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Current State of U.S. Economic Sanctions Imposed in Response to Russia’s Invasion of Ukraine – August 29, 2024

Current State of U.S. Export Controls in Response to the Russian Federation’s Invasion of Ukraine – August 29, 2024

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In its continuing response to Russia’s invasion of Ukraine, the U.S. government has deployed a whole-of-government approach to impose sanctions and tighter export controls on Russia. This alert summarizes key economic sanctions imposed by the U.S. Department of the Treasury’s Office of Foreign Assets Control (<a href="https://home.treasury.gov/policy-issues/office-of-foreign-assets-control-sanctions-programs-and-information" target="_blank" rel="noreferrer noopener">OFAC</a>). It is not intended to be, and is not, a comprehensive summary of the economic sanctions implemented as a result of the invasion of Ukraine. Rather, this alert is a tool to help companies, both U.S. and foreign, identify whether doing business with Russia, Belarus, or Ukraine (Covered Regions) is now prohibited due to the wide-ranging economic sanctions, which include import prohibitions, export prohibitions, and designation of hundreds of individuals, entities, and vessels as sanctioned or blocked persons.

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OFAC’s economic sanctions generally complement the export, reexport and transfer (in-country) controls imposed by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) on items subject to the Export Administration Regulations (EAR) destined for Russia, Belarus, Ukraine (Covered Regions) or certain individuals and entities. The EAR governs the export, reexport and transfers (in-country) of most items exported from the United States, U.S.-origin items wherever located, and certain foreign-produced goods. For any transaction involving Russia, Belarus, or Ukraine (Covered Regions), it is important to review both the OFAC sanctions and the EAR and to conduct screening of participants to determine whether a contemplated transaction is authorized. A summary of the current state of export controls implemented in response to the Russian Federation’s invasion of Ukraine can be found <a href="https://www.bakerlaw.com/insights/current-state-of-u-s-export-controls-in-response-to-the-russian-federations-invasion-of-ukraine-august-29-2024/" target="_blank" rel="noreferrer noopener">here</a>.

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Executive Summary of Changes Since August 22, 2024

Since August 22, 2024, OFAC has taken the following key actions:

Sanctioned nearly 400 additional entities and individuals, including transnational networks, including those “involved in procuring ammunition and military materiel for Russia, facilitating sanctions evasion for Russian oligarchs through offshore trust and corporate formation services, evading sanctions imposed on Russia’s cyber actors, laundering gold for a sanctioned Russian gold company, and supporting Russia’s military-industrial base by procuring sensitive and critical items such as advanced machine tools and electronic components.”&nbsp; These designations also targeted the Russian metals, mining, and financial sectors (<a href="https://home.treasury.gov/news/press-releases/jy2546">August 23, 2024</a>).

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Explicitly stated its goal of targeting transnational networks that supply Russia with military materiel and sensitive dual-use goods like those included in the <a href="https://www.bis.doc.gov/index.php/all-articles/13-policy-guidance/country-guidance/2172-russia-export-controls-list-of-common-high-priority-items">Common High Priority List</a> (“CHPL”), which is jointly developed by the United States, the European Union, Japan, and the United Kingdom (<a href="https://home.treasury.gov/news/press-releases/jy2546">Aug. 23, 2024</a>).&nbsp; The CHPL includes four tiers of items including integrated circuits, radio navigational devices, antennas and semiconductors, aircraft parts, and certain machines (<a href="https://home.treasury.gov/news/press-releases/jy2546">August 23, 2024</a>).

Issued and/or amended several general licenses (“GLs”), including<ul><li>
<a href="https://ofac.treasury.gov/media/933116/download?inline">GL 103</a>, authorizing transactions that are ordinarily incident and necessary to the importation into the United States of certain diamond jewelry (<a href="https://home.treasury.gov/news/press-releases/jy2546">August 23, 2024</a>).</li></ul>
<ul><li>
<a href="https://ofac.treasury.gov/media/933121/download?inline">GL 104</a>, authorizing transactions that are ordinarily incident and necessary to the importation in the United States of certain non-industrial diamonds (<a href="https://home.treasury.gov/news/press-releases/jy2546">August 23, 2024</a>).</li></ul>
<ul><li>
<a href="https://ofac.treasury.gov/media/933126/download?inline">GL 105</a>, authorizing transactions that are ordinarily incident and necessary to certain safety and environmental activities, as well as the offloading of cargo, involving White Fox Ship Management FZCO (<a href="https://home.treasury.gov/news/press-releases/jy2546">August 23, 2024</a>).</li></ul>
<ul><li>
<a href="https://ofac.treasury.gov/media/933131/download?inline">GL 106</a>, authorizing the wind down of transactions involving certain entities blocked on August 23, 2024 (<a href="https://home.treasury.gov/news/press-releases/jy2546">August 23, 2024</a>).</li></ul>

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Issued and/or amended FAQs regarding the GLs above, including new FAQ <a href="https://ofac.treasury.gov/faqs/1189">1189</a> and amended FAQs <a href="https://ofac.treasury.gov/faqs/1165">1165</a> and <a href="https://ofac.treasury.gov/faqs/1166">1166</a> (<a href="https://home.treasury.gov/news/press-releases/jy2546">August 23, 2024</a>).

