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Enforcement Edge
October 6, 2022

Biden Administration Announces New Sanctions on Russia in Response to Annexation in Ukraine

Enforcement Edge: Shining Light on Government Enforcement

On September 30, 2022, the Biden Administration announced a new tranche of sanctions against individuals and entities that provide political and material economic support to Russia’s attempts to annex four regions of Ukraine and imposed export restrictions on entities that violated or attempted to violate US export controls targeting Russia. The specific measures implemented by the US Departments of Treasury, Commerce, and State are summarized below.

The Treasury Department

The US Department of Treasury, Office of Foreign Assets Control (“OFAC”) designated 14 persons in Russia’s military-industrial complex, including two international suppliers, three key leaders of Russia’s financial infrastructure, immediate family members of some of senior Russian officials, and 278 members of Russia’s legislature for enabling Russia’s attempts to annex sovereign Ukrainian territory. Among the designated entities are Radioavtomatika and Novastream Limited, for purported sanctions evasion, and their leadership.

In addition, OFAC issued new guidance emphasizing that OFAC is prepared to more aggressively use its existing sanctions authorities, including Executive Orders (EO) 13660, 14024, and 14065, to target persons—inside or outside Russia—whose activities may constitute “material support” of persons sanctioned pursuant to those executive orders, or sanctionable activity related to Russia’s sham referenda, purported annexation, and continued occupation of the Kherson, Zaporizhzhya, Donetsk, and Luhansk regions of Ukraine. As noted in the guidance, OFAC sanctions are not designed to target Ukraine or Ukrainians, including those living in areas occupied or purportedly annexed by Russia.

In line with this new guidance, OFAC designated two third-country entities supporting Radioavtomatika: Sinno Electronics Co., Limited (Sinno), a People’s Republic of China supplier of Radioavtomatika, and Taco LLC (Taco), an Armenian supplier. The entities and their leadership were designated for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of Radioavtomatika in violation of EO 14024.

The Commerce Department

OFAC’s action also is complemented by the Commerce Department’s listing of 57 Russian entities on the Entity List for acquiring or attempting to acquire US-origin items in support of the Russian military. The Department’s Bureau of Industry and Security (BIS) issued the Final Rule listing 57 entities that have been determined to be acting contrary to the national security or foreign policy interests of the United States. Among the listed entities are the Russian Institute of Radio Navigation and Time, the Federal Technical Regulation and Metrology Agency, and the Institute of Physics Named After P.N. Lebedev of the Russian Academy of Sciences. The entities are listed for their involvement in the development of quantum computing technologies, which would further enable Russia’s malicious cyber activities, or are otherwise important to Russia in developing advanced production and development capabilities. Forty-nine entities will receive footnote 3 designations because the End-User Review Committee has determined that they are Russian “military end users” (MEU). Among those are Siberian Scientific-Research Institute of Aviation N.A. S.A. Chaplygin, Salute Gas Turbine Research and Production Center, and Scientific Research Institute of Applied Acoustics. Footnote 3 designations significantly expand the universe of export control restrictions on non-US origin goods under the BIS's Russia-MEU Foreign Direct Product (FDP) rule. For more information on the Russia-MEO FDP rule, see our prior advisory.

Notably, these new Entity List designations resulted primarily from concerns that these entities acquired or attempted to acquire US origin items to support Russia's military in connection with possible diversion activities. We anticipate BIS to continue to scrutinize businesses that supply US origin items to Russia in light of ongoing diversion risks.

The State Department

The Department of State also imposed visa restrictions on 910 individuals, including members of the Russian Federation military, Belarusian military officials, and Russian proxies, for interfering with Ukrainian independence. The Department of State also designated Russian national Ochur-Suge Mongush for purported human rights violations. As a result, Mongush and his immediate family members are ineligible for entry into the United States.

We’ve provided the full list of sanctioned individuals and entities below. We will continue to monitor the sanctions and export control restrictions as they emerge.

Click here for the full Annex  

© Arnold & Porter Kaye Scholer LLP 2022 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.