Issuance of new Russia-related Executive Order and related Determinations; Issuance of Russia-related General Licenses and Frequently Asked Questions; Publication of Russia-related Compliance Advisory

The Office of Foreign Assets Control, OFAC, has issued a press release to inform of various new sanction measures of the U.S. government in view of the ongoing aggression of Russia towards Ukraine. Specifically, President Joseph Biden has issued a new Executive Order to enhance existing sanction measures and OFAC has issued three new determinations under Executive Order 14024 to impose further related restrictions. Furthermore, the Office issued various new frequently asked questions in this context, revised existing ones, issued three new general licenses with respect to the new restrictions, and issued a new compliance guide for financial institutions to assist them in their efforts to comply with existing and new sanction measures. Each of these actions or documents is briefly described below.
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(1) Issuance of a new Executive Order by President Joseph Biden: On December 220, 2023, the President issued a new Executive Order „on Taking Additional Steps With Respect to the Russian Federation’s Harmful Activities“. The Executive Order modifies Executive Order 14024 and Executive Order 14068 to enable the sanctioning of foreign financial institutions, if they engage in any of the following activities:
– conduct or facilitate significant transactions for or on behalf of individuals or entities involved in certain Russian Federation military industrial sectors; or
– engage in significant transactions, provide services, or involve themselves in the sale, supply, or transfer (directly or indirectly) of items related to Russia’s military industrial base, as determined by the Secretary of the Treasury in consultation with the Secretaries of State and Commerce.
Moreover, the amendments to Executive Order 14068 expand import prohibitions into the United States. The Secretary of the Treasury, in consultation with the Secretaries of State, Commerce, and Homeland Security, may prohibit the importation and entry of various products, potentially including:
– specific categories of fish, seafood, and their preparations, diamonds, and other goods wholly or partly mined, extracted, produced, or manufactured in the Russian Federation;
– products containing such products; and
– prohibited products that have transited through or been exported from Russia.
Additionally, the Secretary of Homeland Security, with the approval of the Secretary of the Treasury, is empowered to establish rules and regulations to gather necessary documentation or information to enforce these additional importation prohibitions promptly.
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(2) Issuance of a Determination Pursuant to Section 11(a)(ii) of E.O. 14024 (December 22, 2023): This determination under E.O. 14024 (as amended) includes an additional list of items which are classified as prohibited goods for which financial institutions may not provide any services for (as noted above) and which may not be sold, transferred, supplied, or exported to the Russian Federation, including various machine tools, manufacturing equipment, semi-conductors, electronic test equipment, and various others.
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(3) Issuance of a Determination Pursuant to Section 1(a)(i)(B) of Executive Order 14068 (December 22, 2023): This determination under E.O. 14068 (as amended) includes various seafoods and preparations thereof, which are classified as prohibited goods for which financial institutions may not provide any services for (as noted above) and which may not be purchased or imported from the Russian Federation, including salmon, cod, pollock, and crabs. The restriction also extends to seafood caught in Russian waters.
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(4) Issuance of a Determination Pursuant to Section 1(a)(i)(A) of E.O. 14068 (December 22, 2023): This determination under E.O. 14068 (as amended) determines gold of Russian origin to be a prohibited good for which financial institutions may not provide any services for (as noted above) and which may not be purchased or imported into the United States.
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(5) Issuance of three new general licenses (GLs): In an effort to wind down any transactions involving the newly prohibited goods, OFAC has issued three new GLs, including the following:
1. General License 83 which permits any financial transactions related to the import of the above noted seafoods provided that the contracts and agreements for such import were concluded prior to December 22, 2023. The license expires on February 21, 2024.
2. General License 84 which permits financial institutions for a period of 10 days to engage in financial transactions for the purposes of the wind-down of any correspondence relationships with newly sanctioned financial institutions pursuant to the provisions of the above noted, new Executive Order. The 10 day period commences on the day the (foreign) financial institution is sanctioned.
3. General License 85 which permits otherwise prohibited financial transactions involving Expobank Joint Stock Company or any entity owned or controlled by such (50% or more in ownership interest) for purposes of the wind-down of current engagements provided that payments to the bank or to related firms are made into frozen accounts only. The license is time-limited up to March 21, 2024.
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(6) Issuance of various new FAQs: To foster understanding and compliance with the new sanction measures, OFAC has issued numerous new and revised FAQs in this context. Due to the large number of FAQs, we only list the questions and provide the link to each FAQ where the corresponding answers may be found. Very significant FAQs are marked in bold.
