Menu Home

Just as I was going to step out for a while – new Russia-related Executive Order, a new General License, and new & changed FAQs

Here’s the meat of the Executive Order:

Section 1. (a) The following are prohibited:

(i) the importation into the United States of the following products of Russian Federation origin: crude oil; petroleum; petroleum fuels, oils, and products of their distillation; liquefied natural gas; coal; and coal products;

(ii) new investment in the energy sector in the Russian Federation by a United States person, wherever located; and

(iii) any approval, financing, facilitation, or guarantee by a United States person, wherever located, of a transaction by a foreign person where the transaction by that foreign person would be prohibited by this section if performed by a United States person or within the United States.

And there is a new General License:

Russian Harmful Foreign Activities Sanctions Regulations 31 CFR part 587
GENERAL LICENSE NO. 16
Authorizing Transactions Related to Certain Imports
Prohibited by Executive Order of March 8, 2022
Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine

(a) Except as provided in paragraph (b) of this general license, all transactions prohibited by Executive Order (E.O.) of March 8, 2022, Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine, that are ordinarily incident and necessary to the importation into the United States of crude oil; petroleum; petroleum fuels, oils, and products of their distillation; liquefied natural gas; coal; and coal products of Russian Federation origin pursuant to written contracts or written agreements entered prior to March 8, 2022 are authorized through 12:01 a.m. eastern daylight time, April 22, 2022.

(b) This general license does not authorize any transactions otherwise prohibited by the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR), including involving any person blocked pursuant to the RuHSR, unless separately authorized.

And there are new:

Russian Harmful Foreign Activities Sanctions

1,020. Does Executive Order (E.O.) of March 8, 2022, “Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine,” prohibit dealing in crude oil of the Caspian Pipeline Consortium (“CPC”)?

No.  Distribution systems such as those within the CPC can segregate various sources of crude oil, allowing crude oil that is not of Russian Federation origin to be marketed and loaded separately.  The importation prohibition of E.O. of March 8, 2022applies to the import of certain products of Russian Federation origin to the United States and excludes imports that are not of Russian Federation origin, even if such items transit through or depart from the Russian Federation.

Released on 03/08/2022

Russian Harmful Foreign Activities Sanctions

1,019. For the purposes of Executive Order (E.O.) of March 8, 2022, “Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine,” what is meant by the terms “Russian Federation origin” and “new investment in the energy sector in the Russian Federation”?

For the purposes of E.O. of March 8, 2022, the Office of Foreign Assets Control anticipates publishing regulations defining these terms to include the following:

  • “Russian Federation origin” — 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.
  • “new investment in the energy sector in the Russian Federation” — a transaction that constitutes a commitment or contribution of funds or other assets for, or a loan or other extension of credit to, new energy sector activities (not including maintenance or repair) located or occurring in the Russian Federation beginning on or after March 8, 2022.  

For purposes of this interpretation, a loan or extension of credit is any transfer or extension of funds or credit on the basis of an obligation to repay, or any assumption or guarantee of the obligation of another to repay an extension of funds or credit, including: overdrafts, currency swaps, purchases of debt securities, purchases of a loan made by another person, sales of financial assets subject to an agreement to repurchase, renewals or refinancings whereby funds or credits are transferred or extended to a borrower or recipient described in the provision, the issuance of standby letters of credit, and drawdowns on existing lines of credit.  

For the purposes of this interpretation, the energy sector includes the procurement, exploration, extraction, drilling, mining, harvesting, production, refinement, liquefaction, gasification, regasification, conversion, enrichment, fabrication, or transport of petroleum, natural gas, liquified natural gas, natural gas liquids, or petroleum products or other products capable of producing energy, such as coal or wood or agricultural products used to manufacture biofuels, the development, production, generation, transmission or exchange of power, through any means, including nuclear, electrical, thermal, and renewable.

Released on 03/08/2022

Russian Harmful Foreign Activities Sanctions

1,018. Are non-U.S. persons exposed to sanctions if they continue to import to non-U.S. jurisdictions certain products of Russian Federation origin that are banned from the United States pursuant to Executive Order (E.O.) of March 8, 2022, “Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine”?

E.O. of March 8, 2022 prohibits the importation into the United States of crude oil; petroleum; petroleum fuels, oils, and products of their distillation; liquefied natural gas; coal; and coal products of Russian Federation origin.  To the extent the import of such products of Russian Federation origin outside of the United States does not involve a sanctioned person or an otherwise prohibited transaction, non-U.S. persons are not exposed to sanctions under E.O. of March 8, 2022.  However, targeted prohibitions or restrictions may apply to certain energy-related dealings with specified Russian persons under other sanctions authorities, such as E.O. 13662or E.O. 14024.

