Sanctions Weekly Update – Ukraine/Russia Conflict – April 10, 2023

US Sanctions | EU Sanctions | UK Sanctions | Russia/Ukraine Sanctions | Other Notable Developments

Week of April 10, 2023

I. US SANCTIONS

• OFAC and Department of State Sanction over 120 Individuals and Entities: On April 12, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Department of State announced that, in coordination with the UK, they are imposing sanctions on over 120 individuals and entities, including the facilitation network of Alisher Usmanov, one of Russia’s sanctioned billionaires who is known to have a wide network of businesses around the globe that enables him to circumvent international sanctions. The action also includes designations to reinforce existing measures and further disrupt Russia’s importation of critical technologies used in its war against Ukraine; entities operating in the defense sector of the Russian economy and supporting Russia’s war against Ukraine; and additional entities associated with Russia’s State Atomic Energy Corporation (Rosatom). Read more>>, Read more>> and Read more>>
• OFAC Issues New General Licenses and FAQ: On April 12, concurrent upon the OFAC and State Department’s imposition of sanctions on the financial facilitators of Alisher Usmanov, OFAC revoked Russia-related General License 15, "Authorizing Transactions Involving Certain Blocked Entities Owned by Alisher Burhanovich Usmanov”, and issued the following new Russia-Related General Licenses:
  • General License (GL) 62, which authorizes the wind down of transactions involving Holdingovaya Kompaniya Metalloinvest AO, MegaFon PAO, Limited Liability Company USM Telecom, Akkermann Cement Ca Limited Liability Company, and any company owned 50 percent or more by each of these entities through 12:01am eastern time on July 11, 2023. Read more>>
  • General License (GL) 63, which authorizes divestment transactions related to debt or equity of, or derivative contracts Involving, Holdingovaya Kompaniya Metalloinvest AO or any entity owned 50 percent or more by the company through 12:01am eastern time on July 11, 2023. Read more>>
  • General License (GL) 64, which authorizes all transactions incident and necessary to operate the newspaper Kommersant. Read more>>
  • General License (GL) 65, which authorizes transactions related to telecommunications and certain internet-based communications for MegaFon PAO or Digital Invest Limited Liability Company which involve Tajikistan or Uzbekistan. Read more>>

In addition, the OFAC is also issuing a new Frequently Asked Question (1122), which clarifies the scope of transactions authorized under the existing GL 25C and the new GL 65. Read more>> and Read more>>