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I. Overview of OFAC Economic Sanctions Regulations Relating to Russia

A. Ukraine-/Russia-related Sanctions Regulations

B. Russian Harmful Foreign Activities Sanctions

II. OFAC Restrictions on Doing Business in Ukraine (Covered Regions)

Imposition of embargoes on Crimea and the Donetsk People’s Republic and Luhansk People’s Republic regions of Ukraine

III. Import Restrictions on Goods from Russia or of Russian Origin

A. Import Ban on Crude Oil, Petroleum and Related Energy Products

B. Import Ban on Items from Key Sectors (for example, seafood, alcohol and non-industrial diamonds)

D. Import Ban on Aluminum, Copper, and Nickel

IV. Restrictions on the Export of Key Services to Russia by U.S. persons

Export bans on accounting services, trust and corporate formation services, management consulting services, quantum computing, architecture services, and engineering services; and certain services related to aluminum, copper and nickel of Russian origin.

V. Restrictions Regarding Maritime Services in Connection with Russian Crude Oil and Petroleum Products

Summary of restrictions on the provision of certain services related to maritime transport of Russian-origin crude oil and petroleum products:

A. Services Related to Crude Oil Transport

B. Services Related to Petroleum Products Transport

VI. Sanctions Relating to Numerous Russian Economic Sectors

Persons determined to operate or to have operated in numerous sectors of the Russian economy may be sanctioned. The sectors are:

technology, defense and related materials as of April 15, 2021;

financial services as of February 22, 2022;

aerospace industries, electronics and marine as of March 31, 2022;

accounting services, trust and corporate formation services and management consulting services as of May 8, 2022;

quantum computing as of September 15, 2022;

metals and mining as of February 24, 2023; and

architecture, engineering, construction, manufacturing, and transportation as of May 19, 2023.

VII. Restrictions Regarding Financial Institutions, Financial Transactions and Related Transactions with Russia

D. Amended Directive 4 and Reporting Requirements

E. Designations of Financial Institutions and Executives and Board Members of Financial Institutions as SDNs

F. Secondary Sanctions Against Foreign Financial Institutions

VIII. Other Specially Designated National and Blocked Person Designations

Additional SDN designations include oligarchs, Russian elites, TV stations, key industry entities, vessels, and aircraft.

IX. Humanitarian-Related Authorizations for Certain Activities In or Involving Russia Sanctions

I.&nbsp;Overview of OFAC Economic Sanctions Relating to Russia

The economic sanctions relating to the Russian invasion of Ukraine are being implemented primarily through two programs: the&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/sanctions-programs-and-country-information/ukraine-russia-related-sanctions" target="_blank" rel="noreferrer noopener">Ukraine-/Russia-related Sanctions</a>&nbsp;program and the&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/sanctions-programs-and-country-information/russian-harmful-foreign-activities-sanctions" target="_blank" rel="noreferrer noopener">Russian Harmful Foreign Activities Sanctions</a>&nbsp;program. OFAC also maintains sanctions against Russia under the&nbsp;<a href="https://ofac.treasury.gov/sanctions-programs-and-country-information/the-magnitsky-sanctions" target="_blank" rel="noreferrer noopener">Magnitsky Sanctions</a>&nbsp;program and the&nbsp;<a href="https://ofac.treasury.gov/sanctions-programs-and-country-information/countering-americas-adversaries-through-sanctions-act-related-sanctions" target="_blank" rel="noreferrer noopener">Countering America’s Adversaries Through Sanctions Act of 2017</a>, but these programs have not been deployed in response to the 2022 invasion and are not a focus of this summary.

As a general rule, OFAC’s economic sanctions against Russia and Ukraine (Covered Regions) apply to U.S. citizens, wherever located; U.S. permanent residents –&nbsp;i.e., “green card” holders, wherever located; entities formed in the United States, including their foreign branches; and anyone, including entities, located in or otherwise subject to the jurisdiction of the United States regardless of citizenship.

