact sheet detailing these actions.
The sanctions focus on the following sectors and certain key Russian entities:
- Russia’s defense-industrial base, including the designation of State Corporation Rostec and numerous of its subsidiaries. Rostec had only previously been designated and placed on OFAC’s Sectoral Sanctions List and subject to certain directives. Rostec is now sanctioned by the United States, Australia, Canada, the European Union (EU), New Zealand, Switzerland, and the United Kingdom.
- Russia’s Aerospace sector, including Rostec subsidiary Public Joint Stock Company United Aircraft Corporation (UAC), Tupolev Public Joint Stock Company, Irkut Corporation Joint Stock Company, and various subsidiaries of these entities.
- Russia’s defense technology sector, including numerous companies that are, again, subsidiaries or Rostec and engage in information technology, information security and radio-electronics systems.
- Russia’s industrial exporting sector, including Kamaz Publicly Traded Company (aka Kamaz PJSC), Russia’s largest truck manufacturer, and many of its subsidiaries.
- Russian management entities that are related to Rostec and manage aeronautical, real estate, procurement, asset management and investments for Rostec.
OFAC also sanctioned and designated numerous other entities for participating in Russia’s war against Ukraine and many individuals who have acted to undermine Ukraine’s democratic form of government and sovereignty.
Detailed identifying information on each of these entities and individuals can be found 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.
Given the extent and scope of these sanctions, OFAC also issued several Russia-related General Licenses (GL):
- GL No. 39 – authorizes transactions ordinarily incident and necessary to the wind down of any transaction involving State Corporation Rostec, and its subsidiaries, until August 11, 2022.
- GL No. 40 – authorizes transactions ordinarily incident and necessary to the provision, exportation, or reexportation of goods, technology, or services to ensure the safety of civil aviation for blocked entities list in an annex to the GL and including UAC, Irkut and other related companies. Use of this GL is restricted to aircraft registered in a jurisdiction solely outside of Russia; and for goods, technology, or services that are provided, exported, or reexported for use on aircraft operated solely for civil aviation purposes.
- GL No. 41 – authorizes transactions ordinarily incident and necessary to the manufacture, sale, and maintenance, including the provision and receipt of warranty and maintenance services, of agricultural equipment, components, and spare parts produced by Nefaz Publicly Traded Company or Public Joint Stock Company Tutaev Motor Plant until December 22, 2022.
- GL No. 42 – authorizes certain and limited transactions involving Russia’s Federal Security Service (a.k.a. Federalnaya Sluzhba Bezopasnosti) (a.k.a. FSB).
- GL No. 43 – authorizes until August 31, 2022, transactions that are ordinarily incident and necessary for the divestment or transfer of debt or equity purchased prior to June 2, 2022, and wind down of derivative contracts entered into before June 2, 2022, involving, Public Joint Stock Company Severstal or Nord Gold PLC.