Escalated Sanctions Related to Russia Hit Globally

Feb. 23, 2024
By: Marvin E. McPherson

At the two-year mark of the Russian war in Ukraine, the United States and its allies have escalated actions against Russia through export controls and sanctions. These sanctions not only impact Russia but also neighboring countries where circumvention activities are at an all-time high. This broader scope of controls and sanctions makes it crucial that companies review current and new suppliers and customers after these significant developments.

The U.S. took two significant steps: implementing new sanctions and imposing additional export control restrictions on entities found aiding Russia or its military regime. Under the new sanctions, Office of Foreign Assets Control (OFAC) listed nearly 300 individuals and entities involved in semiconductor and electronics manufacturing, logistics, cargo transportation, and third-country suppliers of manufacturing and technology equipment, including computer numerically controlled (CNC) machines to the sanctions list pursuant to E.O. 14024.

Additionally, Bureau of Industry and Security (BIS) announced restrictions on 93 entities from various destinations, including China, India, Kyrgyzstan, Russia, South Korea, Turkey, and the United Arab Emirates (UAE). Many of these entities are designated as Russian-Belarusian military end-users, requiring a license for all items subject to EAR (Export Administration Regulations) with a review policy of denial, except for food and medicine classified as EAR99, which will be reviewed case-by-case.

Concurrently, the Finance ministries of the Netherlands (FIU-NL), Germany (FIU-DE), and Canada (FINTRAC) issued an advisory regarding financial transactions suspected of being linked to the illegal export of dual-use goods and laundering of criminal proceeds. The advisory recommends cross-checking customer databases with sanction lists such as the Consolidated List of persons, groups, and entities subject to European Union financial sanctions, the United States Consolidated Screening List, and the Consolidated Canadian Autonomous Sanctions List. Furthermore, companies should monitor customer databases for hits with Russian military end-users, as listed in Annex IV of Council Regulation (European Union) 833/2014.

The advisory also provides client risk indicators to assess contextual and financial factors indicating potential illegal exports or money laundering activities related to Russian end-users. However, these indicators should not be interpreted in isolation, as they may not necessarily indicate money laundering, terrorist financing, or other suspicious activities on their own.

Stay informed about these regulatory updates for compliance in the evolving landscape. If you have any questions surrounding the new sanctions or export controls, please contact any attorney at Barnes Richardson and Colburn.