For information on General Licenses that may be applicable to certain of the prohibited activities described below, see&nbsp;<a href="https://ofac.treasury.gov/selected-general-licenses-issued-ofac" target="_blank" rel="noreferrer noopener">OFAC’s Selected General License page</a>, the&nbsp;<a href="https://ofac.treasury.gov/sanctions-programs-and-country-information/ukraine-russia-related-sanctions" target="_blank" rel="noreferrer noopener">Russian Harmful Foreign Activities Sanctions</a>&nbsp;page and the&nbsp;<a href="https://ofac.treasury.gov/sanctions-programs-and-country-information/ukraine-russia-related-sanctions" target="_blank" rel="noreferrer noopener">Ukraine-/Russia-related Sanctions</a>&nbsp;page.&nbsp;

A. Ukraine-/Russia-related Sanctions

The Ukraine-/Russia-related sanctions include the sanctions that were implemented in March 2014 in response to&nbsp;<a href="https://www.federalregister.gov/documents/2014/03/10/2014-05323/blocking-property-of-certain-persons-contributing-to-the-situation-in-ukraine" target="_blank" rel="noreferrer noopener">Executive Order (EO) 13660</a>, which declared a national emergency to deal with the threat posed by Russia to the security, stability and sovereignty of Ukraine, including the annexation of the Crimea region by Russia. In addition to the restrictions promulgated in EO 13660, these sanctions implement the restrictions imposed by three subsequent 2014 executive orders:&nbsp;<a href="https://www.federalregister.gov/documents/2014/03/19/2014-06141/blocking-property-of-additional-persons-contributing-to-the-situation-in-ukraine" target="_blank" rel="noreferrer noopener">EO 13661</a>&nbsp;(March 16, 2014),&nbsp;<a href="https://www.govinfo.gov/content/pkg/FR-2014-03-24/pdf/2014-06612.pdf" target="_blank" rel="noreferrer noopener">EO 13662</a>&nbsp;(March 20, 2014) and&nbsp;<a href="https://www.federalregister.gov/documents/2014/12/24/2014-30323/blocking-property-of-certain-persons-and-prohibiting-certain-transactions-with-respect-to-the-crimea" target="_blank" rel="noreferrer noopener">EO 13685</a>&nbsp;(December 19, 2014). As discussed in Part II below, this program also includes the first EO addressing the 2022 invasion (<a href="https://www.federalregister.gov/documents/2022/02/23/2022-04020/blocking-property-of-certain-persons-and-prohibiting-certain-transactions-with-respect-to-continued" target="_blank" rel="noreferrer noopener">EO 14065</a>) as well as the Ukraine-/Russia-related Sanctions Regulations, which are codified at&nbsp;<a href="https://www.ecfr.gov/current/title-31/subtitle-B/chapter-V/part-589?toc=1" target="_blank" rel="noreferrer noopener">31 C.F.R. Part 589</a>, and&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/sanctions-programs-and-country-information/ukraine-russia-related-sanctions" target="_blank" rel="noreferrer noopener">general licenses</a>&nbsp;that have been issued authorizing certain transactions that would be prohibited under these sanctions (many of which are time-limited) as well as numerous FAQs and other guidance.

Select provisions of the Ukraine-/Russia-related Sanctions are outlined in Section II below. For more information on Ukraine-related Sanctions, see&nbsp;<a href="https://ofac.treasury.gov/sanctions-programs-and-country-information/ukraine-russia-related-sanctions" target="_blank" rel="noreferrer noopener">OFAC’s page on the Ukraine-/Russia-related Sanctions</a>,&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220429" target="_blank" rel="noreferrer noopener">Amendment to the Ukraine-Related Sanctions Regulations and Associated Administrative List Updates</a>&nbsp;and OFAC’s&nbsp;<a href="https://ofac.treasury.gov/faqs/topic/1576" target="_blank" rel="noreferrer noopener">FAQs</a>&nbsp;on the sanctions applicable to Ukraine (Covered Regions).

B. Russian Harmful Foreign Activities Sanctions

The Russian Harmful Foreign Activities Sanctions program began in 2021 with the issuance of&nbsp;<a href="https://ofac.treasury.gov/media/57936/download?inline" target="_blank" rel="noreferrer noopener">EO 14024</a>, and the Russian Harmful Foreign Activities Sanctions Regulations (<a href="https://www.ecfr.gov/current/title-31/subtitle-B/chapter-V/part-587" target="_blank" rel="noreferrer noopener">RuHSR</a>) were issued in May 2022. The&nbsp;<a href="https://www.ecfr.gov/current/title-31/subtitle-B/chapter-V/part-587" target="_blank" rel="noreferrer noopener">RuHSR</a>, which are codified at 31 C.F.R. Part 587, implement the restrictions imposed by EO 14024 and any legal prohibitions or restrictions in executive orders issued pursuant to the national emergency declared in EO 14024. In EO 14024, the president declared an unusual and extraordinary threat to the national security, foreign policy and economy of the United States due to the Russian government’s efforts to undermine the democracy of the United States and its allies and partners, Russia’s “malicious cyber-enabled activities against the United States and its allies and partners,” and Russia’s violations of “well-established principles of international law.”