Released on 03/08/2022

Russian Harmful Foreign Activities Sanctions

1,017. Does Russia-related General License (GL) 8A remain valid following the issuance of Executive Order (E.O.) of March 8, 2022, “Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine”?

Yes.  GL 8A, which authorizes certain transactions “related to energy” involving specified Russian financial institutions, remains in effect until 12:01 eastern daylight time, June 24, 2022, unless renewed.  However, GL 8A does not authorize any transactions prohibited by E.O. of March 8, 2022 (see FAQs 976-978 and 1,010-1,012).

Released on 03/08/2022

Russian Harmful Foreign Activities Sanctions

1,016. I have a shipment of a product or products listed in Executive Order (E.O.) of March 8, 2022, “Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine,” en route to the United States that was contracted prior to March 8, 2022.  Can I find a new buyer for this shipment, re-direct the shipment to a country other than the United States, or import the product and comply with the import ban?

Yes.  E.O. of March 8, 2022 prohibits the importation into the United States of crude oil; petroleum; petroleum fuels, oils, and products of their distillation; liquefied natural gas; coal; and coal products of Russian Federation origin.  It does not prohibit U.S. persons from engaging in transactions to sell or re-direct shipments that were previously destined for the United States.  In addition, the Office of Foreign of Assets Control (OFAC) has also issued General License (GL) 16 to authorize the limited import of these items pursuant to pre-existing written contracts or written agreements through April 22, 2022 (see FAQ 1015).  Such shipments into the United States can still be imported in compliance with E.O. of March 8, 2022.  OFAC may issue specific licenses on a case-by-case basis to authorize shipments occurring after April 22, 2022 or other activity outside the scope of GL 16.

Released on 03/08/2022

Russian Harmful Foreign Activities Sanctions

1,015. Is there a period for U.S. persons to continue imports prohibited by Executive Order (E.O.) of March 8, 2022, “Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine”?

Through 12:01 eastern daylight time, April 22, 2022, Russia-related General License (GL) 16 authorizes all transactions prohibited by E.O. of March 8, 2022 that are ordinarily incident and necessary to the importation of crude oil; petroleum; petroleum fuels, oils, and products of their distillation; liquefied natural gas; coal; and coal products of Russian Federation origin pursuant to written contracts or written agreements entered prior to March 8, 2022.  GL 16 does not authorize entry into new contracts.

Additionally, E.O. of March 8, 2022 does not prohibit transactions such as the unwinding of contracts or other business-related activities by U.S. persons to comply with the import ban imposed under E.O. of March 8, 2022.  Likewise, E.O. of March 8, 2022 does not prohibit U.S. persons from engaging in transactions to sell or re-direct shipments that were laden on or after March 8, 2022 and previously destined for the United States.

Note that all other prohibitions specified in E.O. of March 8, 2022 are effective immediately.

Released on 03/08/2022

Russian Harmful Foreign Activities Sanctions

1,014. Are all energy imports from Russia now prohibited by Executive Order (E.O.) of March 8, 2022, “Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine”?

No, only imports of crude oil; petroleum; petroleum fuels, oils, and products of their distillation; liquefied natural gas; coal; and coal products of Russian Federation origin into the United States are prohibited by E.O. of March 8, 2022, “Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine.”  Imports of other forms of energy of Russian Federation origin are not prohibited by E.O. of March 8, 2022.  In addition, E.O. of March 8, 2022 does not prohibit imports of non-Russian Federation origin, even if such items transit through or depart from the Russian Federation.  However, targeted prohibitions or restrictions may apply to certain energy-related dealings with specified Russian persons under other sanctions authorities, such as E.O. 13662 or E.O. 14024.

Released on 03/08/2022

Russian Harmful Foreign Activities Sanctions

1,013. What does Executive Order (E.O.) of March 8, 2022, “Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine,” do?

E.O. of March 8, 2022 prohibits the following activities:

  • the importation into the United States of crude oil; petroleum; petroleum fuels, oils, and products of their distillation; liquefied natural gas; coal; and coal products of Russian Federation origin;
  • new investment in the energy sector in the Russian Federation by a United States person, wherever located; and
  • any approval, financing, facilitation, or guarantee by a United States person, wherever located, of a transaction by a foreign person where the transaction by that foreign person would be prohibited by E.O. of March 8, 2022, if performed by a United States person or within the United States.

Released on 03/08/2022

and updated:

Russian Harmful Foreign Activities Sanctions

1,010. My company transports Russian oil for sale to the United States and third countries.  Can I continue to transport or sell Russian-origin oil without violating sanctions pursuant to Executive Order (E.O.) 14024?

The energy sector of the Russian Federation economy itself is not subject to comprehensive sanctions.  However, prohibitions or restrictions may apply to certain energy-related transactions under several sanctions authorities, including prohibitions issued pursuant to E.O. 13662, E.O. 14024, and E.O. of March 8, 2022.

