US Economic Sanctions on Russia: How To Reduce Your Exposure and Be Compliant

Why Should You Attend:

In response to Russia's invasion of Ukraine in February 2022, the Department of Commerce, Bureau of Security and Industry issued two final rules to sanction Russia and Belarus. Essentially, the new US rules (1) restrict exports of military or “dual-use” technology to Russia and Belarus; (2) block doing business with certain Russian banks and financial institutions; (3) sanction certain regime elites and business executives close to the Russian Government.

These final rules add new license requirements for all Export Control Classification Numbers (ECCNs) in Categories 3-9 of the CCL. Certain of these items, in 58 ECCNs with unilateral controls (including certain microelectronics, telecom items, sensors, navigation equipment, avionics, marine equipment, and aircraft components), were not previously controlled to Russia or Belarus.

Under the stringent licensing review policy being implemented, applications for the export, reexport, or transfer of items that require a license for Russia or Belarus will be reviewed under a policy of denial.

Certain partner countries that have also committed to implementing substantially similar measures. Exports, reexports, and transfers from the following countries are not subject to these rules: Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, New Zealand, Poland, Portugal, Romania, Slovakia, Slovenia, South Korea, Spain, Sweden, and the United Kingdom.

Commerce also added 120 Entities in Russia and Belarus to the Entity List, Further Limiting the Russian and Belarusian Militaries Access to Items that Support Aggression Against Ukraine, BIS issued a final rule adding 120 entities to the Entity List. Ninety-five (95) entities are being added as military end users under the destinations of Belarus (24 entities) and Russia (71 entities) for acquiring and attempting to acquire items subject to the EAR in support of Belarus's and Russia’s militaries. These parties are being effectively cut off from the inputs necessary to sustain Putin's war and shows that the US has the capabilities to detect, identify, and restrict parties in Russia, Belarus, or elsewhere that seek to support that effort.

In addition to the new Department of Commerce rules, the US Department of Treasury, Office of Foreign Asset Controls, also issued new financial sanctions against Russia.

US took significant and unprecedented action to respond to Russia's further invasion of Ukraine imposing severe economic costs that will have both immediate and long-term effects on the Russian economy and financial system. The US Department of Treasury's Office of Foreign Assets Control (OFAC) imposed expansive economic measures, in partnership with allies and partners, that target the core infrastructure of the Russian financial system -- including all of Russia's largest financial institutions and the ability of state-owned and private entities to raise capital - and further bars Russia from the global financial system. Treasury is also sanctioning additional Russian elites and their family members and imposing additional new prohibitions related to new debt and equity of major Russian state-owned enterprises and large privately owned financial institutions.

By cutting off Russia's two largest banks -- which combined make up more than half of the total banking system in Russia by asset value - from processing payments through the US financial system.

OFAC has imposed full blocking sanctions on VTB Bank, Russia's second-largest financial institution, which holds 20% of banking assets in Russia. VTB is majority-owned by the GOR, which deems it to be a systemically important financial institution. This will sever a critical artery of Russia's financial system.

Who Will Benefit:

• Directors, CEOs, CFOs, COOs, VPs & C-level professionals across trade industry
• Import and export managers
• Supply chain managers
• Labor and legal affairs
• Procurement managers
• Customs regulatory managers
• Customs compliance managers
• Operations professionals
• Regulatory compliance professionals
• Custom compliance personnel
• Quality managers
• Office managers
• Customs/logistics supervisors
• Trade compliance managers
• EHS managers
• Purchasing managers
• Quality/process control engineers
• Project managers
• Global compliance managers
• Sales administrators
• Personnel involved in import-export from/to North America
• Shipping and logistics personnel
• Legal personnel
• Trade consultants/advisors
• Chambers of commerce professionals
• Foreign trade agency professionals
• Business development professionals

Douglas Cohen
Senior Manager for Global Trade and Contracts, Worldwide Trade and Legal Associates

For more than 25 years, Mr. Douglas Cohen has been at the forefront of international trade and transactions. With senior positions in private consultancy, the US Department of Commerce, the European Union, American Airlines, and IATA, he has developed substantial expertise in import-export operations and compliance. At present, he is Director General, Global Trade and Transactions, at Worldwide Trade & Legal Associates, where he provides legal and strategic advice to organizations seeking to enter or expand foreign markets whilst mitigating regulatory risk.

Mr. Cohen has been asked to teach his expertise in international trade at universities and corporate seminars in North America, Europe, Asia, and the Middle East. He is currently a faculty member at the Thunderbird School of Global Management.

Topic Background:

Do you export, or plan to export goods outside the United States? Maybe you do business with international banks or financial institutions?

If so, you may be exposed to new, strict export and financial controls and sanctions placed on Russia and Belarus, in response to Russia’s invasion of Ukraine. These export control rules also cover the transshipment to Russia from third countries – so even if you do not believe you are directly exporting to Russia or Russian individuals, you must verify that your customer will not do so, and provide proof with an end-use and end-user certificate.

The fines and penalties for violating these export rules are severe – both civil and criminal. You could be forced to pay up to $335,000 for each civil violation, more than $1,000,000 per criminal violation, or twice the total amount of the transaction. In addition to monetary penalties, you could be denied your export privileges and suffer extensive reputational damage. You could also be subject to a lengthy prison sentence if found to be responsible for these violations.

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