On July 14, 2022, the Department of Treasury’s Office of Foreign Assets Control (OFAC) released a food security fact sheet on Russian sanctions and agricultural trade and an amended General License (GL) 6B to broaden the scope of the authorizations relating to transactions involving agricultural and medical products. The Department’s press release emphasized that “[a]gricultural and medical trade are not targets of the sanctions imposed by the United States on Russia for its unjustified war against Ukraine.”
General License 6B replaced and superseded GL 6A effective July 14, 2022. GL 6A originally authorized all transactions otherwise prohibited by the Russian Harmful Foreign Activities Sanctions Regulations, 31 C.F.R. part 587 (“RuHSR”), that are ordinarily incident and necessary to the exportation or reexportation of agricultural commodities, medicine and medical devices to/from or transiting the Russian Federation. With GL 6B, OFAC expanded the scope of this authorization to include transactions related to agricultural equipment.
GL 6B also expands the scope of authorized activity permitted related to medical research or clinical trials. Previous GL 6A limited the authorization to “ongoing clinical trials and other medical research activities that were in effect prior to March 24, 2022.” GL 6B removes the requirement that the medical research or clinical trials be already in effect on March 24.
GL 6B notes that the authorization does not encompass the opening or maintaining of a correspondent account or payable-through account for or on behalf of any entity subject to Directive 2 under Executive Order (EO) 14024, and any transaction prohibited by EO 14066, EO 14068, and EO 14071, including new investments in Russia and the importation into the United States of certain Russian-origin products, such as alcoholic beverages and fish, seafood, or preparations thereof.
On the same day, the Department of Treasury also released a fact sheet to further clarify that agricultural commodities (including fertilizer), agricultural equipment, or medicine relating to Russia are not the target of U.S. sanctions. The fact sheet describes in detail the authorization granted with GL 6B, including the transactions involving exportation of agricultural commodities and fertilizers to/from or transiting Russia. This authorization includes exportation of agricultural and medical products from the Port of Novorossiysk.
Further, the fact sheet explains that insurance and reinsurance services related to these transactions are also permitted, and U.S. financial institutions are authorized to process these transactions. Nevertheless, the fact sheet warns that the prohibition against importation of Russian-origin fish, seafood, and preparations thereof, alcoholic beverages, and non-industrial diamonds into the United States remains in effect. Importation of these goods into jurisdictions outside the United States does not expose non-U.S. persons to sanctions.
Finally, the fact sheet clarifies that Joint Stock Company Russian Agricultural Bank is not subject to U.S. blocking sanctions under any U.S. authority. That said, the Russian Agricultural Bank is subject to Directive 1 under EO 13662, which prohibits certain dealings in new debt or equity of the Russian Agricultural Bank, and Directive 3 under EO 14024, which prohibits dealings by U.S. persons or within the United States in new debt of longer than 14 days maturity or new equity where such new debt or equity is issued after March 26, 2022. U.S. persons are authorized to engage in transactions involving agricultural commodities and equipment otherwise prohibited by Directive 3 under EO 14024 under GL 6B.