• Biden Administration Extends National Emergency Declaration with Respect to Russia: On April 7, the Biden administration announced that it would extend the national emergency declaration pursuant to Executive Order 14024 for another year. Executive Order 14024 was issued on April 15, 2021, to “deal with the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States constituted by specified harmful foreign activities of the Government of the Russian Federation”. The Biden administration stressed that Russia’s harmful foreign activities, such as efforts to undermine democratic elections, engaging in malicious cyber-enabled activities, fostering transnational corruption to influence foreign governments, persecuting dissidents and journalists, and violating well-established principles of international law including respect for the territorial integrity of states, warranted a need to continue the national emergency beyond April 15, 2023. Read more>>
• US, EU, and UK Host Sanctions Evasion Meeting: On April 13, on the sidelines of the World Bank and IMF Spring Meetings, Deputy Secretary of the Treasury Wally Adeyemo; European Commissioner for Financial Stability, Financial Services, and Capital Markets Union Mairead McGuinness; and HM Treasury Director General for International Finance Lindsey Whyte hosted representatives from financial institutions to discuss continued efforts to counter sanctions evasion and combat Russian military procurement in key jurisdictions. The officials shared information about the most critical goods sought by the Russian military and emphasized that the Kremlin has directed its intelligence services to find ways around sanctions in order to replenish badly depleted supplies. They also discussed trade trends and enforcement priorities. Read more>>
• Sanction Officials Plan Trips to Clamp Down on Russia: On April 8, The Associated Press reported that top sanctions officials from the Treasury Department are planning special international trips this month to pressure firms and countries still doing business with Russia to cut financial ties due to the war in Ukraine. According to senior Treasury officials who spoke on the condition of anonymity, the message to these firms and countries will be to decide whether to continue supporting Moscow, or to “keep doing business with countries that represent 50% of the global economy.” The report noted that Treasury officials Liz Rosenberg and Brian Nelson will travel to Europe to meet with leaders of financial institutions in Switzerland, Italy and Germany, in order to share intelligence on potential sanctions evaders and to warn of the potential penalties for failure to comply with international sanctions. Rosenberg will also make a visit to Kazakhstan to urge the country’s private businesses not to provide material or intelligence support to Moscow. Read more>>
• U.S. Calls for Immediate Release of Wrongfully Detained Journalist: On April 10, Secretary of State Antony Blinken made determined that Wall Street Journal reporter Evan Gershkovich is wrongfully detained by Russia. In a press statement, the U.S. government condemned the Kremlin’s continued repression of independent voices in Russia and its ongoing war against the truth, and called for Russia to immediately release Mr. Gershkovich. Read more>>
• Secretary Yellen Stresses Importance of Support to Ukraine in IMF-World Bank Annual Meetings: On April 11-12, Secretary of the Treasury Janet L. Yellen participated in the 2023 IMF-World Bank Annual Spring Meetings. In addressing the press, Secretary Yellen highlighted that one of the key priorities of the Annual Meetings will be to work on additional coordination with the United States’ allies to support Ukraine as it continues to defend itself against Russia, especially in light of the recently approved IMF reform program for Ukraine, which will contribute to international efforts to meet Ukraine’s economic needs. In the Third Ukraine Ministerial Roundtable, Secretary Yellen also said that the United States is “proud to have provided significant budget support since Russia’s invasion”, and that it has “current plans to provide additional aid through September—all as grants—as well as to provide support for energy security and early recovery.” Read more>>, Read more>> and Read more>>
• USAID and DFC Sign MOU to Galvanize Private Investment in Ukraine: On April 12, the U.S. Agency for International Development (USAID) and the U.S. International Development Finance Corporation (DFC) signed a Memorandum of Understanding (MOU) with the Government of Ukraine to attract investments to Ukraine as part of their efforts to help address the country’s urgent development priorities and economic recovery. Under the MOU, the Ministry of Economy of Ukraine, with USAID support, will help identify and develop private sector projects for consideration for DFC support, whereas the DFC would work closely with the Ministry of Economy of Ukraine so that it understands DFC’s investment requirements. Apart from the MOU, the United States also agrees to continue its commitment to help the Ukrainian people overcome the destructive consequences of Russia’s aggression and to support early recovery and reconstruction, including its investment in Ukraine’s agriculture sector, technology sector, and critical energy equipment. Read more>> and Read more>>
• Defense Secretary Meets with Ukrainian Prime Minister: On April 12, Secretary of Defense Lloyd J. Austin III met with Ukrainian Prime Minister Denys Shmyhal at the Pentagon to discuss U.S. support for Ukraine in the face of continued Russian aggression. The two leaders discussed security assistance priorities, such as air defense and artillery, and training for the Ukrainian Armed Forces. They also agreed on the importance of ensuring accountability of security assistance, and Secretary Austin shared the key objectives for the next meeting of the Ukraine Defense Contact Group. Read more>>
• Treasury Secretary Meets with Ukrainian Prime Minister: On April 13, Secretary of the Treasury Janet Yellen met with Ukrainian Prime Minister Denys Shymal. The pair discussed the current status of IMF financing for Ukraine, and Secretary Yellen praised the international community’s commitment to supporting Ukraine. Read more>>
• Secretary of Commerce Delivers Remarks at US-Ukraine Partnership Forum: On April 13, Secretary of Commerce Gina Raimondo delivered remarks at the US-Ukraine Partnership Forum. She discussed efforts to engage with the private sector in reconstructing Ukraine, noting that these efforts must be undertaken carefully to make sure that a stable Ukrainian economy results from the partnership. Her remarks added that she met with Ukrainian Prime Minister Denys Shymal the preceding day. Read more>>
• U.S.-Made Chips Find Their Way into Russia Despite Sanctions: On April 12, Nikkei reported that despite the U.S. banned exports of semiconductors to Russia since the latter invaded Ukraine in February 2022, investigation shows that U.S.-made semiconductors are still “flowing” into Russia, with a large portion of it through small traders in Hong Kong and mainland China. Read more>>

