U.S. Imposes Sweeping Sanctions and Export Controls on Russia in Response to Crisis in Ukraine

Alert

03.03.2022

By Elsa Manzanares and Janae Aune

Over the last week, the U.S. government, in coordination with partner and allied countries, announced a series of unprecedented escalating sanctions targeting Russia in response to the invasion of Ukraine. These actions represent some of the most comprehensive sanctions ever imposed by the U.S. The fast-paced rollout of measures has forced U.S. and non-U.S. companies to conduct an immediate assessment of the U.S. sanctions risks to their business operations in Russia or commercial transactions with touchpoints to Russia. We expect additional sanctions to be on the way as the geopolitical conflict continues to evolve.

Summarized below are some of the compliance risks that U.S. and non-U.S. businesses should consider as restrictive measures are implemented, followed by an overview of the sanctions measures announced so far.

The U.S. has implemented a comprehensive investment ban and trade embargo on the so-called Donetsk People's Republic (DNR) and Luhansk People's Republics (LNR) in Eastern Ukraine. U.S. persons have less than 30 days to wind down all operations, contracts, or other agreements involving the export, reexport, sale, or supply of goods, services, or technology to, or the import of any goods, services, or technology from, the DNR and LNR regions of Ukraine. U.S. persons must implement internal controls to ensure their goods or services are not destined for these regions, either directly or indirectly.
U.S. persons with existing business relationships in Russia, Belarus, and Ukraine should screen their business partners to ensure compliance with new restrictions on dealings with specified entities recently added to the List of Specially Designated Nationals and Blocked Persons (SDN List). Entities who are owned 50 percent or more, directly or indirectly, by one of these specified entities, even if not identified on the SDN List and regardless of whether they are located in Russia, are similarly blocked. Any future activities will require enhanced due diligence on all parties to the transactions.
U.S. financial institutions must ensure compliance with the March 26 deadline to close all correspondent and payable-through accounts for or on behalf of Sberbank and its subsidiaries, and other Russia financial institutions determined to be subject to this prohibition.
U.S. persons engaged in international trade transactions with Russian customers should consider the impact of new prohibitions on certain debt or equity transactions involving specified entities. For example, new credit terms for the sale of goods or services involving certain entities in Russia cannot exceed 14 days.
U.S. persons exporting U.S.-origin goods or technologies to Russia and non-U.S. persons exporting from abroad foreign-produced items that contain U.S.-origin content or that are developed from U.S.-origin software or technology should carefully review the expanded export licensing requirements for Russia imposed by the U.S. Department of Commerce. Export licenses will be required for commercial goods destined to Russia that did not previously require a license and fewer license exceptions are available.

Detailed below are the relevant U.S. sanctions measures in the order in which they were announced.

New Executive Order Imposing Investment Ban and Trade Embargo

On February 21, the Biden administration issued a new Executive Order (EO) imposing comprehensive sanctions on the DNR and LNR regions of Ukraine. The EO, entitled "Blocking Property of Certain Persons and Prohibiting Certain Transactions with Respect to Continued Russian Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine" followed President Putin's decision to recognize the DNR and LNR as independent states and to deploy troops to the region. Under the EO, the following activities are prohibited:

New investment in the so-called DNR or LNR regions of Ukraine by U.S. persons, wherever located
The importation into the U.S., directly or indirectly, of any goods, services, or technology from the DNR or LNR
The export, reexport, sale, or supply, directly or indirectly, from the U.S., or by a U.S. person, wherever located, of any goods, services, or technology to the DNR or LNR regions of Ukraine
Any approval, financing, facilitation, or guarantee by a U.S. person, wherever located, of a transaction by a foreign person where the transaction by that foreign person would be prohibited by this EO if performed by a U.S. person or within the U.S.

The prohibitions of the EO replicate the language of Executive Order 13685, which imposed a similar investment ban and trade embargo on the Crimea region of Ukraine in December 2014. The terms of the EO authorize the U.S. Treasury Department, in consultation with the U.S. State Department, to impose similar sanctions in any other region of Ukraine.