To supplement the RuHSR, OFAC issued&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/sanctions-programs-and-country-information/russian-harmful-foreign-activities-sanctions" target="_blank" rel="noreferrer noopener">four directives</a>&nbsp;in 2022 that imposed additional restrictions regarding financial transactions relating to Russia (see Section VII below). As discussed below, an&nbsp;<a href="https://ofac.treasury.gov/media/918806/download?inline" target="_blank" rel="noreferrer noopener">amended Directive 4</a>&nbsp;was issued by OFAC on May 19, 2023. Under this program, OFAC also issued three additional executive orders in 2022 (discussed in Sections III and VI below) as well as numerous general licenses, FAQs and other guidance. As of August 27, 2024, there are&nbsp;<a href="https://ofac.treasury.gov/sanctions-programs-and-country-information/russian-harmful-foreign-activities-sanctions" target="_blank" rel="noreferrer noopener">67 active general licenses</a>&nbsp;under the RuHSR program, including authorizations for&nbsp;the offloading of cargo;&nbsp;<a href="https://ofac.treasury.gov/media/932601/download?inline" target="_blank" rel="noreferrer noopener">safety and environmental transactions</a>;&nbsp;<a href="https://ofac.treasury.gov/media/930431/download?inline" target="_blank" rel="noreferrer noopener">agricultural commodities and medicine</a>;&nbsp;<a href="https://ofac.treasury.gov/media/924326/download?inline" target="_blank" rel="noreferrer noopener">telecommunications</a>;&nbsp;<a href="https://ofac.treasury.gov/media/922211/download?inline" target="_blank" rel="noreferrer noopener">activities by nongovernmental organizations</a>;&nbsp;<a href="https://ofac.treasury.gov/media/922841/download?inline" target="_blank" rel="noreferrer noopener">overflight payments, emergency landings and air ambulance services</a>;&nbsp;<a href="https://ofac.treasury.gov/media/931016/download?inline" target="_blank" rel="noreferrer noopener">certain emergency vessel repairs or salvage operations</a>;&nbsp;<a href="https://ofac.treasury.gov/media/929386/download?inline" target="_blank" rel="noreferrer noopener">civil aviation safety</a>;&nbsp;<a href="https://ofac.treasury.gov/media/923976/download?inline" target="_blank" rel="noreferrer noopener">certain transactions involving Russia’s Federal Security Service</a>;&nbsp;<a href="https://ofac.treasury.gov/media/931011/download?inline" target="_blank" rel="noreferrer noopener">certain energy transactions related to the importation of Russian crude oil into Bulgaria, Croatia and certain landlocked EU member states</a>; and other support to people impacted by Russia’s further invasion of Ukraine.

Select provisions of the RuHSR program are outlined below. For more information on the program, see OFAC’s&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/sanctions-programs-and-country-information/russian-harmful-foreign-activities-sanctions" target="_blank" rel="noreferrer noopener">Russian Harmful Foreign Activities Sanctions page</a>&nbsp;and&nbsp;<a href="https://ofac.treasury.gov/faqs/topic/6626" target="_blank" rel="noreferrer noopener">OFAC’s Russian Harmful Foreign Activities Sanctions FAQ page.</a>

II. OFAC Restrictions on Doing Business in Ukraine

As a result of the February 2022 invasion of Ukraine and Russia gaining control of the Donetsk People’s Republic and Luhansk People’s Republic regions of Ukraine (DNR and LNR regions, respectively), the United States imposed an embargo on the two regions. Specifically, on Monday, February 21, 2022, the president issued&nbsp;<a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2022/02/21/executive-order-on-blocking-property-of-certain-persons-and-prohibiting-certain-transactions-with-respect-to-continued-russian-efforts-to-undermine-the-sovereignty-and-territorial-integrity-of-ukraine/" target="_blank" rel="noreferrer noopener">EO 14065</a>, prohibiting “United States persons” from engaging in new investment in the DNR and LNR regions as well as engaging in trade – including the export, import, reexport, and sale or supply of goods, services or technology – with the DNR and LNR regions. The comprehensive embargo on transactions with the two regions mirrors the <a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2022/02/21/executive-order-on-blocking-property-of-certain-persons-and-prohibiting-certain-transactions-with-respect-to-continued-russian-efforts-to-undermine-the-sovereignty-and-territorial-integrity-of-ukraine/">2014 sanctions prohibiting transactions with the Crimea region of Ukraine</a>.

These embargoes mean that exports of all U.S.-origin items (other than food and medicine designated as EAR99 and certain software and Internet-based personal communications) to Crimea or the DNR or LNR regions require a license. Also, U.S. persons, wherever located, are prohibited from approving, financing, facilitating or guaranteeing transactions by foreign persons that cannot be performed by U.S. persons because of the embargoes. Licenses from both BIS and OFAC may be needed for any export, reexport or transfer (in-country) and related transactions involving Crimea or the LNR or DNR regions.

