U.S. broadens sanctions on Russia in connection with poisoning and imprisonment of Alexei Navalny

• Published date: 19 March 2021
• Subject Matter: ITAR,Foreign Policy,Foreign Relations,SDN List,Russia,Political Speech,Economic Sanctions,Federal Acquisition Regulations (FAR),Biden Administration,Bureau of Industry and Security (BIS),Office of Foreign Assets Control (OFAC),Directorate of Defense Trade Controls (DDTC)
• Author: Adam Berry,Tyra Walker
• Law Firm: Hogan Lovells

Over the course of the past few weeks, the U.S. Government has taken several actions against the Russian government in connection with the poisoning of Russian dissident Alexei Navalny. These actions included the designation of a number of entities by the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS), as well as changes in licensing policy by the U.S. Department of State’s Directorate of Defense Trade Controls (DDTC) with respect to certain defense articles and services. Some of these designations may trigger additional reporting requirements for issuers that are required to file reports with the U.S. Securities and Exchange Commission (SEC).

OFAC and BIS designations

On 2 March 2021, OFAC added a number of Russian individuals and entities to its Specially Designated Nationals and Blocked Persons (SDN) List, including several individuals and entities that were already sanctioned under other authorities, such as Russia’s Federal Security Service (FSB) and its Main Intelligence Directorate (GRU). U.S. Persons are generally prohibited from most dealings involving SDNs, and non-U.S. Persons are also generally prohibited from dealings involving goods, software, or technology subject to U.S. law, as well as U.S. Dollar-denominated transactions that clear through the U.S. financial system.

Similarly, BIS announced its addition of a number of Russian entities to the Entity List in connection with Russia’s chemical and biological weapons programs. Unlike many other Entity List designations, which impose a licensing requirement for all items subject to the Export Administration Regulations (EAR) and a review policy of a presumption of denial, in this case BIS specified that it is imposing a more tailored license review policy, expressly flagging that it is applying the license review policy set forth in §§ 744.2, 744.3, and 744.4 of the EAR, which includes restrictions on certain nuclear end-uses; rocket systems and unmanned aerial vehicles end-uses; and chemical and biological weapons end-uses. In other words, these restrictions are more targeted than BIS’s typical policy of denial for all items subject to the EAR. License applications for items that do not pose proliferation-related concerns may be able to benefit from a more favorable licensing policy of case-by-case review, rather than a presumption of denial.

The State Department also announced the continuation of existing measures under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (CBW Act), as well as the expansion of certain export controls, which it summarized in this fact sheet. These sanctions – which include the prohibition, subject to partial waiver, on the export to Russia of National Security-controlled goods and technology subject to the EAR – are scheduled to take effect on 18 March 2021 and will remain in place for a minimum of 12 months. The U.S. Government’s use of chemical and biological weapons sanctions against Russia dates back to the 2018...