##### Newly issued FAQs
FAQ 1146: What does Executive Order (E.O.) of December 22, 2023, “Taking Additional Steps With Respect to the Russian Federation’s Harmful Activities,” do?
FAQ 1147: How does Executive Order (E.O.) of December 22, 2023 amend E.O. 14024, “Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation”?
FAQ 1148: What activities could expose a foreign financial institution (FFI) to sanctions under section 11 of Executive Order (E.O.) 14024, as amended by E.O. of December 22, 2023?
FAQ 1149: What sanctions can be imposed on a foreign financial institution (FFI) that engaged in conduct described in section 11 of Executive Order (E.O.) 14024, as amended by E.O. of December 22, 2023? What are the obligations of U.S. financial institutions?
FAQ 1150: What does determination of December 22, 2023, “Determination Pursuant to Section 11(a)(ii) of Executive Order (E.O. 14024)” (Russia Critical Items Determination) do?
FAQ 1151: How does OFAC intend to interpret the following terms in Executive Order (E.O.) 14024, as amended by E.O. of December 22, 2023: “foreign financial institution,” “Russia’s military-industrial base,” and “significant transaction or transactions”?
FAQ 1152: Could foreign financial institutions (FFIs) that engage in transactions in non-USD currencies be sanctioned under section 11 of Executive Order (E.O.) 14024, as amended by E.O. of December 22, 2023?
FAQ 1153: How can I identify which Specially Designated Nationals (SDNs) operate in a particular sector that supports Russia’s military-industrial base?
FAQ 1154: How does Executive Order (E.O.) of December 22, 2023 amend E.O. 14068, “Prohibiting Certain Imports, Exports, and New Investment with Respect to Continued Russian Federation Aggression”?
FAQ 1155: What does the determination of December 22, 2023, “Prohibitions Related to Imports of Certain Categories of Fish, Seafood, and Preparations Thereof,” pursuant to Executive Order (E.O.) 14068, as amended by E.O. of December 22, 2023, (Seafood Determination) prohibit?
FAQ 1156: I have a shipment of a certain product(s) containing the types of seafood listed in the determination of December 22, 2023 pursuant to Executive Order (E.O.) 14068, as amended by E.O. of December 22, 2023, (Seafood Determination) en route to the United States that was contracted prior to December 22, 2023. Can I complete such import into the United States? Can I find a new buyer for this shipment and/or re-direct the shipment to a country other than the United States?
FAQ 1157: For the purposes of the determination of December 22, 2023 pursuant to Executive Order (E.O.) 14068, as amended by E.O. of December 22, 2023, (Seafood Determination) what is meant by the terms “salmon,” “cod,” “pollock,” and “crab”?
##### Revised FAQs
FAQ 973: I am a U.S. individual or company that maintains an account at a foreign financial institution sanctioned pursuant to Directive 2 under Executive Order (E.O.) 14024. What are my obligations?
FAQ 1070: What does the gold-related determination pursuant to Executive Order (E.O.) 14068 prohibit?
FAQ 1126: Under Executive Order (E.O.) 14024, “Blocking Property With Respect To Specified Harmful Foreign Activities of the Government of the Russian Federation,” any person determined to operate or have operated in certain sectors of the Russian Federation economy may be blocked. How is OFAC defining those sectors?
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(7) Issuance of a new Sanctions Advisory: Guidance for Foreign Financial Institutions on OFAC Sanctions Authorities Targeting Support to Russia’s Military-Industrial Base: This guidance is aimed at financial institutions of all kinds in view of the new provisions of the above noted Executive Order which provides for the sanctioning of foreign financial institutions that „conduct or facilitate significant transactions or provide any service involving Russia’s military-industrial base“. In detail, this guidance
– explains the reasons for these new provisions,
– provides examples of circumstances that could cause institutions to be sanctioned (e.g. by processing financial transactions in the related sectors or by maintaining correspondence accounts with designated firms and entities),
– explains the steps institutions are recommended to take to identify and mitigate the risk of being sanctioned (e.g. reviewing account monitoring procedures, communicating sanction-related expectations to customers, or performing a survey among import, export, and trading customers to find out about their relationship to Russian (designated) entities and individuals), and
– summarizes the content of previous guidance issued in this context.