sanctions

On June 30, the United States, together with its partners in the P5+1, the EU and Iran, agreed to a seven day extension of the Joint Plan of Action (JPOA), which currently halts progress on Iran’s nuclear program in order to continue negotiations towards establishing a comprehensive and enduring solution.  The initial agreement, reached in November 2013, stipulated that the P5+1 (comprised of the United States, the United Kingdom, France, China, Russia, and Germany) would implement narrow and targeted sanctions relief in return for Iran’s continued commitment to limit its nuclear program.

The U.S. Department of State rescinded Cuba’s designation as a State Sponsor of Terrorism today.  While the rescission of Cuba’s designation eliminates a major hurdle in restoring diplomatic ties with Cuba, the U.S. trade embargo against Cuba remains in effect, including its restrictions on investment, trade, and travel with Cuba.  Congress has the sole authority to lift the trade embargo.

Rescission of Cuba’s designation as a State Sponsor of Terrorism, however, will affect companies and individuals the following ways:

The U.S. Department of Treasury, Office of Foreign Asset Control (OFAC), this week imposed sanctions on fourteen additional Ukrainian and Russian individuals and two organizations, including the Russian National Commercial Bank (RNCB), by adding them to the Specially Designated Nationals (SDN) list. These designations were issued pursuant to Executive Order (E.O.) 13660 for undermining Ukraine’s sovereignty and misappropriation of Ukrainian states assets, and E.O. 13685 for operating in Crimea Region.

Treasury stated that the RNCB was added to the sanctions list because it had no presence in the Crimea region prior to the occupation by Russia, and because Russian authorities have illegally used the bank in efforts to incorporate Crimea into the Russian Federation.

The U.S. Departments of Treasury and Commerce today announced new regulations intended to significantly loosen the embargo imposed against Cuba in 1963.  The changes to the Cuban Assets Control Regulations (CACR), administered by the Office of Foreign Assets Control (OFAC), and the Export Administration Regulations (EAR), administered by the Bureau of Industry and Security (BIS), will go into effect on January 16, 2015, when the rules are published in the Federal Register.  The new rules are part of the implementation of the Obama Administration’s policy shift concerning Cuba, which was announced by President Obama on December 17, 2014.

On December 18, 2014, President Obama signed the Ukraine Freedom Support Act of 2014 (UFSA) into law,broadening the Administration’s authority to impose sanctions in response to continued Russian activity in Ukraine. Although the legislation authorizes the President to increase sanctions, he has stated that “this does not signal a change in the Administration’s sanctions policy” and the Administration does not intend to impose further sanctions at this time.

Yesterday, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced increased economic sanctions against Russia, including measures against Russia’s largest bank – Sberbank Russia – as well as several state-owned defense technology companies and five energy companies (Gazprom, Gazprom Neft, Lukoil, Surgutneftegas and Rosneft).  The United States has also tightened previous restrictions by lowering from 90 days to 30 days the allowable length of debt U.S. citizens and entities may buy from sanctioned Russian banks – Bank of Moscow, Gazprombank OAO, Vnesheconombank (VEB), Russian Agricultural Bank (Rosselkhozbank),  VTB Bank OAO and Sberbank Russia.

As described in our Alert published on August 1, 2014, the United States and other nations have ramped up sanctions against Russia related to the ongoing situation in Ukraine.

On July 31, 2014, the European Union imposed increased sanctions designed to discourage Russia from, in the words of the EU Regulation, “destabilising the situation in Ukraine.”

In response to Russia’s continuing actions in Ukraine, the United States and other nations have implemented increased economic sanctions that significantly broaden the scope of the sanctions previously in place. In addition to the U.S. actions, Canada, the European Union and Japan have imposed similar sanctions against Russia, including asset freezes and individual designations.

Recently, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) promulgated regulations which formally implement the Ukraine-related sanctions set forth in Executive Orders 13660 (“Blocking Property of Certain Persons Contributing to the Situation in Ukraine”), 13661 (“Blocking Property of Additional Persons Contributing to the Situation in Ukraine”), and 13662 (“Blocking Property of Additional Persons Contributing to the Situation in Ukraine”). OFAC has made numerous designations of entities and individuals under the executive orders, which can be reviewed here.

The new regulations, entitled the Ukraine-Related Sanctions Regulations (URSR)  31 CFR Part 589, have been published in abbreviated form in an effort to provide immediate guidance to the public. OFAC has indicated that it intends to supplement the regulations in the near future with a more comprehensive set of regulations which may include additional guidance on interpretations and definitions, as well as additional general licenses and statements of licensing policy.