On February 24, 2023, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued its latest Russia-related determination expanding its use of sanctions authorities to the metals and mining sector of the Russian Federation economy pursuant to section 1(a)(i) of Executive Order (E.O.) 14024. Section 1(a)(i) of E.O. 14024 allows for the blocking of any person determined by the Treasury Secretary to “operate or have operated in the technology sector or the defense and related materiel sector of the Russian Federation economy, or any other sector of the Russian Federation economy as may be determined by the Secretary of the Treasury.”
This new determination exposes persons in Russia’s metals and mining sector to U.S. sanctions risk and allows for sanctions to be imposed on any individual or entity that may subsequently be determined and designated by OFAC to operate or have operated in this sector. The determination does not automatically impose sanctions on all persons who operate or have operated in the sector. Pursuant to this determination, OFAC did proceed to immediately designate and place on its Specially Designated Nationals (SDN ) List four entities involved in Russia’s metals and mining sector. Additional information on these entities is available here.
In addition, OFAC issued five new FAQs to address implementation of the determination. Importantly, and while OFAC states that it anticipates publishing regulations defining the term “metals and mining sector of the Russian Federation economy,” one FAQ (FAQ 1115) states that the term includes “any act, process, or industry of extracting, at the surface or underground, ores, coal, precious stones, or any other minerals or geological materials in the Russian Federation, or any act of procuring, processing, manufacturing, or refining such geological materials, or transporting them to, from, or within the Russian Federation.” Another FAQ (FAQ 1117) provides information on activities and provision of goods or services to the metals and mining sector that will not be targeted under this determination.
This determination and action complements existing provisions for sanctions against those that operate or have operated in the quantum computing (see Update of September 16, 2022), accounting, trust and corporate formation, management consulting (see Update of May 13, 2022), aerospace, marine, electronics (see Update of March 31, 2022), and defense and related materiel (see Update of March 7, 2022) sectors of the Russian Federation economy.