Russia-related Designations; Issuance of Amended Russia-related Directive 4, Russia-related General Licenses; Publication of Russia-related Determinations; and New and Amended Frequently Asked Questions

In view of the ongoing aggression of Russia towards Ukraine, the U.S. Department of the Treasury has drawn up – in coordination with the other G7 states- a new massive sanctions package targeting Russia, the Russian economy, and Russian firms and individuals, which consists of nearly 400 new designations, the issuance of a new Directive under Executive Order 14024, several determinations, and other measures. Each measure is briefly described below.
(1) Issuance of amended Directive 4: The Directive replaces previous Directive 4 which was issued as a direct consequence of Russia President Putin’s acknowledgement of the independence of the two Ukraine regions Donetsk People’s Republic (DNR) and Luhansk People’s Republic (LNR) and Russia’s subsequent invasion into the Ukraine two days thereafter.
The amended version, just like the previous one, prohibits „any transaction involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation, including any transfer of assets to such entities or any foreign exchange transaction for or on behalf of such entities.“ It also includes a new section to require (legal) persons which are in possession or control of property where any of the before mentioned entities or bodies have an interest in to report such fact to OFAC by June 18, 2023 and annually thereafter by June 30. The Directive also sets out the exact information that must be reported.
(2) Issuance of a new Determination Pursuant to Section 1(a)(i) of Executive Order 14024: This Determination expands the scope of non-permissible, sanctionable activities as regards the Russian Federation to include the „architecture, engineering, construction, manufacturing, and transportation sectors“. Firms and individuals that operate or have operated in these areas in the Russian Federation may be sanctioned accordingly.
(3) Issuance of a new Determination Pursuant to Section 1(a)(ii) of Executive Order 14071: This Determination expands the scope of non-permissible activities as regards the Russian Federation to include „architecture and engineering“. Therefore, it is prohibited to export, re-export, or supply any of such services to the Russian Federation.
(4) Issuance of new General License 13E: This General License replaces previous General License 13D which was issued on February 24, 2023. It permits financial transactions necessary for administrative purposes such as the application of licenses, payment of taxes, or payment of import duties. A list of „administrative purposes“ is provided in the license. The license is valid through August 17, 2023.
(5) Issuance of new General License 66: This General License was issued as a direct consequence of the designations made by OFAC on May 19, 2023. It permits certain (financial) transactions necessary for the wind-down of any business involving Public Joint Stock Company Polyus or any company in which Polyus owns 50% or more. Polyus was sanctioned anew on May 19, 2023. The license is valid through August 17, 2023.
(6) Issuance of new General License 67: This General License, also relating to Public Joint Stock Company Polyus or any company in which Polyus owns 50% or more, permits transactions that are necessary to divest or transfer any debt or equity securities of the company in an effort to comply with U.S. sanction regulations. It also permits the clearing and settlement of trades of covered debt or equity securities and the wind-down of derivative contracts so long as any of these trades / contracts were made / concluded prior to May 19, 2023. The license is valid through August 17, 2023.
(7) Issuance of new General License 68: This General License permits financial transactions relating to the following newly sanctioned entities or organizations, so long as they are necessary to wind-down any existing „transactions“ with these parties and so long as any payments to these entities are made into a blocked (frozen) account. The license is valid through July 18, 2023.
The following entities are listed in the license – as quoted:
– Federal State Budgetary Educational Institution of Higher Education Grozny State Oil Technical University Named After Academician M.D. Millionshchikov;
– Federal State Budget Educational Institution of Higher Education Saint Petersburg Mining University;
– Federal State Budgetary Educational Institution of Higher Education Sergo Ordzhonikidze Russian State University for Geological Prospecting;
– Federal State Budgetary Educational Institution of Higher Vocational Education Gubkin Russian State University of Oil and Gas;
– State Budgetary Educational Institution of Higher Education Almetyevsk State Oil Institute; or
– Any entity in which one or more of the above persons own, directly or indirectly, individually or in the aggregate, a 50 percent or greater interest.