II. EU SANCTIONS

• Poland Criticizes Lack of Progress on EU Sanctions against Belarus: Poland is disappointed with the Swedish Presidency of the Council of the European Union as work on EU sanctions against Belarus has stalled, Andrzej Sadoś, the Polish ambassador to the EU has said. 
• The EU is Trying to Sanction Diamonds from Russia: A large part of the world's supply of diamonds comes from Russia. The U.S. and Europe may try to cut off the revenue the country is raising from the gems given the war in Ukraine. Read more>>
• RT France Challenges EU Sanctions before EU Court: On 15 February 2023, RT France brought an action against EU Sanctions before the General Court of the European Union. Read more>>
• Fortum Launches Claim against Vestas over Russian Contracts: State-owned Finnish company Fortum Oyj has initiated ICC (International Chamber of Commerce) arbitration in Stockholm, Sweden against Vestas for terminating Russian wind project contracts. Vestas’ termination of Russian wind project contracts was in order to comply with the European Union sanctions arising from Russia’s invasion of Ukraine, the turbine manufacturer said. Read more>>
• Swiss Pharma Exports to Russia Soar Despite Sanctions: Though Swiss trade with Russia has come to a standstill in many key sectors, notably machines and watches, pharmaceutical exports are at a record high. Read more>>
• Berlin Wants Tighter Customs Control to Enforce Anti-Russia Sanctions: German Economy Minister Robert Habeck revealed Friday that he is seeking to strengthen customs control to prevent the dodging of anti-Russian sanctions. Read more>>
• Hungary Quits Russian-Led IIB Bank after US Sanctions: Hungary’s government decided to quit the Russian-controlled International Investment Bank a day after the US sanctioned the lender, the Economic Development Ministry said in a statement. Read more>>
• Commission Approves EUR 1.4 Billion Dutch Scheme to Support Energy-Intensive Companies in the Context of Russia's War against Ukraine: The European Commission has approved a EUR 1.4 billion Dutch scheme to support energy-intensive small and medium-sized enterprises (‘SMEs') facing increased energy costs in the context of Russia's war against Ukraine. The scheme was approved under the State aid Temporary Crisis and Transition Framework. Read more>>
• Commission Approves EUR 1 Billion Hungarian Scheme to Support Companies Facing Increased Energy Costs in the Context of Russia's War against Ukraine: The European Commission has approved a EUR 1 billion (approximately HUF 379 billion) Hungarian scheme to support companies facing increased energy costs in the context of Russia's war against Ukraine. The scheme was approved under the State aid Temporary Crisis and Transition Framework. Read more>>