Under the Ukraine-/Russia-Relation Sanctions program, OFAC has issued&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/sanctions-programs-and-country-information/ukraine-russia-related-sanctions" target="_blank" rel="noreferrer noopener">general licenses</a>&nbsp;authorizing certain transactions with the DNR and LNR regions, mainly for humanitarian reasons, that would have otherwise been prohibited under the EO. For example,&nbsp;<a href="https://ofac.treasury.gov/media/918686/download?inline" target="_blank" rel="noreferrer noopener">General License 18</a>&nbsp;authorizes the “exportation or reexportation of agricultural commodities, medicine, medical devices, replacement parts and components for medical devices, or software updates for medical devices” as well as “the prevention, diagnosis, or treatment of COVID-19.”&nbsp;<a href="https://ofac.treasury.gov/media/918696/download?inline" target="_blank" rel="noreferrer noopener">General License 20</a>&nbsp;authorizes transactions “for the conduct of the official business of certain international organizations and entities.” The Ukraine-Related Sanctions Regulations provide similar general licenses related to Crimea. In addition, under the Russian Harmful Foreign Activities Sanctions program, OFAC has issued&nbsp;<a href="https://ofac.treasury.gov/media/922211/download?inline" target="_blank" rel="noreferrer noopener">General License 27</a>&nbsp;authorizing certain humanitarian and democracy-building efforts by non-governmental organizations in Ukraine otherwise prohibited by those sanctions.

For further information, see&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220221_33" target="_blank" rel="noreferrer noopener">February 21, 2022 Issuance of Executive Order Blocking Property Of Certain Persons And Prohibiting Certain Transactions With Respect To Continued Russian Efforts To Undermine The Sovereignty And Territorial Integrity Of Ukraine</a>;&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220221_33" target="_blank" rel="noreferrer noopener">Issuance of Ukraine-related General Licenses</a>;&nbsp;<a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/21/fact-sheet-executive-order-to-impose-costs-for-president-putins-action-to-recognize-so-called-donetsk-and-luhansk-peoples-republics/" target="_blank" rel="noreferrer noopener">White House Fact Sheet</a>; and&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/faqs/1007" target="_blank" rel="noreferrer noopener">FAQ 1007</a>.

III. Import Restrictions on Goods from Russia or of Russian Origin

A number of import restrictions have been imposed on goods from the Russian Federation or goods that are of Russian origin. These restrictions include an import ban on crude oil, petroleum, energy products, gold, aluminum, copper, and nickel, as well as a ban on certain items from key Russian sectors, including fish, seafood, and preparations thereof; alcoholic beverages; certain non-industrial diamonds; and diamond jewelry. Further, as discussed below in Section IV, certain services relating to some of the banned Russian origin metals (i.e., aluminum, copper, and nickel) are also prohibited.

A. Import Ban on Crude Oil, Petroleum and Related Energy Products

Since March 8, 2022, pursuant to&nbsp;<a href="https://www.federalregister.gov/documents/2022/03/10/2022-05232/prohibiting-certain-imports-and-new-investments-with-respect-to-continued-russian-federation-efforts" target="_blank" rel="noreferrer noopener">EO 14066</a>, imports into the United States of Russian Federation-origin crude oil; petroleum; petroleum fuels, oils and products of their distillation; liquefied natural gas; coal; and coal products have been prohibited.

B. Import Ban on Items from Key Sectors

Since March 11, 2022, pursuant to&nbsp;<a href="https://ofac.treasury.gov/media/919281/download?inline" target="_blank" rel="noreferrer noopener">EO 14068</a>, imports of Russian Federation-origin goods from several notable sectors of the Russian economy, including fish, seafood and preparations, alcoholic beverages and non-industrial diamonds, also have been prohibited.&nbsp; However, effective August 23, 2024, <a href="https://ofac.treasury.gov/media/933116/download?inline">GL 103</a> and <a href="https://ofac.treasury.gov/media/933121/download?inline">GL 104</a> authorize transactions that are ordinarily incident and necessary to the importation in the United States of certain diamond jewelry and non-industrial diamonds, respectively, from Russia. GL104 is only valid through September 1, 2025.

The import ban imposed by EO 14068 was expanded in three key ways pursuant to&nbsp;<a href="https://www.federalregister.gov/documents/2023/12/26/2023-28662/taking-additional-steps-with-respect-to-the-russian-federations-harmful-activities" target="_blank" rel="noreferrer noopener">EO 14114</a>, issued on December 22, 2023.

First, whereas prior to December 22, 2023, only “importation” was banned, the prohibition now extends to “the importation and entry into the United States, including importation for admission into a foreign trade zone located in the United States” (but see comments in Section III.C, below).