Following the announcement of the EO, the Treasury Department's Office of Foreign Assets Control (OFAC) issued several general licenses[1] authorizing U.S. persons to engage in certain transactions relating to the DNR and LNR. The general licenses (GLs) authorize the following:

GL 17: transactions ordinarily incident to the wind down of transactions involving the DNR and LNR, including the divestiture or transfer to a non-U.S. person of a U.S. person's share of ownership in any pre-February 21, 2022 investment located in the DNR or LNR, and the winding down of operations, contracts, or other agreements in effect prior to February 21, 2022 involving the export, reexport, sale or supply of goods, services, or technology to, or import of any goods, services, or technology from the DNR or LNR regions. These transactions are authorized through 12:01 am eastern daylight time, March 23, 2022
GL 18: transactions ordinarily incident and necessary to: (1) the export or reexport of agricultural commodities, medicine, medical devices, replacement parts and components for medical devices, or software updates for medical devices to the DNR or LNR; or (2) the prevention, diagnosis, or treatment of COVID-19
GL 19: transactions involving the DNR or LNR that are ordinarily incident and necessary to the receipt of transmission of telecommunications
GL 20: transactions related to the official business of international organizations, such as the United Nations and the International Committee of the Red Cross
GL 21: transactions ordinarily incident to and necessary to the transfer of noncommercial, personal remittances to or from the DNR or LNR
GL 22: transactions ordinarily incident and necessary to the export or reexport from the U.S. or by U.S. persons to persons in the DNR or LNR of services incident to the exchange of personal communications over the internet, including software necessary to enable such services, provided that such software is designated EAR99, classified as mass market under ECCN 5D992.c, or not listed under any multilateral export control regime

The U.S. Department of Commerce, Bureau of Industry and Security (BIS) has also implemented the trade and investment prohibitions by expanding the restrictions in the Export Administration Regulations (EAR) to apply to export, re-export and in-country transfer transactions involving the DNR and LNR regions of Ukraine.[2] Effective February 24, 2022, the EAR imposes a new license requirement for the export and reexport to the DNR and LNR regions of Ukraine of all items subject to the EAR, other than food and medicine designated as EAR99 and certain software for Internet-based personal communications. Some license exceptions are available under the EAR. Any license applications for the export or reexport of items to the DNR and LNR regions of Ukraine (and Crimea) will be reviewed under a policy of denial, except for items authorized under OFAC General License Numbers 17-22 referenced above, which will be reviewed on a case-by-case basis. BIS noted that exporters, reexporters, and transferors of items must ensure that any transaction complies with all applicable requirements under the OFAC regulations and the EAR. For most export transactions, a license will be required from both BIS and OFAC.

Blocking Sanctions on State-Owned Financial Institutions

The administration emphasized that the sanctions on the DNR and LNR were "in addition to the swift and severe economic measures being prepared with allies and partners should Russia further invade Ukraine." On February 22, the White House announced it was implementing the "first tranche of swift and severe costs on Russia" with full blocking sanctions on two state-owned financial institutions involved in financing Russia's defense industry, Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB) and Promsvyazbank Public Joint Stock Company (PSB), and 42 of their subsidiaries. VEB and PSB were designated by OFAC pursuant to a separate executive order issued in April 2021, EO 14024, which authorizes sanctions against Russia "for harmful foreign activities," including violating "well-established principles of international law, including respect for the territorial integrity of states." Parties subject to full blocking sanctions are placed on OFAC's List of Specially Designated Nationals and Blocked Persons (SDN List). The assets of SDNs are blocked and U.S. persons, wherever located, are prohibited from engaging in any transactions with them unless authorized by OFAC. All entities owned 50 percent or more, directly or indirectly, by VEB or PSB are also considered SDNs, even if not identified on OFAC's SDN List.

OFAC also issued two general licenses authorizing certain activities involving VEB and PSB:

GL 2: transactions involving VEB or any entity in which VEB owns, directly or indirectly, a 50 percent or greater interest, that are ordinarily incident and necessary to the servicing of bonds issued before March 1, 2022 by the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation
GL 3: transactions ordinarily incident and necessary to the wind down of transactions involving VEB, or any entity in which VEB owns, directly or indirectly, a 50 percent or greater interest, through 12:01 am eastern daylight time, March 24, 2022

In addition to the blocking sanctions on VEB and PSB, the Treasury Department published a determination under EO 14024 that paves the way for additional designations of persons or entities in the Russian financial services sector. OFAC also placed five Russian elites and their family members on the SDN List.

