This newsletter is a listing of the latest changes in export control regulations through September 30, 2022. The newsletter is provided as a complimentary service to assist exporters with their ITAR and EAR export compliance responsibilities. It provides a summary of recent changes to export control regulations or other regulatory matters of interest that may impact your company’s international trade and export compliance functions. Call us at 703-847-5801 or email info@fdassociates.net with questions or comments.
See also our “Latest Sanctions Fines & Penalties” section below for an update on companies and persons denied export privileges by the United States Government.
REGULATORY UPDATES
The President
President Biden Issues Executive Order Regarding Guidance On CIFIUS
September 15, 2022: President Biden issued an Executive Order (“EO”) on the interagency Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”) and guidance for ensuring robust national security reviews of foreign investment in the United States. The EO outlines five key factors that the Biden Administration is instructing the Committee to consider when conducting national security reviews of covered transactions:
- A transaction’s impact on U.S. supply chains. The EO directs CFIUS to consider how a proposed transaction could affect “the resilience of critical U.S. supply chains” and associated national security implications that could result from a shift in ownership, rights, or control to a foreign entity or person. The EO notes that this review should include sectors outside of the defense industrial base, including manufacturing capabilities, services, critical mineral resources, and technologies that could cause supply disruptions.
- A transaction’s effect on U.S. technological leadership in areas affecting U.S. national security. The EO instructs the Committee to take into consideration the protection of U.S. technological leadership in sectors that are critical to US national security, including microelectronics, artificial intelligence, biotechnology and biomanufacturing, quantum computing, advanced clean energy, and climate adaptation technologies. The EO acknowledges that foreign investment can aid domestic innovation but asks CFIUS to consider whether a transaction could result in technological or application advancements by foreign third parties that may undermine national security.
- Industry investment trends. The EO directs the Committee to view proposed transactions in the context of previous investments or past acquisitions—rather than in isolation. The EO identifies the need to focus on aggregate trends, such as incremental investments over time or the acquisition of cumulative control, in a sector or technology that may cede, part-by-part, domestic development or control (such as through multiple unrelated investments by the same party or country across the same industry).
- Cybersecurity risks. The EO states that CFIUS should consider whether a transaction could provide foreign investors or related third parties with the ability to conduct cyber intrusions or other malicious cyber-enabled activity that would pose serious national security risks.
- Risks to U.S. persons’ sensitive data. Notably, the EO highlights the risk of access to U.S. persons’ sensitive personal data among the key factors for the Committee’s consideration. The EO notes that tools like surveillance, tracing, tracking, and targeting of individuals combined with advances in technology and access to large data sets now allow data that was previously unidentifiable to become re‑identified or de-anonymized. At the direction of the EO, CFIUS will now apply greater consideration to whether a transaction could provide a foreign investor with the ability to exploit such information to the detriment of national security.
https://www.jdsupra.com/legalnews/biden-administration-releases-5703369/ and https://www.whitehouse.gov/briefing-room/presidential-actions/2022/09/15/executive-order-on-ensuring-robust-consideration-of-evolving-national-security-risks-by-the-committee-on-foreign-investment-in-the-united-states/
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G7
G7 Members Confirmed Intention For A Price Cap On Russian Oil And Petroleum Products
September 2, 2022: At their summit in Elmau, G7 Leaders (which include the U.S.) reaffirmed a shared commitment to preventing Russia from profiting from its war of aggression, supporting stability in global energy markets, and to minimizing negative economic spillovers, especially on low and middle-income countries. To deliver on this commitment, the G7 confirmed its joint political intention to finalize and implement a comprehensive prohibition of services that enable maritime transportation of Russian-origin crude oil and petroleum products globally – the provision of such services would only be allowed if the oil and petroleum products are purchased at or below a price (“the price cap”) determined by the broad coalition of countries adhering to and implementing the price cap.
See the corresponding article below from the U.S. Department of the Treasury.
