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Effective February 23, 2024, the U.S. government imposed blocking (SDN) sanctions under Russia-related Executive Order 14024 on approximately 500 individuals and entities, primarily but not exclusively in Russia, and added 93 entities to the Commerce Department’s Entity List, of which 63 are based in Russia. Simultaneously, the U.S. State, Treasury, Commerce, and Labor Departments issued a joint advisory to businesses, warning that “doing business in the Russia Federation and in Russia-occupied territories of Ukraine poses serious legal, financial, and reputational risks” and that while risks “may be mitigated by rigorous due diligence” regarding human rights, sanctions, and anti-corruption, “substantial risk is likely to remain.” OFAC issued four general licenses authorizing certain limited transactions involving some of the newly-blocked parties.  In addition, OFAC issued two determinations further restricting diamond-related imports into the U.S.

A quick summary of the actions follows. Foreign financial institutions (including banks and insurance companies, among others) should recall that EO 14114 (December 2023) authorizes imposition of sanctions on FFIs that conduct or facilitate significant transactions, or provide any service, involving Russia’s military-industrial base, including the parties designated today and others not yet designated that support the sale, supply, or transfer of items important to Russia’s military effort, as identified here.

A. Blocking Sanctions and General Licenses 

The February 23, 2024 blocking sanctions were imposed in part by Treasury/OFAC and in part by State. The targets include entities in finance, logistics, cargo transportation, truck parts, aerospace, weapons, diamonds, metals, lubricants, 3D printing, machine tooling, electronics, navigation, optics, semiconductors, energy storage, software, IT infrastructure, and other research and manufacturing sectors, including (but not limited to) the following (CAPS indicate State Department designation; others are OFAC designations):

1. In Russia: The National Payment Card System Joint Stock Company (NSPK) (the operator of the Mir National Payment System, which, per OFAC “plays a key role in facilitating financial transactions both internal to Russia and abroad”), nine Russian banks, major transport/logistics players JSC SUEK, PJSC Transcontainer, TK Logimeks, numerous parties related to UAV-producer JSC Special Economic Zone of Industrial Production Alabuga, the Russian state-owned diamond exporter JSC Foreign Economic Association Almazyuvelirexport, top specialty steel producer Publichnoe Aktsionernoe Obshchestvo Mechel, data center operators 3data, Miran, TrustInfo, and Stack Telecom, JSC Gazprom Space Systems, several subsidiaries of Russia’s State Atomic Energy Corporation Rosatom, Russia’ leading supplier of steel pipe PJSC PIPE METALLURGICAL COMPANY, major gold-mining company PJSC UZHURALZOLOTO GROUP, several ship-building and shipping companies associated with the Arctic LNG 2 project; three individuals in connection with the death of Navalny in Russian Penal Colony IK-3 (prison warden VADIM KONSTANTINOVICH KALININ, regional prison head IGOR BORISOVICH RAKITIN, and deputy director of the Federal Penitentiary Service of Russia VALERIY GENNADEVICH BOYARINEV), and many others.
2. Outside Russia, various shipping companies, suppliers of aircraft and truck parts, manufacturing and technology equipment, electronics and others, including: Belarus-based JSC 558 AIRCRAFT REPAIR PLANT; Cyprus-based AZORIA SHIPPING COMPANY LIMITED, ELIXON SHIPPING COMPANY LIMITED, GLORINA SHIPPING COMPANY LIMITED; China-based Jiangxi Liansheng Technology Co., Ltd, Guangzhou Ausay Technology Co., Limited, Guangzhou Hesen Import and Export Co., Ltd, Yilufa Electronics Limited, Shenzhen Biguang Trading Co., Ltd, New Idea Guangzhou Technology Co., Ltd., ZHEJIANG OULONG ELECTRIC CO LTD, WUHAN MAIWE COMMUNICATION CO LTD, and COREBAI MICROELECTRONICS BEIJING COMPANY LIMITED; Estonia-based Gold Solution OU (Gold Solution); Finland-based HD Parts OY;  Germany-based ELIX ST LIMITED LIABILITY COMPANY; Iran-based MINISTRY OF DEFENSE AND ARMED FORCES LOGISTICS (MODAFL); Ireland-based semiconductor supplier Cubit Semiconductor Limited; Kazakhstan-based LIMITED LIABILITY PARTNERSHIP DA GROUP 22, LIMITED LIABILITY PARTNERSHIP ELEM GROUP; Kyrgyz Republic-based Obshchestvo S Ogranichennoy Otvetstvennostyu Ukon; Liechtenstein-based precious metals-related entities Rheingold Edelmetall GmbH and Liemeta AG; Serbia-based Kominvex DOO Beograd, Soha Info DOO Novi Banovc, Goodforwarding DOO Beograd, Research and Development Company TR Industries; Turkey-based MBK LOJISTIK MEDIKAL PAZARLAMA SANAYI IC VE DIS TICARET LIMITED SIRKETI, OLIMPIK GAMA IC VE TICARET SANAYI LIMITED SIRKETI, LIMITED LIABILITY COMPANY TRADE HOUSE KYUTEK, ALPHA VISIT SHOP FOREIGN TRADE LIMITED COMPANY; UAE-based Linker FZE, Generation Trading FZE, ASIA INTERNATIONAL TRADE PROVIDER LLC, POLARSTAR LOGISTICS LLC, MIRAGE AIR CRAFT SERVICES SOLE PROPRIETORSHIP LLC, CRYNOFIST AVIATION FZCO, and RBG SOLUTION FZE; Uganda-based PRO HELI INTERNATIONAL SERVICES LIMITED (PRO HELI); Ukraine-based PRIVATE MILITARY COMPANY CONVOY; and Vietnam-based Inand Industries Co Ltd.

