New sanctions imposed by foreign states on Russia

On 19 May 2023, the US, the UK, Australia and Canada imposed new restrictive measures on Russia. The countries in question extended their sanctions lists mainly to include persons and entities connected with the defence and energy sectors.

I. New US sanctions

On 19 May 2023 OFAC extended the Specially Designated Nationals and Blocked Persons list (“the SDN list”). Blocking sanctions were imposed on 22 individuals and 104 entities. A notable feature of this latest extension is the wide range of jurisdictions whose companies have been sanctioned. Besides Russian companies and individuals, new additions to the SDN list include persons from Cyprus, China, Hong Kong, India, Germany, the Netherlands, the UAE, Finland, Estonia and other countries^[1].

New SDN designations connected with the technology sector

Blocking sanctions have been imposed on certain German and Indian nationals and the Indian companies Mavasal and Innoedge on account of their connections to the Swiss-Italian businessman Walter Moretti, who was included in the SDN list in February 2023 for allegedly procuring technology and equipment for the needs of the Russian armed forces.

Companies based in Liechtenstein (Trade Initiative Establishment and IGT Intergestions Trust Reg) and Moscow (TBS LLC) as well as certain individuals connected with those companies have been added to the SDN listed for carrying on activities in Russia’s technology sector (the companies and individuals are alleged to have procured equipment for the manufacture of semiconductors and nanotechnologies in the interests of persons previously included by OFAC in the SDN list).

The Russian entity Radioavtomatika LLC, which specialises in the procurement of foreign products to support the Russian defence industry, was added to the SDN list in March 2022. On 19 April 2023, OFAC added to the list a number of individuals and certain Russian and Czech companies which were allegedly engaged in procuring certain components for Radioavtomatika LLC.

Blocking sanctions were also imposed on the Russian group Ostec Group (whose core activity is allegedly supplying technology and equipment for Russia’s military-industrial complex) and on the Polish company Inter-Trans (for organising shipments of electronic components for Ostec Group).

In addition, Finnish, Estonian and Russian technology companies (Elmec Trade OU, Phoenix Electronics, BSP Global, Proton, West-Ost, et al.) have been included in the list for allegedly supplying electronic components and technologies to Russia.

New SDN designations connected with the energy and commodity sectors

Among the new additions to the SDN list are Russian universities engaged in research relating to the extraction and processing of raw materials (the Saint Petersburg Mining University, the Sergo Ordzhonikidze Russian State University for Geological Prospecting, the I.M. Gubkin Russian State University of Oil and Gas, et al.), as well as:

• research institutes (the Energy Research Institute of the Russian Academy of Sciences, Gazprom VNIIGAZ, et al.);
• companies specialising in the production of drilling and mining equipment (Tatburneft, Uralmash, Gazpromneft NNGGF, et al.);
• the venture company New Industry Ventures, which is linked to investments in the Russian energy sector;
• the consulting company Vygon Consulting, which advises on matters relating to the development of Russia’s energy industry;
• one of Russia’s largest gold mining companies – Polyus PJSC.

New SDN designations connected with the financial sector

New additions to the SDN list also include companies operating in the private investment sector, including:

• the Arab company Huriya and its director, Irish national John Hanafin, for having allegedly helped to procure foreign passports for Russian citizens;
• the Cypriot company Huriya Private Cyprus Ltd and the Hong Kong company Gold Miles Limited, both controlled by Hanafin, and Aquila Capital Group, for having allegedly carried out illegal transactions through bank accounts opened in the UAE;
• the Swiss company DuLac Capital, its director Anselm Oscar Schmucki, and companies controlled by Schmucki in Russia, Singapore, Hong Kong, Estonia, Malta, et al., for allegedly carrying on illegal activities through shell companies.

New OFAC general licenses

A general license allows US and foreign persons (that are at risk of secondary sanctions) to engage in certain transactions and arrangements with persons included in the SDN list without the need to apply for individual licences.

On 19 May 2023, after the latest round of additions to the SDN list, OFAC issued three general licences, and specifically:

• General License No. 13Е, under which US persons are authorised until 17 August 2023 to pay taxes, duties and other similar fees in Russia in connection with ordinary day-to-day transactions;
• General License No. 66, under which US persons are authorised until 17 August 2023 to enter into transactions with Polyus PJSC and companies owned by the latter for the purpose of winding down business with those entities;
• General Licence No. 67, under which US persons are authorised until 17 August 2023 to enter into transactions with Polyus PJSC and companies owned by the latter that are connected with the fulfilment of debt obligations of those entities or connected with the sale of equity interests in those entities;
• General License No. 68, under which US persons are authorised until 17 August 2023 to enter into transactions with universities included in the SDN list (the Mining University, the I.M. Gubkin Russian State University of Oil and Gas, et al.) for the purposes of winding down business with those entities.

US sectoral and export restrictions^[2]

On 19 May 2023 the US Department of State imposed sanctions on a number of entities operating in certain industries, including shipbuilding and ship repair, the development of advanced geophysical exploration and engineering software, accounting services, etc., in support of Russia’s energy sector (Bashnipineft, Inkomneft, Federal State Unitary Enterprise “Hydrographic Company”, et al.).