Restrictions on Sovereign Debt

OFAC also announced on February 22, prohibitions related to certain sovereign debt of the Russian Federation. As of March 1, 2022, Directive 1A ("Prohibitions Related to Certain Sovereign Debt of the Russian Federation") restricts U.S. financial institutions from participation in the secondary markets for ruble or non-ruble denominated bonds issued after March 1, 2022 by the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation. Prior to February 22, U.S. financial institutions were already prohibited under a prior version of this directive from participation in the primary market for ruble or non-ruble denominated bonds issued by the entities subject to that directive, and with respect to lending ruble or non-ruble denominated funds to the entities subject to that directive. OFAC added the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation to the Non-SDN Menu-Based Sanctions List (NS-MBS List). Parties on the NS-MBS List are not SDNs and are subject to less than full blocking sanctions.

Sanctions on Nord Stream 2

On February 23, OFAC announced the imposition of sanctions on the Swiss entity responsible for the development of the Russian Nord Stream 2 pipeline, as well as its chief executive officer. OFAC added Nord Stream 2 AG and Matthias Warnig to the SDN List. In connection with the designations, OFAC also issued General License 4, which authorizes transactions ordinarily incident and necessary to the wind down of transactions involving Nord Stream 2 AG, or any entity in which Nord Stream 2 AG owns, directly or indirectly, a 50 percent or greater interest, through 12:01 am eastern daylight time, March 2, 2022.

Sanctions on Russia's Largest Financial Institutions

Following the Biden Administration's imposition of a first tranche of sanctions on Russia, the White House announced on February 24, 2022 additional "severe and economic costs on Russia in response to Putin's war of choice against Ukraine." As a result, OFAC implemented sanctions measures intended to disrupt the ability of Russia's two largest financial institutions, Public Joint Stock Company Sberbank of Russia (Sberbank) and VTB Bank Public Joint Stock Company (VTB), to process payments through the U.S. financial system.

Correspondent and Payable-Through Account Sanctions on Sberbank

On February 24, OFAC published Directive 2 ("Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions") (the "Russia-related CAPTA Directive"), which prohibits U.S. financial institutions from: (1) maintaining or opening of a correspondent or payable-through account for or on behalf of any entity determined to be subject to the prohibitions of the Russia-related CAPTA Directive, or their property or interests in property; and (2) the processing of transactions involving any such entities determined to be subject to the Russia-related CAPTA Directive, or their property or interests in property.

Directive 2 only applies to U.S. financial institutions, but the term "U.S. financial institution"[3] is broadly defined in Directive 2 to capture U.S. entities (including its foreign branches) engaged in a long list of specified activities, "as well as any U.S. holding companies, U.S. affiliates, or U.S. subsidiaries of any of the foregoing."

The prohibitions in Directive 2 apply to the foreign financial institutions listed in Annex 1 to the Directive, which identifies Russia's largest financial institution, Sberbank, and 25 of its subsidiaries. However, the restrictions also apply to any entity otherwise determined by OFAC to be subject to the prohibitions of the Russia-related CAPTA Directive, or their property or their interest in property, which includes financial institutions owned 50% or more owned or controlled by one or more foreign financial institutions determined to be subject to the prohibitions of the Russia-related CAPTA Directive.

Directive 2 requires U.S. financial institutions to close any correspondent or payable-through accounts for Sberbank and any of the 25 subsidiaries listed in Annex 1 to the Russia-related CAPTA Directive by 12:01 am eastern daylight time, March 26, 2022, and thereafter reject any future transactions involving those entities, unless exempt or authorized by OFAC. With respect to the additional foreign financial institutions otherwise determined to be subject to Directive 2, the prohibitions of Directive 2 become effective beginning at 12:01 a.m. eastern time on the date that is 30 days after the date of such determination.

Sberbank and the other entities subject to the Russia-related CAPTA Directive were added to OFAC's List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions (CAPTA List). The prohibitions in Directive 2 are not full blocking sanctions and do not require U.S. financial institutions or U.S. persons to block the assets of foreign financial institutions subject to the Russia-related CAPTA Directive.

