May 7, 2024

U.S. designates nearly 300 persons associated with Russia’s military-industrial base

On May 1, 2024, the U.S. Department of the Treasury and Department of State imposed nearly 300 new designations aimed at Russia’s military-industrial base in an effort to disrupt the war with Ukraine by limiting Russia’s access to funds and materiel it needs to sustain the war.  The sanctions target chemical and biological weapons programs in Russia as well as individuals and entities around the world, including third countries, that obtain critical technology and equipment from abroad that Russia desperately needs.  In addition, the Department of State sanctioned more than 80 individuals and entities involved in sanctions evasion and Russia’s future energy, metals, and mining production as well as three individuals involved in the death of opposition leader Aleksey Navalny.

The sanctions imposed by the Treasury and State Departments were issued pursuant to Executive Order 14024, as amended, which targets specified harmful foreign activities of the Russian Federation.  As a result of these designations, all property and interests in property of the designated persons within the United States or within the possession or control of a U.S. person are blocked, and U.S. persons are generally prohibited from engaging in transactions involving a designated person.  Entities owned 50 percent or more by one or more blocked persons are also blocked.

In light of the new sanctions, the Office of Foreign Assets Control issued three general licenses under the Russian Harmful Foreign Activities Sanctions Regulations (“RuHSR”), 31 CFR part 587.  General License 95 temporarily authorizes civil aviation safety-related transactions and wind down transactions involving Limited Liability Company Aviakompaniya Pobeda until July 30, 2024.  General License 96 temporarily authorizes limited safety and environmental transactions involving recently blocked persons or vessels, including Red Box Energy Services PTE LTD, CFU Shipping Co Limited, and Transstroy Limited Liability Company until July 30, 2024.  In addition, General License 97 temporarily authorizes, until June 17, 2024, wind down transactions involving other entities blocked on May 1, 2024, including LLC Sibcapital and Yantai Iray Technology Co Ltd.  The transactions authorized by these general licenses are permitted as long as any related payments are made into blocked accounts in accordance with the RuHSR.

Concurrent with the imposition of new sanctions, the Department of Justice filed a $1.55 million forfeiture complaint against a set of aircraft landing gear purchased in violation of U.S. economic sanctions for the benefit of LLC RM Design and Development (“RMDD”), a Kyrgyz Republic-based shipping company that was designated by OFAC in July 2023 for operating in the electronics sector of the Russian economy.  According to the DOJ, the landing gear was purchased for a Boeing 727-800 that had been detained at the Miami International Airport by the U.S. Customs and Border Patrol since September 2023, and had been sold by a Florida-based company to an intermediary in Istanbul, GQ Solution Elektronik Ekipman Limited Sirketi, one of the entities designated by OFAC on May 1, 2024.

U.S. Department of Treasury Press Release | U.S. Department of State Press Release | General License 95 | General License 96 | General License 97 | U.S. Department of Justice Press Release