The latest on Russia sanctions from the International Trade and Supply Chain Team
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On March 15, 2018 the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) exercised its authority to issue cyber sanctions under Executive Order 13694 and the new Countering America’s Adversaries Through Sanctions Act (CAATSA) by imposing blocking sanctions against 5 Russian entities and 19 Russian individuals connected to previous Russian cyber operations directed towards the United States. In an accompanying press release, OFAC stated that these sanctions were intended to counter Russian destabilizing activities such as interference in the 2016 US election, the 2017 global NotPetya cyber-attack and other cyber-attacks directed at critical U.S. infrastructure sectors. One aspect of this move was somewhat puzzling, because 9 of the total 24 sanctioned entities and individuals were already subject to blocking sanctions for their previous activities. For those 9 sanctioned entities and individuals, (which include Russia’s Federal Security Service (the FSB) and Main Intelligence Directorate (the GRU), whose initial designation we covered here), it is unclear what OFAC seeks to accomplish by imposing blocking sanctions against them for a second time.

The press release also contained a statement from Treasury Secretary Steven Mnuchin that “[t]hese targeted sanctions are a part of a broader effort to address the ongoing nefarious attacks emanating from Russia. Treasury intends to impose additional CAATSA sanctions, informed by our intelligence community, to hold Russian government officials and oligarchs accountable for their destabilizing activities by severing their access to the U.S. financial system.”  This is presumably a reference to forthcoming sanctions to be imposed against some of the 94 senior political figures and 96 oligarchs named in OFAC’s CAATSA Section 241 report from January 29, 2018 (which we covered here). As explained in our previous CAATSA coverage, CAATSA allows OFAC discretion to issue both blocking sanctions and lesser menu-based sanctions. Therefore, who OFAC might choose to sanction and what form of sanctions OFAC might choose to impose still remains to be seen.

In connection with this announcement, OFAC also issued a revised General License No. 1A which now features several new CAATSA cross-references but will still otherwise continue to permit limited transactions with the FSB to obtain certain registration approvals for technology products to be used within Russia (we previously discussed General License No. 1A here).

Husch Blackwell’s Export Controls and Economic Sanctions team continues to monitor this situation as it develops and will provide updates as new information becomes available.  Should you have any questions please contact Cortney MorganLinda Tiller, or Grant Leach.