Blocking Sanctions of VTB and Other Financial Institutions

On the same day OFAC imposed sanctions on Sberbank, it also imposed blocking sanctions on Russia's second largest bank as well as three other financial institutions pursuant to EO 14024 for being owned or controlled by, or for having acted or purported to act for, or on behalf of, directly or indirectly, the Government of Russia, and for operating in the Russian financial services sector, as follows:

VTB Bank Public Joint Stock Company (VTB) and 20 of its subsidiaries
PJSC Bank Financial Corporation Otkritie (Otkritie) and 12 of its subsidiaries
OJSC Sovcombank (Sovcombank) and 22 of its subsidiaries
JSC Bank Novikombank (Novikombank)

These blocking sanctions apply to any entity owned 50% or more, directly or indirectly, by one or more of the foregoing, even if not identified on the SDN List. The assets of SDNs located in the U.S. (or held by U.S. persons wherever located) are blocked and U.S. persons are prohibited from dealing with SDNs without a license from OFAC.

Restrictions on Debt and Equity Transactions Involving Major Russian Entities

Concurrent with its implementation of sanctions on Sberbank and VTB, OFAC issued Directive 3 ("Prohibitions Related to New Debt and Equity of Certain Russia-related Entities"), which prohibits U.S. persons or persons within the U.S. from engaging in all transactions in, the provision of financing for, and other dealings in new debt of longer than 14 days' maturity or new equity of certain Russian entities where such new debt or new equity is issued on or after March 26, 2022. The restrictions apply to new debt with a maturity of greater than 14 days and new equity whether in U.S. dollars or any other currency.

These restrictions apply to any entity listed in Annex 1 to Directive 3, which include Russian entities identified by OFAC as being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, the Government of Russia, or for operating or having operated in the financial services sector of Russia, as follows:

Sberbank
Gazprombank Joint Stock Company
Joint Stock Company Russian Agricultural Bank
Public Joint Stock Company Gazprom
Public Joint Stock Company GazpromNeft
Public Joint Stock Company Transneft
Public Joint Stock Company Rostelecom
Public Joint Stock Company RusHydro
Public Joint Stock Company Alrosa
Joint Stock Company Sovcomflot
Open Joint Stock Company Russian Railways
Joint Stock Company Alfa-Bank
Credit Bank of Moscow Public Joint Stock Company

The prohibitions on entities that are subsequently determined to be subject to Directive 3 become effective at 12:01 am eastern daylight time 30 days following such determination.

The entities on Annex 1 have been added to the NS-MBS List. Entities on the NS-MBS List are not SDNs and are subject to less than full blocking sanctions. However, OFAC's 50% Rule applies to all entities subject to Directive 3. The prohibitions of Directive 3 apply to the entities listed in Annex 1 or to any entity otherwise determined to be subject to Directive 3, or their property or interests in property, which include entities 50% or more owned, directly or indirectly, individually or in the aggregate, by one or more entities determined to be subject to Directive 3.

Issuance of General Licenses

Concurrent with the issuance of Directive 2 and the additions of VTB, Otkritie, Sovcombank, and Novikombank to the SDN List, OFAC released a number of general licenses authorizing specific activities otherwise prohibited by Directive 2 or in connection with the foregoing blocked parties:

GL 5: transactions for the conduct of official business of specified international organizations and entities
GL 6: transactions related to the export/reexport of agricultural commodities, medicine, medical devices, replacement parts and components or software updates, or items needed to respond to COVID-1
GL 7:transactions related to receipt and payment of charges for overflights and emergency landings in Russia by aircraft registered in the U.S. or owned or controlled or chartered to U.S. persons
GL 8A[4]: transactions involving VEB, Otkritie, Sovcombank, Sberbank, or VTB (and any entity owned 50% or more, directly or indirectly, by one or more of the foregoing entities) (together, Covered Entities), and the Central Bank of Russia, that are "related to energy"[5] through 12:01 am eastern daylight time, June 24, 2022
GL 9: transactions ordinarily incident and necessary to dealings in debt or equity of one or more Covered Entities that was issued prior to February 24, 2022, through 12:01 am eastern daylight time, May 25, 2022, provided that any divestment or transfer of, or facilitation of divestment or transfer of, covered debt or equity must be to a non-U.S. person
GL 10: transactions ordinarily incident and necessary to the wind down of derivative contracts entered into prior to February 24, 2022 that (i) include a Covered Entity or (ii) are linked to debt or equity of a Covered Entity, are authorized through 12:01 am eastern daylight time, May 25, 2022. Any payments to an SDN must be made into a blocked account. Debits to accounts on the books of U.S. financial institutions of Covered Entities are likewise authorized to the extent ordinarily incident and necessary to effect authorized transactions under GL 10.