OFAC issued four general licenses authorizing certain limited transactions involving some of the newly-blocked parties, as follows:

1. General License 88 authorizing the wind down, until 12:01 a.m. eastern daylight time, April 8, 2024, of transactions involving the following 18 of the entities blocked on February 23 and their 50% Rule Entities: (1) PJSC Transcontainer; (2) Publichnoe Aktsionernoe Obshchestvo Mechel; (3) JSC SUEK; (4) ILLC Geopromining Investment; (5) LLC Holding GPM; (6) Joint Stock Company Samara Metallurgical Plant; (7) Joint Stock Company Rimera; (8) Public Joint Stock Company Pipe Metallurgical Company; (9) Vostochnaya Stevedoring Company LLC; (10) JSC Rosgeologia;  (11) National Payment Card System Joint Stock Company; (12) Limited Liability Company BSF Capital; (13) Limited Liability Company Investment Consultant Elbrus Capital; (14) Limited Liability Company Orbita Capital Partners; (15) Nonprofit Organization Investment and Venture Fund of the Republic of Tatarstan; (16) Obshchestvo S Ogranichennoi Otvetstvennostyu Guard Kapital; (18) Limited Liability Company Shipbuilding Complex Zvezda.
2. General License 89 authorizing, until 12:01 a.m. eastern daylight time, April 8, 2024, (1) rejection, rather than blocking, of transactions in which the banks serve only as originating, intermediary, or beneficiary financial institution, and (2) wind-down of transactions involving, the following eight financial institutions blocked on February 23 and their 50% Rule Entities: (1) Avangard Joint Stock Bank; (2) Bank RostFinance; (3) Joint Stock Commercial Bank Chelindbank; (4) Joint Stock Commercial Bank International Financial Club; (5) Joint Stock Commercial Bank Modulbank; (6) Joint Stock Company Databank; (7) Maritime Joint Stock Bank Joint Stock Company; (8) Public Joint Stock Company Bystrobank.
3. General License 90 authorizing, until 12:01 a.m. eastern daylight time, April 8, 2024, certain transactions related to debt or equity issued or guaranteed by the following six entities blocked on February 23 and their 50% Rule Entities: (1) LLC Holding GPM; (2) Limited Liability Company Geopromaining Verkhne Menkeche; (3) Joint Stock Company Sarylakh Surma; (4) Joint Stock Company Zvezda; (5) ILLC Geopromining Investment; (6) Public Joint Stock Company PIK Specialized Homebuilder.
4. General License 91 authorizing, until 12:01 a.m. eastern daylight time, April 8, 2024, certain safety-related maritime activities related to the following five entities blocked on February 23 and their 50% Rule Entities:  (1) Ladoga Shipping Company Limited Liability Company; (2) JSC Polar Marine Geosurvey Expedition; (3) Yuzhmorgeologiya AO; (4) Sevmorneftegeofizika AO; and (5) Amige AO.

B. Entity List Designations

The Entity List designations by Commerce targeted 93 entities for contributing to Russia’s military, defense-industrial, or industrial bases, or otherwise undermining US sanctions and export controls targeting Russia. All the new entries impose a license requirement for all items subject to the U.S. Export Administration Regulations (EAR), and license requests are subject to a presumption of denial. Further, more than 50 of the entities, including five located in China/Hong Kong, received a Footnote 3 designation as Russian-Belarusian military end users, subjecting them to restrictions on receiving foreign-produced items that fall within the (broad) scope of the Russia/Belarus-Military End User Foreign Direct Product (FDP) rule, 15 CFR 734.9(g).