III. UK SANCTIONS

• OFSI to Renew Legal Services General Licence for Russia and Belarus Sanctions Regimes: On April 11, 2023, it was reported that OFSI will renew for six months its legal services General Licence (GL) INT/2022/2252300, ‘OFSI General Licence Under the Russia Regulations and The Belarus Regulations’ due to expire on 28 April 2023, will be extended 28 October 2023. It was reported that OFSI issued a letter to stakeholders that said the renewed GL will, amongst other things; (i) set the legal fees caps (£500,000 inc. VAT) and legal expenses caps (5% of legal fees, up to £25,000) again and; (ii) make clear that it will be applicable in cases where fees and / or expenses may exceed the legal fees and / or expenses caps (any legal fees and/or expenses over the applicable caps will require a specific licence). OFSI has also said that whilst decisions on any specific licence application in defamation or similar cases will be taken on a case-by-case basis, it is OFSI’s starting position that payment of legal fees in such cases would not be appropriate, and a licence will be declined. Read more>>
• OFSI Updates Guidance on Russian Oil Maritime Services Ban & Price Cap: On April 6, 2023, OFSI updated its guidance on the UK’s Russian oil maritime services ban and oil price cap. In summary the updated guidance sets out amongst other things that; (i) the oil price cap will be kept under review and will be updated subject to the agreement of the Oil Price Cap Coalition; (ii) explains that, for the purposes of the maritime services ban, a person supplying or delivering the goods concerned by ship includes a person who owns, controls, charters or operates a ship on which those goods are being carried; or from or to which those goods are being transferred; (iii) it removes a section on bunker fuel and include new and updated sections on blending and co-mingling, co-mingling of goods; (iv) adds a definition of ‘general financing facilities; and (v) set out attestation example scenarios with regard to blending and substantial processing of refined oil products. Read more>>
• New UK Sanctions Announced to Target Individuals Assisting Sanctioned Oligarchs: On April 12, 2023, the Foreign, Commonwealth and Development Office updated the UK Sanctions List to target those who those who have knowingly assisted sanctioned Russia oligarchs to hide their assets in complex financial networks. The Russia sanctions list adds 10 people and 4 entities and amends the entry for Nikolay Ivanovich Bortsov. Among those sanctioned are Demetris Ioannides and Christodoulos Vassiliades, 2 Cypriot professional enablers supporting major Russian oligarchs Roman Abramovich and Alisher Usmanov. Ioannides is responsible for crafting the offshore structures which Abramovich used to hide over £760 million assets ahead of being sanctioned following Putin’s illegal invasion of Ukraine. Vassiliades, a Cypriot lawyer, is at the centre of a web of trusts and offshore companies that link Usmanov and Sutton Place Estate. The UK has also targeted Usmanov’s financial network, including companies USM, Curzon Square Limited, and Hanley Limited. Read more>> and Read more>>
• UK Confirms Further $500m in Loan Guarantees for Ukraine: On April 13, 2023, it was reported that Jeremy Hunt, Chancellor of the Exchequer, has confirmed that the UK is ready to provide an additional $500m in UK guaranteed loans for Ukraine, taking the total for this year to $1 billion and the total amount pledged by the UK in support of Ukraine to £6.5 billion. Read more>>
• UK Russia Sanctions List Update: On April 13, 2023, the Foreign, Commonwealth and Development Office updated the UK Sanctions List. Under the Russia financial sanctions regime, the list was updated to (i) amend the address for Tatiana Vladimirovna Evtushenkova; (ii) correct Felix Vladimirovich Evtushenkov known aliases; and (iii) correct the address of Nariman Gadzhievich Gadzhiev. Read more>>