Blocking Sanctions on Belarusian Entities and Individuals

On February 24, OFAC imposed blocking sanctions on 24 Belarusian individuals and entities pursuant to Executive Order 14038 ("Blocking Property of Additional Persons Contributing to the Situation in Belarus") in connection with Belarus's support for and facilitation of the invasion of Ukraine. The designated entities include two Belarusian state-owned banks, Belarusian defense and security firms and related individuals, Belarusian defense officials, and Belarusian individuals with close ties to President Lukashenka. These blocking sanctions apply to any entity owned 50% or more, directly or indirectly, by one or more of the foregoing, even if not identified on the SDN List. The assets of SDNs located in the U.S. (or held by U.S. persons wherever located) are blocked and U.S. persons are prohibited from dealing with SDNs without a license from OFAC.

Additional Export Control Restrictions on Russia

Effective February 24, in addition to the comprehensive export restriction on the DNR and LNR regions of Ukraine described above, BIS also implemented additional export licensing restrictions on a broad array of items destined for Russia, including U.S.-origin goods and foreign-produced items that contain or are based on U.S.-origin technology or other technology subject to the EAR.

New License Requirements

BIS has imposed a new license requirement for the export, reexport, or transfer (in-country) to or within Russia of any item "subject to the EAR" and specified in Export Control Classification (ECCN) Categories 3, 4, 5, 6, 7, 8, and 9 on the Commerce Control List (CCL) under the EAR.[6] In practical terms, this measure extends a licensing requirement to many commercial items that did not previously require a license for Russia. For example, parts and components used in civil aircraft controlled under ECCN 9A991.d now require a license for export to Russia. Some license exceptions are available, but they are limited. If a license application is required, applications for those items will be subject to a policy of denial, with a case-by-case review policy for applications related to flight safety, maritime safety, humanitarian needs, government space cooperation, items destined to certain U.S. subsidiaries and joint ventures, support civil telecommunications infrastructure in certain countries, and government to government activities.

New Foreign-Produced Direct Product Rules

BIS imposed two new foreign direct product rules in the EAR. Both rules will result in many more foreign-produced items being subject to the EAR than under the previous BIS rules.

The first rule applies to the entire country of Russia (Russia FDP Rule). Broadly speaking, under the Russia FDP Rule, foreign-produced items (i.e., items manufactured outside the U.S.) are subject to the EAR if they are the "direct product"[7] of certain U.S.-origin technology or software or are produced by any plant or major component of a plant that itself is a direct product of certain U.S.-origin technology or software, when there is knowledge that the foreign-produced item is destined to Russia, or will be incorporated into or used in the production or development of any part, component, or equipment produced in or destined to Russia. These foreign-produced items are subject to the expanded licensing requirements imposed for Russia discussed above. In order to avoid restricting consumer items used by the Russian people, the Russia FDP Rule does not apply to foreign-produced items that would be designated as EAR99.

The second rule is more expansive and targets Russian military end-users (Russia-MEU FDP Rule). Under the Russia-MEU FDP Rule, foreign-produced items (including items designated as EAR99) are subject to the EAR if they are the direct product of any software or technology specified in an ECCN in any category of the CCL, or are produced by a plant or major component of a plant that itself is a direct product of such software or technology, when there is knowledge that the foreign-made items will be incorporated into, or will be used in the production or development of any part, component, or equipment produced, purchased, or ordered by any entity designated under the EAR as a Russian military end user. Forty-nine entities have been designated as Russian military end-users under the EAR. A license is required to export, reexport or transfer (in-country) all items subject to the EAR to these entities, with limited exceptions.

Designation of Vladimir Putin and Others

On February 26, OFAC designated President Vladimir Putin, Minister of Foreign Affairs Sergei Lavrov, and other members of Putin's national security team as SDNs. The assets of SDNs in the U.S. are blocked and U.S. persons are prohibited from any dealings with them without authorization from OFAC.

Additional Restrictions on the Central Bank of Russia

On February 28, pursuant to EO 14024, OFAC issued Directive 4 ("Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation"), which prohibits U.S. persons (not only U.S. financial institutions) from engaging in any transactions involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation, including any transfer of assets to such entities or any foreign exchange transactions. This measure would restrict Russia's ability to sell its reserves of international currency to avoid the impact of sanctions.