Sixty-three of the Entity List additions are based in Russia, eight in the People’s Republic of China (including Hong Kong), sixteen in Turkiye, four in the United Arab Emirates (UAE), two in the Kyrgyz Republic, and one each in India and South Korea. The non-Russia-based entities are listed below.  (An asterix indicates the five non-Russian entities that received a Footnote 3 designation.)

1. In Turkey: Miray Global Sanayi Ve Ticaret; Ramses Turizm Isletmesi Danismanlik; Svista Turizm Ve Havacilik Dis; Bion Group Ic Ve Dis Ticaret Limited Sirketi; Alesta World Dis Ticaret Ltd; Azu International Bilgi Teknolojileri Ve Dis Ticaret Limited Sirketi; Cozum Yazilim Donanim Elektronik Ic Ve Dis Tic A S; CTL Dis Ticaret Limited Sirketi; CTM Dis Ticaret Ltd. Sti.; Ervacan Makina Ekipmanları ve Sanayi Tedarik Ltd Şti.; Kayi Bilişim Elektronik Enerji Madencilik Ve Danismanlik Ltd. Şti.; Megasan Elektronik Ticaret Ve Sanayi A.S.; Smart Trading Tasimacilik San Ve Tic Ltd Sti;  Transeurope Bilişim Diş Ticaret Limited Şirketi; Karasani Dis Ticaret Limited Sirketi; and Orel Dis Ticaret Ltd.
2. In China/Hong Kong: Bion Group Ic Ve Dis Ticaret Limited Sirketi; Kaili Industrial H.K. Limited; Shenzhen Speed Industrial Materials Co., Ltd; Dennex Enterprises Limited*; Exeya Co. Limited*; Most Development Limited*; Sigma Technology Limited*; and United Electronics Group Company Limited*.
3. In UAE: Lucky Star General Trading LLC; Marakish Express Cargo LLC; Payload Cargo LLC; Crynofist Aviation.
4. In Kyrgyzstan: Muller Markt LLC and Profflab LLC.
5. In India: Crynofist Aviation.
6. In South Korea: Daesung International Trading.

C. Expanded Restrictions on Diamond Imports 

In furtherance of the December 6, 2023, G7 announcement of plans to implement phased restrictions on imports of certain Russian diamonds, OFAC also issued two diamond-related determinations under the authority of Executive Order 14068, as follows:

1. The Diamond Jewelry Determination prohibiting, effective March 1, 2024, entry into the United States, including to a foreign trade zone in the U.S., of diamond jewelry and unsorted diamonds of Russian Federation origin, as well as diamond jewelry and unsorted diamonds that were exported from the Russian Federation, regardless of origin.  FAQ 1027 defines diamond jewelry as “articles defined under HTSUS heading 7113, incorporating diamonds,” “unsorted diamonds” as “articles defined under HTSUS subheading 7102.10,” and “diamonds” as “any diamonds classifiable under HTSUS subheadings 7102.10, 7102.31, and 7102.39 and under any other subheadings of the Harmonized Tariff Schedule of the United States specified in determinations.” FAQ 1019 defines “Russian Federation Origin” as “to include goods produced, manufactured, extracted, or processed in the Russian Federation, excluding any Russian Federation origin good that has been incorporated or substantially transformed into a foreign-made product.”
2. The Diamond Determination, prohibiting entry into the United States, including to a foreign trade zone in the U.S., of the following categories of diamonds when mined, extracted, produced, or manufactured wholly or in part in the Russian Federation, notwithstanding whether such diamonds have been substantially transformed into other products outside of the Russian Federation: (1) effective March 1, 2024, non-industrial diamonds with a weight of 1.0 carat or greater; and (2) effective September 1, 2024, non-industrial diamonds with a weight of 0.5 carats or greater.  FAQ 1027 define “non-industrial diamonds” as “articles defined at HTSUS subheadings 7102.31.00 and 7102.39.00, including any subsequent revisions to the list of HTSUS classifications,” and “diamonds” as noted above.

OFAC summarized the determinations as follows, in FAQ 1164:

For more information on the topics covered in this advisory or any other aspect of U.S. export controls or economic sanctions, contact Partner Tahlia Townsend, co-chair of Wiggin and Dana’s International Trade Compliance Practice Group.

This publication is a summary of legal principles. Nothing in this article constitutes legal advice, which can only be obtained as a result of a personal consultation with an attorney. The information published here is believed accurate at the time of publication, but is subject to change and does not purport to be a complete statement of all relevant issues.