Second, the revised executive order, together with the&nbsp;<a href="https://ofac.treasury.gov/media/932451/download?inline" target="_blank" rel="noreferrer noopener">Determination Pursuant to Section 1(a)(i)(B) of Executive Order 14068, issued on December 22, 2023</a>, extended the import ban to “products . . . that were mined, extracted, produced, or manufactured wholly or in part in the Russian Federation or harvested in waters under the jurisdiction of the Russian Federation or by Russia-flagged vessels,&nbsp;notwithstanding whether such products have been incorporated or substantially transformed into other products outside of the Russian Federation: fish, seafood, and preparations thereof; diamonds and any other such products.” Pursuant to this authority, salmon, cod, pollock and crab that are incorporated in or substantially transformed into other products outside of Russia are subject to the import prohibition. On February 20, 2024, OFAC extended&nbsp;<a href="https://ofac.treasury.gov/media/932471/download?inline" target="_blank" rel="noreferrer noopener">GL 83</a>&nbsp;through issuance of GL83A&nbsp;to permit importation of such seafood derivatives through May 31, 2024, provided that the importation is pursuant to written contracts or agreements entered into prior to December 22, 2023.&nbsp;<a href="https://ofac.treasury.gov/faqs/1157" target="_blank" rel="noreferrer noopener">FAQ 1157</a>, as amended on January 18, 2024, states that OFAC intends to publish regulations defining salmon, cod, pollack and crab as articles falling under the Harmonized Tariff Codes specified in the FAQ.

Finally, revised EO 14068, in a new section 1(e), defined the previously undefined term “diamond” to include “any diamonds classifiable under subheadings 7102.10, 7102.31, and 7102.39 of the Harmonized Tariff Schedule of the United States” as well as subheadings specified in determinations made pursuant to the executive order.

The definition paved the way for two new determinations issued on February 8, 2024. The&nbsp;<a href="https://ofac.treasury.gov/media/932606/download?inline" target="_blank" rel="noreferrer noopener">first determination</a>&nbsp;expanded the import ban to include diamond jewelry and unsorted diamonds, whether of Russian origin or exported from Russia, effective March 1, 2024. The&nbsp;<a href="https://ofac.treasury.gov/media/932611/download?inline" target="_blank" rel="noreferrer noopener">second determination</a>&nbsp;banned importation of non-industrial diamonds mined, extracted, produced, or manufactured wholly or in part in Russia – effective March 1, 2024, for such diamonds with a weight of 1.0 carat or greater; and, effective September 1, 2024, non-industrial diamonds with a weight of 0.5 carats or greater. In both cases, the ban will apply&nbsp;notwithstanding whether such diamonds have been incorporated or substantially transformed into other products outside of the Russian Federation.&nbsp;On February 23, 2024, OFAC issued&nbsp;<a href="https://ofac.treasury.gov/faqs/topic/6626">FAQs 1164 – 1166</a>&nbsp;which provided further guidance on the diamond import bans.

Based on FAQs&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/faqs/1016" target="_blank" rel="noreferrer noopener">1016</a>,&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/faqs/1024" target="_blank" rel="noreferrer noopener">1024</a>&nbsp;and&nbsp;<a href="https://ofac.treasury.gov/faqs/1156" target="_blank" rel="noreferrer noopener">1156</a>, the import bans do not extend to U.S. persons engaging in transactions to sell or redirect shipments of goods covered by the import ban outside the United States that were previously destined for the United States.

Although OFAC has not issued clear guidance on how theories of incorporation or substantial transformation may impact the ban on importation of goods of Russian Federation origin into the United States, the December 22, 2023, and February 8, 2024, developments appear to clarify that the import ban only applies to items that have been incorporated or substantially transformed into a foreign-made product when an OFAC determination has been issued to that effect, i.e., currently, salmon, cod, pollock and crab; effective March 1, 2024, diamond jewelry, unsorted diamonds, and non-industrial diamonds with a weight of 1.0 carat or greater; and, effective September 1, 2024, non-industrial diamonds with a weight of 0.5 carats or greater.

Finally, previously issued FAQ 1019 defines “Russian Federation origin” 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.” Country-of-origin determinations are the purview of U.S. Customs and Border Protection regulations and guidelines, which, in the absence of a relevant determination, may offer some additional guidance for the purposes of OFAC’s ban on importation of Russian Federation-origin goods.

For more information on the sector-based import ban, see the&nbsp;<a href="https://ofac.treasury.gov/faqs/topic/6626" target="_blank" rel="noreferrer noopener">OFAC FAQs</a>.

Since&nbsp;<a href="https://home.treasury.gov/news/press-releases/jy0838" target="_blank" rel="noreferrer noopener">June 28, 2022</a>, pursuant to a determination issued under EO 14068 section 1(a)(i)(A) and&nbsp;<a href="https://ofac.treasury.gov/media/923986/download?inline" target="_blank" rel="noreferrer noopener">updated on December 22, 2023</a>, imports of newly mined or refined gold of Russian origin have been prohibited unless licensed or otherwise authorized by OFAC. However, the ban does not apply to gold of Russian origin that was located outside the Russian Federation prior to June 28, 2022. Although the updated December 22, 2023, determination states that the amended determination “reflects technical, non-substantive changes,” it seems to retroactively prohibit not only importation but “the importation and entry into the United States, including importation for admission into a foreign trade zone located in the United States.” This suggests that OFAC may view the additional language in the amended executive order as a clarification that is not intended to change the scope of the ban.