Pursuant to E.O. of March 8, 2022, the import into the United States of crude oil; petroleum; petroleum fuels, oils, and products of their distillation; liquefied natural gas; coal; and coal products of Russian Federation origin is prohibited; and U.S. persons, wherever located, are prohibited from new investment in the energy sector in the Russian Federation, among other things. 

E.O. of March 8, 2022 does not prohibit transactions such as the unwinding of contracts or other business-related activities by U.S. persons to comply with the import ban imposed under E.O. of March 8, 2022.  Likewise, E.O. of March 8, 2022 does not prohibit U.S. persons from engaging in transactions to sell or re-direct shipments that were laden on or after March 8, 2022 and previously destined for the United States.  The Office of Foreign Assets Control (OFAC) has also authorized until April 22, 2022 certain transactions prohibited by E.O. of March 8, 2022 (see FAQs 1013 – 1020).

In addition, pursuant to E.O. 14024, OFAC has imposed expansive sanctions on persons that operate or have operated in the financial services sector of the Russian Federation economy (see FAQ 966).  To limit the degree to which these financial services sector sanctions may inhibit energy-related transactions, OFAC has issued Russia-related General License (GL) 8A authorizing U.S. persons to process energy-related transactions involving the sanctioned Russian financial institutions identified in GL 8A.  GL 8A expires at 12:01 a.m. eastern daylight time, June 24, 2022, unless renewed (see FAQs 976, 977, 978,  1011, and 1012).

Energy-related transactions authorized in GL 8A include payments connected with a variety of upstream and downstream activities, including the extraction, production, refinement, liquefaction, gasification, regasification, conversion, enrichment, fabrication, transport, or purchase of energy for import from the Russian Federation to countries other than the United States or for export to the Russian Federation, as well as financing, loading, or unloading related to such processes (see FAQ 977).  However, transactions related to the new investment in the energy sector in the Russian Federation are not authorized pursuant to GL 8A.

Updated: March 8, 2022

Updated on 03/08/2022

Russian Harmful Foreign Activities Sanctions

976. Can a U.S. financial institution process transactions related to energy where a Russian financial institution sanctioned pursuant to Executive Order (E.O.) 14024 is involved?  

General License (GL) 8A authorizes certain transactions “related to energy” (as defined in the GL; see also FAQ 977) involving the following entities (collectively, “Covered Entities”):
•    State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB);
•    Public Joint Stock Company Bank Financial Corporation Otkritie;
•    Sovcombank Open Joint Stock Company;
•    Public Joint Stock Company Sberbank of Russia;
•    VTB Bank Public Joint Stock Company; 
•    Any entity owned 50 percent or more, directly or indirectly, individually or in the aggregate, by one of the above entities; and
•    The Central Bank of the Russian Federation.

GL 8A does not authorize any transaction prohibited by Directive 1A under E.O. 14024, “Prohibitions Related to Certain Sovereign Debt of the Russian Federation” (Russia-related Sovereign Debt Directive).  In addition, GL 8A does not authorize any debit to an account on the books of a U.S. financial institution of the Central Bank of the Russian Federation.  Further, GL 8A does not authorize a U.S. financial institution to maintain (or open) a correspondent account or payable-through account for or on behalf of foreign financial institutions subject to the prohibitions of Directive 2 under E.O. 14024, “Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions” (the “Russia-related CAPTA Directive”).  Consequently, in order for a U.S. financial institution to engage in transactions authorized by GL 8A, all funds transfers related to energy involving one or more Covered Entities must be processed indirectly through a non-sanctioned, non-U.S. financial institution.  Please see FAQ 978 for examples of authorized and prohibited transactions flows under certain GLs, including GL 8A.

For purposes of assessing whether certain transactions are authorized under GL 8A, U.S. persons may rely upon the information available to them in the ordinary course of business, including reasonable reliance on information about the underlying transaction provided by the parties thereto.  

GL 8A is valid until 12:01 eastern daylight time, June 24, 2022 unless renewed.  Persons unable to wind down prohibited transactions with the Covered Entities by June 24, 2022 are encouraged to approach the Office of Foreign Assets Control, which may consider renewing GL 8A.  Please see FAQs 977, 978, 1010, 1111, and 1012 for additional guidance related to GL 8A.

U.S. financial institutions that rely on the authorization provided in GL 8A to process transactions related to energy must also comply with the prohibitions of E.O. of March 8, 2022, “Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine” (see FAQs 1013 – 1015).

Date Updated: March 08, 2022

Updated on 03/08/2022

Frequently Asked Questions (FAQs).

Links:

OFAC Notice

Executive Order

General License 16

New FAQs

Amended FAQs

Categories: Frequently Asked Questions (FAQ) Guidance Licenses OFAC Updates Russian Harmful Foreign Activities Sanctions

eric9to5

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: