On September 30, 2022, in response to Russia President Vladimir Putin’s illegal effort to annex further Ukrainian territory, the Department of Commerce’s Bureau of Industry and Security (BIS) issued a Final Rule that added 57 entities located in Russia and the Crimea region of Ukraine to the Entity List for supporting the Russian military’s continuing assault on Ukraine. BIS stated that with these new listings, the number of entities added to the Entity List for activities related to Russia’s invasion of Ukraine in February 2022 now totals 392.
BIS noted that the new entities added to the Entity List were identified as acquiring or attempting to acquire U.S.-origin items in support of Russia’s military, and others for their involvement in the development of quantum computing technologies, which would further enable Russia’s malicious cyber activities.
The addition of these 57 new entities to the Entity List means these entities are subject to a license requirement – with review by BIS under a “policy of denial,” with no license exceptions available – for the export, reexport, , or transfers (in-country) of all items subject to the Export Administration Regulations (EAR) (including items described under the Russia/Belarus foreign direct produce rule) destined to these entities.
This Final Rule is effective as of September 30, 2022.
Application of ‘Military End User’ Controls to Third Country Entities
Further, and as a result of Russia’s continued aggression against Ukraine, BIS has published guidance in the form of a FAQ that “makes clear that it is prepared to aggressively apply the export controls imposed in response to Russia’s war of aggression against Ukraine against any entities, both inside and outside of Russia, that seek to provide material support for Russia and Belarus’s military and industrial sectors.” This FAQ states that the ‘military end user’ controls of the EAR have been expanded to allow BIS to designate entities in third countries – not just entities within Russia or Belarus – that support ‘military end uses’ in Russia or Belarus as ‘military end users’ on the Entity List. This revision was made in early September 2022 (see Update of September 16, 2022) to “discourage companies or government entities in third countries from backfilling and providing items needed by the Russian and Belarusian military and industrial sectors.” Entities in third countries designated on the Entity List as Russian ‘military end users’ will have a footnote 3 designation in the license requirement column. This restriction includes not only U.S.-origin items or items located in the United States, but also certain foreign-produced items.