(8) Issuance of several NEW frequently asked questions, including the following: (for the answers, please click on the provided link)
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?
FAQ 1127: What does a determination of a sector pursuant to Executive Order (E.O.) 14024 do?
FAQ 1128: Under Executive Order (E.O.) 14071, “Prohibiting New Investment in and Certain Services to the Russian Federation in Response to Continued Russian Federation,” U.S. persons are prohibited from providing certain services to persons located in the Russian Federation. How will OFAC define those categories of services?
FAQ 1129: Do blocking sanctions issued by the State Department on May 19, 2023 on Polimetall AO apply to its corporate parent and affiliates?
(9) Modifications of various frequently asked questions, including the following: (again, for the answers, please click on the provided link)
FAQ 998: What are the requirements of Directive 4 under Executive Order (E.O.) 14024, “Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation,” as amended (Russia-related Sovereign Transactions Directive)?
FAQ 999: What authorizations exist for entities subject to Directive 4 under Executive Order (E.O.) 14024, “Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation,” as amended (Russia-related Sovereign Transactions Directive)?
FAQ 1000: What sanctions are applicable to the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation?
FAQ 1001: Does the 50 Percent Rule apply to Directive 4 under Executive Order (E.O.) 14024, “Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation,” as amended (Russia-related Sovereign Transactions Directive)?
FAQ 1002: Can U.S. persons engage in indirect transactions with persons subject to Directive 4 under Executive Order (E.O.) 14024, “Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation,” as amended (Russia-related Sovereign Transactions Directive)?
FAQ 1004: Are U.S. persons required to block transactions involving entities subject to Directive 4 under Executive Order (E.O.) 14024, “Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation,” as amended (Russia-related Sovereign Transactions Directive)?
FAQ 1005: Does Directive 4 under Executive Order (E.O.) 14024, “Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation,” as amended (Russia-related Sovereign Transactions Directive), prohibit trading in the secondary markets for Russian sovereign debt?
FAQ 1018: Are non-U.S. persons exposed to sanctions if they continue to import to non-U.S. jurisdictions certain products of Russian Federation origin that are banned from the United States pursuant to Executive Order (E.O.) of March 8, 2022, “Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine”?
FAQ 1059: Do the determinations made pursuant to Executive Order (E.O.) 14071 on May 8, 2022, “Prohibitions Related to Certain Accounting, Trust and Corporate Formation, and Management Consulting Services,” on September 15, 2022, “Prohibitions Related to Certain Quantum Computing Services,” and on May 19, 2023, “Prohibitions Related to Architecture and Engineering Services” (“the determinations”), prohibit U.S. persons from providing services to persons located outside of the Russian Federation that are owned or controlled by persons located in the Russian Federation?
FAQ 1061: Do the determinations made pursuant to Executive Order (E.O.) 14071 on May 8, 2022, “Prohibitions Related to Certain Accounting, Trust and Corporate Formation, and Management Consulting Services, on September 15, 2022, “Prohibitions Related to Certain Quantum Computing Services,” and on May 19, 2023, “Prohibitions Related to Architecture and Engineering Services” (“the determinations”) prohibit U.S. persons from working as employees of entities located in the Russian Federation?
FAQ 1062: Do the prohibitions imposed by the determinations made pursuant to Executive Order (E.O.) 14071 on May 8, 2022, “Prohibitions Related to Certain Accounting, Trust and Corporate Formation, and Management Consulting Services,” on September 15, 2022, “Prohibitions Related to Certain Quantum Computing Services,” and on May 19, 2023, “Prohibitions Related to Architecture and Engineering Services,” apply to services provided to a parent company located in the Russian Federation by a U.S. subsidiary?
(10) Designation of nearly 400 entities, persons, and ships: OFAC has also designated countless persons, entities, and ships in this context. Due to the large number of sanctioned parties, we refrain from listing them individually at this point. Please refer to the press statement for detailed information on their names, place of residency, date of birth – if applicable, company number – if applicable, and other identifying information.
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Finally, OFAC has issued an accompanying statement to explain the reasoning, objective, and targets of these sanction measures.