On May 23rd, 2021, a Belarusian fighter jet abruptly intercepted a commercial Ryanair flight in route from Athens, Greece to Vilnius, Lithuania, forcing the commercial jet to make an emergency landing. Soon after the jet arrived in the Belarusian capital of Minsk one of the passengers on board, Belarusian opposition activist and journalist Roman Protasevich was arrested by Belarusian authorities. While a general sense of confusion immediately followed the incident, Belarusian officials have since defended their actions stating the flight was diverted due to a bomb threat, although no bomb was ever recovered.
Shortly after the incident United States Senate Foreign Relations Committee Chairman Bob Menendez (D-NJ) issued a joint statement along with his counterparts in the Czech Republic, Germany, Ireland, Latvia, Lithuania, Poland, and the United Kingdom. The statement broadly condemned the government of Belarus, referring to the May 23rd incident as an “act of piracy” and an “act of state terror and kidnapping.” The joint statement called for the imposition of sanctions in response. On May 27th, the G7 released a similar joint statement strongly condemning the incident and once again indicating that sanctions are likely to follow. Shortly after the incident President Biden issued his own statement, reading in part, “I welcome the news that the European Union has called for targeted economic sanctions and other measures, and have asked my team to develop appropriate options to hold accountable those responsible.” While it has yet to been seen how exactly the United States will ultimately respond, sanctions appear to be increasingly likely.
Since June of 2006, the Belarus Sanctions Regulations (BSR) have provided the legal framework for United States sanctions imposed upon Belarus. The BSR were first enacted in June of 2006 under President George W. Bush, following the 2006 Belarusian national elections several months prior, elections which the Bush administration described as “fundamentally undemocratic.” In general, the BSR prohibit transactions involving a “blocked account” or “blocked property” that come within the United States, or that come within the possession or control of “United States Persons.” Included within these restrictions is the making of any contribution or provision of funds, goods, or services by a United States Person to or for the benefit of any person whose property and interests in property are blocked under the BSR.
Under the regulations the terms “blocked account” and “blocked property” refers to any account or property held in the name of a person whose property and/or interests in property are blocked pursuant to 31 CFR 548.201(a). In practical terms, blocked persons are those included in the Office of Foreign Asset Control (OFAC) list of Specially Designated Nationals (SDN). Entities on the SDN list blocked by the Belarus Sanctions Regulations contain a Belarus or “[BY]” designation, meaning any transaction involving such an entity should be reviewed through the lens of the BSR. Further complicating matters, the definition of blocked entities includes not only those listed as an SDN, but any entity who is directly or indirectly owned 50 percent or more in the aggregate by one or more blocked persons. While the BSR apply only to “United States persons,” it is critical that one understand the somewhat nuanced meaning of this term. The term applies not only to any United States citizen, permanent resident alien, or person in the United States, but also to any entity organized under the laws of the United States, including foreign branches of such entities. 31 CFR 548.312.
While at this point it is still unknown whether the United States will impose additional sanctions on Belarus, if expanded sanctions are imposed the BSR represents the likely vehicle for taking such action. It is therefore critical that any United States Persons engaging or potentially engaging in business with any blocked individuals or entities fully understand the reach and scope of the BSR, and that they have implemented robust restricted party screening measures to snare potentially troublesome transactions for further review. If you have any questions relating to United States sanctions do not hesitate to contact an attorney at Barnes, Richardson & Colburn LLP.