The Department of State also extended sanctions to entities and individuals involved in the development of future energy projects and associated infrastructure, such as the Port of Indiga, a flagship project in Russia’s Arctic territory, and others.

US sanctions have also been imposed on entities that may potentially be linked to the procurement of engines and individual components for the manufacture of the Orlan drone (Novo Blockchain Consultoria LDA from Macau, the Chinese company Beijing Xinghua Hengcheng Technology Development Company Limited, et al.).

The US Department of Commerce is significantly expanding the list of entities^[3] that are subject to export controls (restrictions on the supply of certain goods to those entities, requirements to obtain additional licenses, etc.) and is adding 71 entities (69 Russian companies, one from Armenia and one from Kyrgyzstan) to the Entity List with a view to limiting Russia’s general access to goods (Military Industrial Company LLC, Tekhmash, Khabarovsk Shipbuilding Yard, et al.).

The US Department of Commerce has also extended the list of goods (hairdryers, irons, dishwashers, sewing machines, coffee makers, articles of wool and cotton, ceramic and glass articles, et al.) that are subject to limitations on export to Russia^[4].

Prohibition of certain kinds of services

OFAC has already established that persons operating in certain sectors of the Russian economy (quantum computing, the establishment of trusts and corporations, consulting services, financial services, et al.) may have blocking sanctions imposed on them in accordance with Executive Order No. 14024 of the US President.

On 19 May 2023 OFAC issued a Determination Pursuant to Executive Order No. 14024 according to which blocking sanctions may be applied to persons operating in the following sectors of the Russian economy:

• Architecture (designing, preparing sketches, reports, studies, assessments, site plans, working drawings, specifications, cost estimates, et al.);
• The engineering sector (designing, installing, preparing process flow diagrams, drawings, et al.);
• The construction sector (the creation of any buildings and structures, the development and construction of residential and non-residential, buildings, et al.);
• The manufacturing sector (the creation and modification of goods using machinery or manual labour, et al.);
• The transportation sector (transportation of goods, services, or technology, the conveyance of people, et al.)^[5].

In addition, OFAC has issued a Determination Pursuant to Executive Order No. 14071, which prohibits the provision directly from the US or by a US person, wherever located, of architecture and engineering services to any entity located in Russia. The prohibition takes effect from 18 June 2023.

Toughening of asset reporting requirements

A further order has been made[6] requiring US citizens to submit reports to OFAC on transfers of any assets that may be owned/controlled by the entities below[7]:

• The Central Bank of the Russian Federation;
• The National Wealth Fund of the Russian Federation;
• The Ministry of Finance of the Russian Federation.

OFAC has established this reporting requirement with a view to receiving information needed to monitor Russian assets that have already been blocked in the US.

II. New UK sanctions

On 19 May 2023 OFSI extended the list of individuals and entities subject to UK blocking sanctions[8]. 86 individuals and companies connected to Russia’s defence, metals, defence, transport and financial sectors were added to the list, including:

• 5 financial institutions (DOM.RF, Metallinvestbank, Rosbank, the Russian Regional Development Bank, Tinkoff Bank);
• 9 organisations connected with Rosatom State Corporation which manufacture technology, materials and lasers (Umatex, Triniti, at al.);
• 8 organisations connected with the metal industry (Severstal, Polyus PJSC, Chelyabinsk Metallurgical Plant, part of Mechel Group, Bryansk Machine-Building Plant, et al);
• Individuals and entities that provide transport services in Russia (Pawell Shipping Co, Sun Ship Management, Fesco, et al.);
• Individuals and entities connected to defence enterprises (directors of the Kalashnikov Concern, et al.).

III. New Australian sanctions

Australia has published an updated sanctions list that includes a further 21 companies and 3 individuals from Russia. The newly announced economic restrictions are mainly targeted at sectors of economic and strategic significance to Russia^[9]. The new additions to Australia’s sanctions list include the following entities^[10]:

• Rosneft State Corporation;
• subsidiaries of Rosatom State Corporation;
• one of Russia’s largest metallurgical companies, Severstal PJSC;
• defence enterprises (the Moscow Machine-Building Plant, et al.);
• 5 Russian banks with operations across the Russian Federation (Zenit Bank, Bank Saint Petersburg, Bank Uralsib, MTS Bank, Ural Bank for Reconstruction and Development).

IV. New Canadian sanctions

On 19 May 2023 Canada extended the list of persons and entities subject to blocking sanctions^[11]. 37 Russian individuals and 26 entities have been added to the sanctions list, including:

• 17 individuals connected with Russian companies and 18 entities that allegedly supply technology and know-how for the needs of the Russian armed forces (Delovaya Rossiaya, Universalmash Plant, Radioavtomatika LLC, Novosibirsk Cartridge Plant, et al.);
• 30 individuals who are executives and directors of enterprises in Russia (Human Rights Commissioner, T.N. Moskalkova, Rosatom General Director A.Ye. Likhachev, et al.);
• 8 Russian organisations (the Ministry of Education of Russia, the Prosecutor General’s Office of Russia, the Russian Humanitarian Mission, the Public Movement “People’s Front “For Russia””, et al.).