In coordination with other G7 nations, on the one-year anniversary of Russia’s war against Ukraine, the Foreign, Commonwealth & Development Office of the UK Department for Business and Trade, and the US Department of the Treasury announced sanctions targeting military supplies, pathways of sanctions evasion, and a new determination focusing on the metals and mining sector of the Russian economy.
In order further to address the threats described in Executive Order 14024, the Office of Foreign Assets Control of the US Department of the Treasury issued a Determination declaring that Section 1(a)(i) of EO 14024 shall apply to the metals and mining sector of the Russian Federation economy, effective immediately, and that any person determined to be operating in that sector will be the subject of US sanctions.
The US designations, issued pursuant to Executive Order 14024, include 22 individuals and 83 entities. Among them are Russian banks and their subsidiaries, private equity firms, investment advisors, and businesses and businessmen of Swiss and German nationality who are involved in the procurement of sensitive technologies on behalf of the Russian Federation and the circumvention of US sanctions.
As a result of these designations, all property and interests in property of the 95 designees within the United States or within the possession or control of a US person are blocked, and US persons are generally prohibited from engaging in transactions involving the designated persons.
The Office of Foreign Assets Control has also issued four general licenses in conjunction with the new designations:
- General License 8F, “Authorizing Transactions Related to Energy,” replaces and supersedes GL 8E. It authorizes energy-related transactions with 11 Russian banks and joint stock companies, including the Central Bank of the Russian Federation and VTB Bank, until May 16, 2023. GL 8F does not authorize transactions prohibited by Directives 1A and 2 of Executive Order 14024, debits to accounts held at US financial institutions belonging to the Central Bank of the Russian Federation, or transactions involving persons blocked pursuant to the Russian Harmful Foreign Activities Sanctions Regulations.
- General License 13D, “Authorizing Certain Administrative Transactions Prohibited by Directive 4 under Executive Order 14024,” replaces and supersedes GL 13C. It is valid until June 6, 2023, and authorizes transactions that are ordinarily incident and necessary to day-to-day operations of US persons in the Russian Federation, including the payment of taxes, import duties, license fees, and the like. The general license does not authorize debits to US accounts of the Russian Ministry of Finance, Central Bank or National Wealth Fund, or transactions involving persons blocked pursuant to the Russian Harmful Foreign Activities Sanctions Regulations.
- General License 60, “Authorizing the Wind Down and Rejection of Transactions Involving Certain Entities Blocked on February 24, 2023,” is valid until May 25, 2023, and authorizes transactions otherwise prohibited by Executive Order 14024 that are ordinarily incident and necessary to the wind down of transactions involving any of nine listed joint stock companies and credit banks, so long as any payment to a blocked entity is made into a blocked account in accordance with the Russian Harmful Foreign Activities Sanctions Regulations. GL 60 also authorizes US persons to reject rather than block transactions prohibited by 14024 that are necessary and incident to the processing of funds of one of the blocked entities as an originating, intermediary or beneficial financial institution. GL 60 does not authorize transactions prohibited by Directive 2 of Executive Order 14024, debits to accounts held at US financial institutions belonging to the Central Bank of the Russian Federation, or transactions involving persons blocked pursuant to the Russian Harmful Foreign Activities Sanctions Regulations.
- General License 61, “Authorizing Transactions Related to Debt or Equity of, or Derivative Contracts Involving, Certain Entities Blocked on February 24, 2023,” is valid until May 25, 2023. It authorizes transactions otherwise prohibited by Executive Order 14024 that are ordinarily incident and necessary to the divestment or transfer of debt or equity of six listed banks and joint stock companies; it also authorizes transactions incident to the clearing and settling of trades of covered debt or equity, and the wind down of derivative contracts that were placed or entered into prior to the issuance of the general license. GL 61 does not authorize the sale, purchase, or investment in covered debt or equity of blocked persons and entities not enumerated in the license; nor does it authorize transactions prohibited by Directive 2 under EO 14024, or debits to US accounts of the Russian Ministry of Finance, Central Bank or National Wealth Fund, or transactions involving persons blocked pursuant to the Russian Harmful Foreign Activities Sanctions Regulations.
In order to clarify the operation of Executive Order 14023 and these general licenses, OFAC issued five Frequently Asked Questions.
- FAQ 1114 summarizes the actions taken on February 24, 2023 regarding the metals and mining sector of the Russian Federation economy.
- FAQ 1115 defines the term “metals and mining sector of the Russian Federation economy” to include 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.
- FAQ 1116 asks whether all persons that operate or have operated in the metals and mining sector of the Russian Federation economy are sanctioned, explains that all such persons are not automatically sanctioned, and points out that other Executive Orders such as EO 14071 do prohibit US persons from new investment in the Russian Federation, including in the metals and mining sector.
- FAQ 1117 concerns companies that operate in the Russian metals and mining sector, and their potential exposure to sanctions.
- FAQ 1118 addresses possible “exit taxes” that may be required by the Russian government prior to the divestment of assets held in the Russian Federation.
As part of the coordinated G7 action, the United Kingdom added 92 entries to its consolidated sanctions list pursuant to the Russia (Sanctions) (EU Exit) Regulations 2019 (S.I. 2019/855), freezing the assets of 80 individuals and 12 entities, including Russian officials, financiers, managers and executives in strategic sectors such as aeronautics, transport, and mining, Iranian aviation executives, several German and Estonian businessmen, Russian research institutes, electronics manufacturers, and banks. The sanctioned individuals include relatives of high-ranking politicians, senior executives at Gazprom, Aeroflot, and Rosatom, Russia’s state-owned nuclear power company, executives at Russia’s largest defense companies such as Rostec and Almaz-Antey Corporation, and several banks, including MTS.
In a press release, UK Foreign Secretary James Cleverly described the new export sanctions as banning “every item Russia is using on the battlefield.” He noted that, with the 92 new entries, the consolidated list of the Foreign, Commonwealth & Development Office of the UK Department for Business and Trade exceeds 1,500 entries. Foreign Secretary Cleverly added, “Ukrainians are turning the tide on Russia, but they cannot do it alone. That is why we must do more to help Ukraine win…Today we are sanctioning the elites who run Putin’s key industries and committing to prohibit the export to Russia of every item Russia has been found using on the battlefield.”
Other G7 Nations
Canada, France, Germany, Italy and Japan have either announced, or are contemplating, new sanctions against Russia, following the meeting of G7 finance ministers in India. For example, Canada has imposed sanctions on 13 Russian institutions, including both houses of the Russian duma, the Federal Security Bureau, and the Russian financial intelligence agency and its director.
US Dept of the Treasury press release | UK press release
UK Notice | US Determination | GL 8F | GL 13D
GL 60 | GL 61 | FAQs 114-118 | Gov’t of Canada press release