IV. RUSSIA/UKRAINE SANCTIONS

• Russia to Ban 'Unfriendly' Countries from Share Trading in Defence Companies: On April 13, 2023, it was reported that Russia plans to ban shares in defence companies from so-called unfriendly countries from being traded on Moscow exchanges. It was reported that first deputy chair of the State Duma's financial markets commission Konstantin Bakharev said that the lack of a ban was "unacceptable and amoral”, and that Russia's finance ministry backed the ban. Read more>>
• Ukraine’s Naftogaz Declares Victory over Russia in $5B Arbitration: On April 13, 2023, it was reported that a court in The Hague has ordered Russia to pay $5 billion in compensation for seizing assets from Ukraine’s state energy firm following Moscow's 2014 illegal annexation of Crimea. Naftogaz CEO Oleksiy Chernyshov described the ruling by The Hague's Arbitration Tribunal at the Permanent Court of Arbitration as a "key victory on the energy front" and said he expected more decisions in Ukraine's favour to come. However, given Russia has previously refused to comply with other international court decisions affecting Naftogaz, securing restitution may prove challenging. Read more>>
• Ukraine’s GDP Fell 29.1% in 2022: On April 13, 2023, it was reported that Ukraine’s State Statistics service published data showing that Ukraine's economy contracted by 29.1 percent in 2022. Ukraine’s export-led economy has been battered by the consequences of Moscow’s full-scale invasion in February 2022, with the highly restricted access to Black Sea ports hindering crucial metal and grain shipments and the infrastructure industry dramatically weakened. Read more>>
• World Bank to Help Finance Ukrainian Energy Infrastructure Repairs: On April 12, 2023, the World Bank released a press statement announcing a commitment to finance $200 million to help fix Ukraine's energy and heating infrastructure, with partners and others to provide another $300 million as the project expands. The $200 million grant will be used to make emergency repairs to Ukraine's transition transformers, mobile heat boilers and other emergency critical equipment. Read more>>
• Kremlin Warns Outlook for Black Sea Grain Deal Is 'Not So Great': On April 12, 2023, it was reported that the Kremlin announced that the possibility of extending the Black Sea export deal beyond May 18, 2023, was not great as Russia's own such exports still faced obstacles. The Ukraine grain Black Sea export deal allows the safe wartime export of grain and fertilizer from several Ukrainian Black Sea ports was brokered by the United Nations and Turkey in July last year to help tackle a global food crisis. Read more>>
• Russia's Sberbank CEO Names Graphics Cards as Trickiest Hardware to Replace: On April 12, 2023, CEO German Gref of Sberbank, Russia's dominant lender and a leading technology company, announced that the is finding graphics cards the trickiest hardware item to replace in the absence of Western providers. Sberbank needs the cards for its artificial intelligence services and super computers, and Western sanctions over Moscow's actions in Ukraine have curbed Russia's access to some technology imports. Read more>>
• Russia Imposes Sanctions on 333 Canadians: On April 12, 2023, Russia imposed sanctions on 333 Canadian officials and public figures, including prominent Olympians, in what it said was a tit-for-tat response to Canadian restrictions on Moscow and support for Ukraine. The list, published by Russia's foreign ministry includes Canada's Governor General Mary Simon, more than 250 members of regional legislative assemblies, and scores of Canadian athletes who have publicly supported a ban on Russian athletes competing at the 2024 Olympics. Read more>>
• BOC Aviation Awarded $406m over Planes Stuck in Russia: On April 11, 2023, a US Judge ordered Russia's largest cargo airline to pay aircraft lessor BOC Aviation Ltd $406.2 million after being declared in default on leases for three Boeing 747-8 freighters following Russia's invasion of Ukraine. U.S. District Judge Lewis Liman in Manhattan found the defendant AirBridgeCargo Airlines LLC and its parent Volga-Dnepr Logistics BV liable, after the invasion and resulting sanctions left the plaintiff BOC Aviation unable to reclaim the aircraft. Read more>>
• Russia's Novatek to Acquire Shell's Stake in Sakhalin-2 for $1.16b: On April 12, 2023, it was reported that Russia's government has approved the sale of Shell's former 27.5% stake in the Sakhalin-2 energy project to Russian energy firm Novatek for 94.8 billion roubles ($1.16 billion). Read more>>
• Ukraine Considers Sanctions against Syria Due to Support of Russia: On April 7, 2023, the Cabinet of Ministers of Ukraine stated that it would consider sanctions against Syria for support of the Russian invasion into Ukraine. The suggested sanctions include a full trade ban, restrictions on the movement of capital, restrictions on intellectual property, etc. The sanctions will be considered by the National Defense and Security Council of Ukraine. Read more>>
• Ukraine and Canada to Sign Updated Free Trade Agreement: On April 11, 2023, during a working visit to Canada, the Prime Minister of Ukraine, Denys Shmyhal, together with the Prime Minister of Canada, Justin Trudeau, signed a joint declaration on the completion of negotiations on the renewal of the Free Trade Agreement between Canada and Ukraine. The updated Agreement between Ukraine and Canada revises the sections on digital trade and cross-cumulation and includes sections related to supporting small and medium-sized businesses, as well as strengthening the role of indigenous peoples in trade. Read more>>
• Ukraine's Anti-Corruption Agency Designates Chinese Tech Brand Xiaomi as 'International Sponsor of War': Ukraine's National Corruption Prevention Agency has designated Chinese tech brand Xiaomi an "international sponsor of war" for continuing to do business in Russia following its full-scale invasion of Ukraine. Read more>>
• Grain Imports from Ukraine to Poland Will Be Suspended at Least until July: Deputy Minister of Agriculture of Poland Janusz Kowalski said that the import of grain from Ukraine will be suspended at least until July this year. The Deputy Minister emphasized that the Poland is disappointed with EU efforts to help Polish farmers. According to him, the Polish-Ukrainian grain agreement should be the first step in solving the agricultural crisis and duties should be imposed on all agricultural products from Ukraine. Read more>>
• Russia Moves to Digitize Military Summons, Prevent Conscripts from Fleeing Country: The new bill, approved by the Russian Parliament on 12 April allows the authorities to issue online call-up papers and blocks some men from traveling abroad. Once the bill is signed into law by Russian President Vladimir Putin, men eligible for military service will be required to show up to recruitment offices after receiving an online summons issued via a digital database. Those who ignore their call-up papers will face legal restrictions including a driving ban, and being disqualified from taking out loans and selling or buying real estate. Read more>>
• Trade Turnover between Russia and China has Grown by Almost 40% since the Beginning of the Year: Trade turnover between China and Russia in the first three months of 2023 reached $53.84 billion, an increase of 38.7% compared to the same period in 2022. According to Russian statistics, the growth of trade with Russia was the most significant among all major trading partners of China. China's turnover with Singapore grew by 23%, and its turnover with Canada grew by 17%. Read more>>