D. Import Ban on Aluminum, Copper, and Nickel

On April 12, 2024, OFAC issued a <a href="https://ofac.treasury.gov/media/932796/download?inline=">determination</a> banning the importation of Russian origin aluminum, copper, and nickel produced on or after April 13, 2024, into the United States, including U.S. foreign trade zones. This action was taken pursuant to Executive Order 14068. Revised FAQ 1119 and new FAQ 1171, also issued on April 12, clarify that the ban does not extend to Russian origin aluminum, copper, or nickel that has been incorporated or substantially transformed into a foreign-made product. Further, FAQ 1170 provides that regulations will be issued by OFAC to define aluminum, copper, and nickel as articles or products falling within Chapters 76, 75, and 74, respectively, of the Harmonized Tariff Schedule of the United States.&nbsp;

As stated in the Department of the Treasury’s April 12 <a href="https://home.treasury.gov/news/press-releases/jy2249">press release</a>, these measures were taken in coordination with the United Kingdom and are intended to cut off another stream of revenue to Russia, thereby limiting its ability to fund its war against Ukraine. In addition, as described in Section IV below, effective April 12, 2024, certain services relating to the acquisition of Russian origin aluminum, copper, and nickel produced on or after April 13, 2024.&nbsp;

IV. Restrictions Imposed on the Export of Services to Russia

On May 8, 2022, pursuant to&nbsp;<a href="https://ofac.treasury.gov/media/922081/download?inline" target="_blank" rel="noreferrer noopener">EO 14071</a>, OFAC issued a&nbsp;<a href="https://ofac.treasury.gov/media/922956/download?inline" target="_blank" rel="noreferrer noopener">determination</a>&nbsp;that prohibited the export of certain professional services to Russia by U.S. persons. At that time, the scope of the prohibition covered accounting, trust and corporate formation and management consulting services, and the prohibitions took effect on June 7, 2022.

On September 15, 2022, also pursuant to EO 14071, OFAC issued&nbsp;<a href="https://ofac.treasury.gov/media/926591/download?inline" target="_blank" rel="noreferrer noopener">a second determination</a>&nbsp;prohibiting the provision of professional services related to quantum computing. On May 19, 2023, again, pursuant to EO 14071, OFAC issued a&nbsp;<a href="https://ofac.treasury.gov/media/931776/download?inline" target="_blank" rel="noreferrer noopener">third determination</a>&nbsp;related to services that prohibit the provision of professional services related to architecture and engineering to Russia by U.S. persons effective as of June 18, 2023. Note, however, that these prohibitions do not apply to services provided to entities in Russia that are owned or controlled by a U.S. person or to services provided in connection with the winding down or divestiture of an entity located in Russia that is not owned or controlled by a Russian person.

On April 12, 2024, OFAC issued a <a href="https://ofac.treasury.gov/media/932801/download?inline">determination</a> prohibiting U.S. persons from providing “Covered Metals Acquisition Services” for aluminum, copper, or nickel of Russian origin. Covered Metal Acquisition Services include warranting services for Russian origin aluminum, copper, or nickel on a global metal exchange and services to acquire such metals as part of the physical settlement of a derivative contract. The determination expressly excluded services related to aluminum, copper, or nickel produced prior to April 13, 2024. OFAC issued FAQs 1168 and 1169 to help clarify the scope of the Covered Metals Acquisition Services prohibition. FAQ 1168 offers various suggestions regarding how U.S. global metal exchanges can comply with the determination. FAQ 1169 clarifies that such metals that are already warranted as of April 13, 2024, on a global metal exchange can continue to be traded and that new warranting can continue for such metals produced prior to April 13, 2024, including through new derivatives contracts. In addition, FAQ 1169 provides that “[m]arket participants and traders can reasonably rely on the Certificate of Analysis and Certificate of Origin of the relevant Russian metal, or other documentation available to them in the ordinary course of business, with respect to the date of production, but should exercise caution if they have reason to believe such documentation has been falsified or is otherwise erroneous.”

On June 12, 2024, OFAC issued a new <a href="https://ofac.treasury.gov/media/932951/download?inline">determination</a> under Executive Order (E.O.) 14071 prohibiting the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a U.S. person, wherever located, of

IT support or cloud-based services for Covered Software

to any person located in Russia (the “IT Determination”). Excluded from the scope of this determination are services provided to entities owned or controlled by U.S. persons, directly or indirectly; services related to wind down of transactions with, or divestiture of, entities not so owned or controlled; and services for software licensed or otherwise authorized by the U.S. Department of Commerce for export, reexport, or transfer to Russia or software that would be eligible for such a license or authorization if subject to the EAR.

OFAC has&nbsp;<a href="https://ofac.treasury.gov/faqs/1128" target="_blank" rel="noreferrer noopener">broadly defined</a>&nbsp;the scope of all prohibited services. The prohibited services are defined as follows:

Accounting services&nbsp;include “services related to the measurement, processing, and transfer of financial data about economic entities.”

