October 17, 2022

OFAC issues FAQ on the sanctions risks faced by non-US companies that support Russia’s military-industrial complex

On October 14, 2022, the US Department of the Treasury’s Office of Foreign Assets Control issued a new Frequently Asked Question (FAQ 1092) to reiterate that non-US companies that provide ammunition or other military goods to Russia or support Russia’s military-industrial complex do risk exposure to Russia-related sanctions under multiple authorities, including Executive Order 14024 which targets persons who operate or have operated in the defense and related material sector of the Russian economy, and the Ukraine-/Russia-Related Sanctions Regulations (URSR), 31 CFR part 589, which has multiple authorities that enable the US to block persons who engage in the provision of ammunition or other military goods to Russia.  In addition to foreign persons who provide assistance to the Russian military, OFAC will also target private military companies or paramilitary groups who have participated in or otherwise supported Russia’s attack on Ukraine.  

FAQ 1092 also provides that both OFAC and State Department have already sanctioned numerous key firms in Russia’s defense-industrial base, including the State Corporation Rostec, which is considered to be the cornerstone of this Russian sector.  The State Department has additionally imposed sanctions pursuant to Section 231 of the Countering America’s Adversaries Through Sanctions Act (CAATSA) to identify persons who are part of , or operate on behalf of, Russia’s defense and intelligence sectors.  In accordance with Section 235 of the CAATSA, anyone that knowingly engages in a significant transaction with persons listed pursuant to CAATSA Section 231, are subject to five or more separate sanctions. The US Commerce Department’s Bureau of Industry and Security (“BIS”) has also imposed restrictions on the export and reexport of US-origin and certain foreign-produced commodities, software, and technologies in an effort to restrict access to products that Russia may need to sustain its military capabilities.

FAQ 1092