V. OTHER NOTABLE DEVELOPMENTS

• Canada Provides Fresh Military Aid to Ukraine, Further Sanctions Russia: On April 11, Canada’s Prime Minister Justin Trudeau announced that the country is imposing new sanctions on Russia over its invasion of Ukraine, as well as providing fresh military aid to Kyiv. The announcement came after the Canadian leader met with Ukraine’s Prime Minister Denys Shmyhal in Toronto, and will include 21,000 assault rifles, 38 machine guns and 2.4 million rounds of ammunition to Ukraine, as well as sanctions on 14 Russian individuals and 34 entities, including security targets linked to Wagner Group, according to Trudeau. Canada will also impose sanctions on nine entities tied to the Belarusian financial sector to further pressure Russia’s “enablers in Belarus.”Read more>> and Read more>>
• Russians Search for Bootleg Solutions for Payment Sanctions: On April 9, The Financial Times reported that Russians are heading to neighboring Central Asian nations such as Uzbekistan and Armenia for creative payment solutions to circumvent sanctions, after Visa and Mastercard cut services in Russia, and as Russia’s domestic card scheme Mir faced further international sanctions. Read more>>
• Russia’s Murky Measures Keep Its Oil Flowing Despite Sanctions: On April 12, Bloomberg reported that Russia is resorting to a number of murky practices to sell a lesser-known oil product to buyers wary of breaching sanctions, and to beat a financial cap set by the European Union and its allies. According to people familiar with the matter, as well as market experts, sellers of Russian naphtha — which is primarily used to make plastics and petrochemicals — are facing more hurdles getting the product to market since sanctions took effect in early February, leading to measures such as the fuel being labeled as gasoline or cargoes leaving ports without a destination. Data shows that Russian gasoline has been increasingly observed flowing to storage tanks in the UAE and West Africa. Read more>>
• Only Two Swiss Violations of Russian Sanctions Fined So Far: On April 10, swissinfo.ch reported that out of 126 shipments reported by the Swiss customs for violating sanctions against Russia, only two have ultimately incurred penalties. Switzerland’s Federal Office for Customs and Border Security reiterated that all declared exports to and imports from Russia are checked, while the State Secretariat for Economic Affairs (Seco) stressed that any report of sanctions-busting or suspicious activity must be carefully investigated given the variety of views on sanctions in parliament. Read more>> and Read more>>
• Swiss Pharmaceutical Exports to Russia Increase Despite Sanctions: On April 9, AFP reported that Swiss exports to Russia had only dropped slightly despite the landlocked nation matching the EU’s 10 rounds of ever-tightening sanctions imposed since Russia invaded Ukraine in February 2022, with pharmaceutical exports soaring to record levels, according to data from the Swiss Federal Office for Customs and Border Security. Although Swiss trade with Russia has come to a standstill in many key sectors, notably machines and watches, medicines, being considered humanitarian goods, are exempt from sanctions; and Switzerland has long been home to many large pharmaceutical companies such as Novartis and Roche. Read more>>
• Armenian Banks to Start Blocking Transfers of Russians Due to Sanctions: On April 11, Armenian authorities announced that they are tightening control over banking transactions of Russian clients, after a wave of Russians emigrated to Armenia. In a statement published on Friday, the Central Bank of Armenia said that Armenian banks are “forced to tighten requirements” as “western commercial banks, especially the United States, are now reviewing their transaction control system in connection with sanctions against the Russian Federation, which have significantly tightened conditions for foreign transactions of all banks in the region, including Armenian banks". The Central Bank further warned that number of refusals to Russian clients may increase if commercial banks assess these transactions as risky. Read more>>