Export Controls & Economic Sanctions

On December 19, 2018, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) and the U.S. State Department took multiple sanctions actions related to Russia:

Proposed Delisting of En+ Group, UC Rusal and ESE

OFAC notified Congress of its intent to remove En+ Group plc (“En+ Group”), UC Rusal plc (“UC Rusal”) and JSC EuroSibEnergo (“ESE”) from its Specially Designated Nationals and Blocked Persons List (the “SDN List”) within thirty (30) days from December 19, 2018.  OFAC first added these companies to the SDN List in April 2018 when it imposed sanctions on Oleg Deripaska due to his status as a senior Russian government official.  OFAC added these three companies to the SDN List because Deripaska was the majority owner of En+ Group (which, in turn, was the majority owner of both UC Rusal and ESE).  Under OFAC’s 50% ownership rule, these sanctions also extended to any subsidiaries in which En+ Group, UC Rusal or ESE held an ownership interest of 50% or greater. 

On December 7, 2018, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) further extended the expiration date of certain Ukraine-related general licenses related to EN+ Group plc (EN+), United Company RUSAL PLC (RUSAL), and GAZ Group (GAZ) as the entities continue discussions with OFAC to potentially effect “significant changes in control of these sanctioned entities.”   The new  General Licenses 13H (Authorizing Certain Transactions Necessary to Divest or Transfer Debt, Equity, or Other Holdings in Certain Blocked Persons), 14D (Authorizing Certain Activities Necessary to Maintenance or Wind Down of Operations or Existing Contracts with United Company RUSAL PLC), 15C (Authorizing Certain Activities Necessary to Maintenance or Wind Down of Operations or Existing Contracts with GAZ Group), and 16D (Authorizing Certain Activities Necessary to Maintenance or Wind Down of Operations or Existing Contracts with EN+ Group PLC or JSC EuroSibEnergo) supersede their previous versions by extending the expiration date from from January 7, 2019, to January 21, 2019.

On November 9, 2018, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) extended the expiration date for certain Ukraine-related general licenses related to EN+ Group plc (EN+), United Company RUSAL PLC (RUSAL), and GAZ Group (GAZ).  The expiration date of General Licenses 13G (Authorizing Certain Transactions Necessary to Divest or Transfer Debt, Equity, or Other Holdings in Certain Blocked Persons), 14C (Authorizing Certain Activities Necessary to Maintenance or Wind Down of Operations or Existing Contracts with United Company RUSAL PLC), 15B (Authorizing Certain Activities Necessary to Maintenance or Wind Down of Operations or Existing Contracts with GAZ Group), and 16C (Authorizing Certain Activities Necessary to Maintenance or Wind Down of Operations or Existing Contracts with EN+ Group PLC or JSC EuroSibEnergo) was extended from December 12, 2018 to January 7, 2019.  U.S. persons participating in transactions or activities authorized by these general licenses should provide a detailed report to OFAC within 10 business days of January 7, 2019 (by January 21, 2019).

On November 5, 2018, the United States fully reimposed sanctions against Iran as part of its decision to withdraw from the Iran nuclear deal, also known as the Joint Comprehensive Plan of Action (“JCPOA”).  President Trump announced the decision to withdraw on May 8, 2018, thus beginning the “wind-down” period for businesses to withdraw from Iran. 

As previously covered here, on April 6, 2018, the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) invoked authority provided under the Countering America’s Adversaries Through Sanctions Act (“CAATSA”) in order to place several Russian oligarchs, political officials and businesses under their control on its Specially Designated Nationals and Blocked Persons List (“SDN List”).  These designations generally prohibited U.S. persons from engaging in transactions  with the sanctioned individuals  and entities, however OFAC also issued several General Licenses simultaneously which were intended to provide limited windows for maintaining or winding down preexisting transactions with those sanctioned individuals or entities.  OFAC has now partially extended those authorized wind down periods by issuing the following General Licenses last week on September 21, 2018:

On September 20, 2018, President Trump released a 16-page Executive Order which delegated various Presidential powers established under the Countering America’s Adversaries Through Sanctions Act (“CAATSA”) to both the U.S. Secretary of Treasury and the U.S. Secretary of State.  As a result of this delegation, the U.S. Treasury Department‘s Office of Foreign Assets Control (“OFAC”) and the U.S. State Department are now empowered to take actions which include (but are not limited to) designating parties to be sanctioned under various CAATSA provisions, selecting the specific menu-based sanctions to be imposed upon those parties and implementing those menu-based sanctions (we previously covered the CAATSA statute here, here and here).  OFAC also updated its website to provide an additional FAQ response explaining the new Executive Order and indicating that it anticipates promulgating regulations to implement these sanctions.