Trust and corporate formation services&nbsp;include “services related to assisting persons in forming or structuring legal persons, such as trusts and corporations; acting or arranging for other persons to act as directors, secretaries, administrative trustees, trust fiduciaries, registered agents, or nominee shareholders of legal persons; providing a registered office, business address, correspondence address, or administrative address for legal persons; and providing administrative services for trusts.”

Management consulting services&nbsp;include “services related to strategic advice; organizational and systems planning, evaluation, and selection; marketing objectives and policies; mergers, acquisitions, and organizational structure; staff augmentation and human resources policies and practices; and brand management.”

Quantum computing&nbsp;includes “any of the following services when related to quantum computing, quantum computers, electronic assemblies thereof, or cryogenic refrigeration systems related to quantum computing: infrastructure, web hosting, or data processing services; custom computer programming services; computer systems integration design services; computer systems and data processing facilities management services; computing infrastructure, data processing services, web hosting services, and related services; repairing computer, computer peripherals, or communication equipment; other computer-related services; as well as services related to the exportation, reexportation, sale, or supply, directly or indirectly, of quantum computing, quantum computers, electronic assemblies thereof, or cryogenic refrigeration systems related to quantum computing to any person located in the Russian Federation.”

Architecture services&nbsp;include “advisory services; pre-design services; design services, including schematic design, design development, and final design; contract administration services; combined architectural design and contract administration services; including post-construction services; and all other services requiring the expertise of architects.” The prohibition applies irrespective of focus (e.g., residential, institutional,&nbsp;etc.) and also extends to urban planning services and landscape architectural services.

Engineering Services&nbsp;include “assistance, advisory, consultative, design, and recommendation services concerning engineering matters or during any phase of an engineering project; geotechnical, groundwater, and corrosion engineering services; integrated engineering services, such as those for transportation infrastructure or other projects; engineering-related scientific and technical consulting services, including geological, geophysical, geochemical, surface or subsurface surveying, and map making services; testing and analysis services of chemical, biological, and physical properties of materials or of integrated mechanical and electrical systems; and technical inspection services.” Note, however, that consistent with the price cap policy for crude oil and petroleum products discussed in Section V below, the term “engineering services” does not include maritime classification services.

Covered Metals Acquisition Services&nbsp;means warranting services for aluminum, copper, or nickel of Russian origin on a global metal exchange and services to acquire aluminum, copper, or nickel of Russian origin as part of the physical settlement of a derivative contract. “Warranting services” refers to issuing, registering, accepting, or acquiring a warrant or the underlying metal on a global metal exchange (i.e., a commodities exchange that provides infrastructure and services for the international trading of base metal derivatives contracts). . . . “Warrant” means an electronic record or physical document of title to, possession of, or rights in respect of a specified lot of metal (including where such metal is held in a third country within a global metal exchange-approved warehouse). A warrant is created or issued in accordance with the rules of a global metal exchange.&nbsp;

IT Consultancy and Design Services includes both IT consulting services and IT design and development services for applications, which are defined consistent with United Nations’ Central Product Classification (CPC) Codes 83131 and 83141, respectively, as follows:

IT Consultancy Services includes providing advice or expert opinion on technical matters related to the use of information technology, such as: (a) advice on matters such as hardware and software requirements and procurement; (b) systems integration; (c) systems security; and (d) provision of expert testimony on IT related issues.

IT Design and Development Services for Applications includes services of designing the structure and/or writing the computer code necessary to create and/or implement a software application, such as: (a) designing the structure of a web page and/or writing the computer code necessary to create and implement a web page; (b) designing the structure and content of a database and/or writing the computer code necessary to create and implement a database; (c) designing the structure and writing the computer code necessary to design and develop a custom software application; (d) customization and integration, adapting (modifying, configuring, etc.) and installing an existing application so that it is functional within the clients’ information system environment.

IT Support Services is defined consistent with the United Nations’ Central Product Classification (CPC) Code 83132 to include:

providing technical expertise to solve problems for the client in using software, hardware, or an entire computer system, such as: (a) providing customer support in using or troubleshooting the software; (b) upgrading services and the provision of patches and updates; (c) providing customer support in using or troubleshooting the computer hardware, including testing and cleaning on a routine basis and repair of information technology (IT) equipment; (d) technical assistance in moving a client’s computer system to a new location; (e) providing customer support in using or troubleshooting the computer hardware and software in combination; and

providing technical expertise to solve specialized problems for the client in using a computer system, such as: (a) auditing or assessing computer operations without providing advice or other follow-up action including auditing, assessing and documenting a server, network or process for components, capabilities, performance, or security; (b) data recovery services, i.e. retrieving a client’s data from a damaged or unstable hard drive or other storage medium, or providing standby computer equipment and duplicate software in a separate location to enable a client to relocate regular staff to resume and maintain routine computerized operations in event of a disaster such as a fire or flood; and (c) other IT technical support services not elsewhere classified.

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