New Wave of Sanctions Against Russia

Aug. 30, 2024
By: Ashley J. Bodden

On the eve of Ukraine’s Independence Day in August, the Department of Commerce’s Bureau of Industry and Security (BIS) published a final rule that implements new additional sanctions against Russia and Belarus under the Export Administration Regulations (EAR).

This new wave of sanctions further tightens control on Russia by expanding the scope of the Russia/Belarus Military End User (MEU) and Procurement Froeign Direct Product (FDP) rule; imposes additional license requirements on operation software for computer numerically controlled (CNC) machine tools; cuts off exports to foreign companies on the BIS Entity List; restricts trade to additional foreign addresses and issues guidance to exporters on identifying suspicious transactions; and provides additional guidance and recommendations on contractual language referencing export regulations, specifically, restrictions that target unlawful reexports to Russia and Belarus.

This expansion is intended to target the transshipment of microelectronics and other items that bear the brand of a U.S.-headquartered company, even if manufactured outside the United States. BIS revised EAR by adding 123 entities under 131 entries to the Entity List – 64 entities in Russia or the Crimea Region of Ukraine, 42 in the People’s Republic of China (PRC, including Hong Kong), and 20 entities in Türkiye, Iran, and Cyprus – for shipping U.S.-origin and U.S.-branded items to Russia in contravention of U.S. export controls or for engaging in other activities contrary to U.S. national security and foreign policy interests.

In its effort to aggressively target entities that ship U.S.-origin and U.S.-branded items to Russia, BIS added four high-diversion risk addresses in Hong Kong and Türkiye to the Entity List, which will now require a license for transactions involving parties using those addresses.

BIS is issuing guidance and recommendations to U.S. exports on language they can include in their sales contracts and other export documents to ensure that overseas customers understand that BIS export controls under EAR applies even after the initial sale. Similar to the European Union’s “No re-export to Russia” clause. Additionally, BIS is issuing guidance to foreign corporate service providers to help them avoid providing services to bad actors that could use them to mask their identity.

As Assistant Secretary of Commerce for Export Enforcement Matthew S. Axelrod has stated, “it doesn’t matter whether you’re in the People’s Republic of China or Türkiye – if you send Common High Priority List items (or a range of other items) to Russia, you risk being added to the BIS Entity List.” Since March 2022, BIS has added 1,056 entries to the Entity List, and it likely won’t stop there. If you have questions concerning Russia related export controls or sanctions do not hesitate to contact an attorney at Barnes Richardson, & Colburn LLP.