Concurrent with the publication of Directive 4, OFAC issued General License 8A (GL 8A) authorizing transactions related to energy involving one or more specified entities, including the Central Bank of Russia, through 12:01 eastern daylight time, June 24, 2022. GL 8A does not authorize any transactions prohibited by Directive 1 (prohibitions on sovereign debt), the opening or maintaining of a correspondent account for or on behalf of any entity subject to Directive 2, any debit to an account on the books of a U.S. financial institution of the Central Bank of Russia, or any transactions involving any blocked persons other than those blocked persons identified in GL 8A.

Designation of Russian Sovereign Wealth Fund and Related Entities

On February 28, OFAC imposed full blocking sanctions on The Russian Direct Investment Fund (RDIF), a Russian sovereign wealth fund used by Putin to raise funds abroad. In addition to RDIF, OFAC added RDIF's management company, Joint Stock Company Management of the Russian Direct Investment Fund (JSC RDIF), an RDIF subsidiary, Limited Liability Company RVC Management Company (LLC RVC), as well as RDIF's Chief Executive Officer to the SDN List. The assets of SDNs held in the U.S. or by U.S. persons anywhere in the world are blocked and U.S. persons are prohibited from dealings with them, directly or indirectly, without a license from OFAC.

SWIFT Sanctions

On February 27, the Biden administration announced it was committed to ensuring removal of certain Russian banks from the SWIFT system. On March 2, the Council of the European Union announced a ban, effective March 12, of certain Russian banks from the SWIFT system, including any legal person, entity or body established in Russia whose proprietary rights are directly or indirectly owned more than 50% by any of the specified banks.

Additional Restrictive Measures

On March 2, the White House announced that it would extend the expanded additional export controls imposed on Russia on February 24 to Belarus, impose full blocking sanctions on 22 Russian defense-related entities and impose export controls on oil and gas extraction equipment and technology to Russia, and add entities to the BIS Entity List "that have been involved in, contributed to, or otherwise supported the Russian and Belarusian security services, military and defense sectors and/or military and defense research and development efforts." The White House also announced that the U.S. will close American air space to all Russian passenger and cargo flights, "including aircraft certified, operated, registered or controlled by any person connected with Russia."

[1] A general license authorizes a certain class of persons to engage in transactions without the need to apply for a license from OFAC, but all the conditions of the general license must be strictly observed.

[2] This action supplemented existing comprehensive export restrictions under the EAR on the Crimea region of Ukraine.

[3] The Russia-related CAPTA Directive defines "U.S. financial institution" as any U.S. entity (including its foreign branches) that is engaged in the business of accepting deposits, making, granting, transferring, holding, or brokering loans or credits, or purchasing or selling foreign exchange, securities, futures or options, or procuring purchasers and sellers thereof, as principal or agent. It includes depository institutions, banks, savings banks, money services businesses, operators of credit card systems, trust companies, insurance companies, securities brokers and dealers, futures and options brokers and dealers, forward contract and foreign exchange merchants, securities and commodities exchanges, clearing corporations, investment companies, employee benefit plans, dealers in precious metals, stones, or jewels, and U.S. holding companies, U.S. affiliates, or U.S. subsidiaries of any of the foregoing. This term includes those branches, offices, and agencies of foreign financial institutions that are located in the United States, but not such institutions' foreign branches, offices, or agencies.

[4] OFAC issued GL 8 on February 24, which was replaced and superseded in its entirety by GL 8A on February 28, 2022.

[5] "Related to energy" is broadly defined in GL 8A to include "extraction, production, refinement, liquefaction, gasification, regasification, conversion, enrichment, fabrication, transport, or purchase of petroleum, including crude oil, lease, condensates, unfinished oils, natural gas liquids, petroleum products, natural gas, or other products capable of producing energy, such as coal, wood, or agricultural products used to manufacture biofuels, or uranium in any form, as well as the development, production, generation, transmission, or exchange of power, through any means, including nuclear, thermal, and renewable energy sources."

[6] Under the EAR, items "subject to the EAR" include all items in the United States, all U.S.-origin items wherever located, certain foreign-made commodities, software technology in any quantity or in quantities exceeding certain de minimis levels, or certain foreign-produced "direct product" of specified technology and software, as described in the EAR.

[7] Under the EAR, "direct product" means the immediate products (including processes and services) produced directly by the use of technology or software.

For more information on the rollout of the U.S. sanctions, please contact Elsa Manzanares, Janae Aune or the Stinson LLP contact with whom you regularly work.