US introduces new blocking sanctions against Russia

On 23 February 2024, the US President announced a record number of sanctions against Russia, over 500 new restrictions on Russian and foreign persons. The new sanctions restrictions are for the most part made ofAlong with the blocking sanctions, the Bureau of Industry and Security of the US Department of Commerce, for example, imposed export restrictions on more than 90 Russian and foreign entities. blocking sanctions. The US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) has published an updated specially designated nationals list (“SDN List”).

Blocking sanctions against Russian persons

In the first place, the sanctions targeted a series of Russian persons operating in the financial sector of Russia’s economy, including:

• the National Payment Card System (the operator of the Mir cards);
• a number of banks, including Avangard, BystroBank, RostFinance and SPB-bank;
• a number of investment and venture capital funds, including BSF Capital and Elbrus Capital; and
• a number of fintech companies, including Financial Information Systems, CryptoPro and Validata.

Sanctions were also imposed on companies connected with the Alabuga special economic zone in the Republic of Tatarstan, including the management company AO OEZ PPT ALABUGA, Albatros LLC and their top management.

Among major Russian companies that were added to the SDN List we should also mention Mechel, Rimera, Ruschemalliance, TMK, SUEK, Sovcomflot, Transcontainer, Rosgeologia and PIK.

The US blocking sanctions affected many persons operating in a series of other sectors of Russia’s economy, including the defence industry, aerospace, metals and mining sector, technology, etc.

The list of Russia’s economic sectors affected by US sanctions and an overview of the new sanctions restrictions can be found in the press release of the US Department of the Treasury.

Blocking sanctions against foreign persons

The US continues to further impose sanctions on foreign persons involved in the export of critical technology and equipment for the Russian defence industry.

Twenty-six individuals and legal entities from 11 foreign states (including China, the UAE, Serbia, Finland, Estonia and Lichtenstein) were added to the SDN list, including: six Chinese companies, including Jiangxi Liansheng Technology Co., Ltd and Yilufa Electronics Ltd, that exported microelectronics, optical laboratory accessories and other technological equipment to Russia; Linker FZE (UAE) that exported aviation spare parts and electronic components to Russia; and Gold Solution OU (Estonia) that exported equipment and spare parts of European origin to Russia.

General Licences

OFAC issued four General Licences authorising certain transactions under new sanctions restrictions:

• General Licence No. 88A authorises, until 8 April 2024, all transactions that are incident and necessary to wind down any transaction involving 18 blocked entities (including Mechel, Rimera, SUEK and Sovcomflot) and their subsidiaries, provided that any payment to a blocked person is made into a blocked account;
• General Licence No. 89 authorises, until 8 April 2024, all transactions that are incident and necessary to wind down any transaction involving eight blocked banks and their subsidiaries, provided that any payment to a blocked person is made into a blocked account;
• General Licence No. 90 authorises, until 8 April 2024, all transactions that are incident and necessary to the divestment or transfer, or the facilitation of the divestment or transfer, of debt or equity issued or guaranteed by six blocked entities (including PIK Specialized Homebuilder, Holding GPM and Geopromining Investment) and their subsidiaries; and
• General Licence No. 91A authorises, until 23 May 2024, all transactions that are incident and necessary to (1) the safe docking and anchoring in port of any vessels in which six blocked persons (including Sovcomflot and Ladoga Shipping Company) and their subsidiaries have a property interest (“Blocked Vessels”), (2) the preservation of the health or safety of the crew of any of the Blocked Vessels; or (3) emergency repairs of any of the Blocked Vessels or environmental mitigation or protection activities relating to any of the Blocked Vessels.

Effects of the US blocking sanctions

The mentioned sanctions took effect on the date they were imposed, 23 February 2024. As a reminder, the US blocking sanctions bring about the following consequences:

• all US-based property of SDNs held in the possession or under the control of US Persons
  • United States citizens or US lawful permanent residents (i.e. green card holders), irrespective of where they are located;
  • legal entities registered under the laws of the USA or any other jurisdiction within the USA (including branches outside the USA); and
  • any persons physically present in the USA (“US Persons”).
  should be blocked; and
• US Persons are prohibited from engaging in any transactions with SDNs and providing to them or receiving from them any benefits.

These restrictive measures also apply to legal entities that are not on the SDN List, but are directly or indirectly owned 50% or more by a single SDN or several SDNs.