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Department of State, Directorate of Defense Trade Controls (DDTC)
ITAR Revisions to ITAR Part 120 In Effect
September 6, 2022: Changes proposed on March 22, 2022, revising the regulatory citations in ITAR Part 120 took effect September 6, 2022. There is no change in the scope of the ITAR. These changes affect industries’ compliance plans, manuals, procedures, and training. The revisions to ITAR Part 120 involved reorganization into three distinct sections; General Information, General Policies, and Processes and Definitions. Wherever your compliance plans, manuals, procedures, and training used ITAR Part 120 citations, updates to these documents are required. The use of existing documents will reflect a different definition in the ITAR. I.E. Export was previously defined in ITAR 120.17, the new citation is ITAR 120.50. ITAR Part 120
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DDTC Name And Address Changes Posted To Website
September 13 through 22, 2022: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at
- Change in Address for Axxeum, Inc., from 100 Church Street, Suite 300, Huntsville, AL 35824 to 351 Electronics Blvd. SW, Suite A, Huntsville, AL 35824;
- Change in Name from APSYS SAS to Airbus Protect SAS due to merger with a part of Airbus CyberSecurity SAS’ businesses;
- Change in Address for Pennant International Limited, from Pennant Court, Staverton Technology Park, Gloucester Road, Cheltenham, Glos, GL51 6TL to Unit D1 Staverton Connection, Old Gloucester Road, Cheltenham, England GL51 OTF;
- Change in Name from Thales Management & Services Deutschland GmbH to Thales Deutschland GmbH due to corporate restructuring.
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U.S. Department of the Treasury
The Secretary Of The Treasury Released A Statement Regarding Implementing A Cap On The Price Of Russian Oil
September 2, 2022: The Secretary of the Treasury, Janet L. Yellen, released the following statement on the G7 Finance Ministers’ agreement to finalize and implement a cap on the price of Russian oil.
“Today, the G7 took a critical step forward in achieving our dual goals of putting downward pressure on global energy prices while denying Putin revenue to fund his brutal war in Ukraine. By committing to finalize and implement a price cap, the G7 will significantly reduce Russia’s main source of funding for its illegal war while maintaining supplies to global energy markets by keeping Russian oil flowing at lower prices. While we’ve seen energy prices ease in the United States, energy costs remain a concern for Americans and continue to be elevated globally. This price cap is one of the most powerful tools we have to fight inflation and protect workers and businesses in the United States and globally from future price spikes caused by global disruptions.
Today’s action will help deliver a major blow to Russian finances and will both hinder Russia’s ability to fight its unprovoked war in Ukraine and hasten the deterioration of the Russian economy. We have already begun to see the impact of the price cap through Russia’s hurried attempts to negotiate bilateral oil trades at massive discounts.”
https://home.treasury.gov/news/press-releases/jy0936
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Department of the Treasury, Office of Foreign Assets Control (OFAC)
OFAC Published Recent Actions Notice
September 19, 2022: As a reminder, the Office of Foreign Assets Control (OFAC) issued a recent actions notice, reminding holders of property blocked pursuant to OFAC sanctions regulations published in Chapter V of Title 31 of the Code of Federal Regulations (C.F.R.) of the requirement to provide OFAC with an Annual Report of Blocked Property (ARBP). Persons subject to this reporting requirement must submit a comprehensive report, as outlined in 31 C.F.R. § 501.603 of the Reporting, Procedures and Penalties Regulations (RPPR), of all blocked property held as of June 30 of the current year by September 30.
The annual reports must be filed using the mandatory spreadsheet form TD-F 90-22.50. Completed forms should be sent to ofacreport@treasury.gov or filed through the OFAC Reporting System (ORS). Failure to submit a required ARBP by September 30 constitutes a violation of the RPPR.
https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220919
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OFAC Issued Quarterly Reports Of Licensing Activities
September 27, 2022: The Department of the Treasury's Office of Foreign Assets Control (OFAC) has released Quarterly Reports of Licensing Activities pursuant to Section 906(b) of the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), covering activities undertaken by OFAC under Section 906(a)(1) of the TSRA from April 2019 through September 2021. Under the procedures established in its TSRA-related regulations, OFAC processes license applications requesting authorization to export agricultural commodities, medicine, and medical devices to Iran and Sudan under the specific licensing regime set forth in Section 906 of the TSRA.
https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220927 and https://home.treasury.gov/policy-issues/financial-sanctions/ofac-license-application-page/trade-sanctions-reform-and-export-enhancement-act-of-2000-tsra-program/trade-sanctions-reform-and-export-enhancement-act-of-2000-tsra-reports-to-congress#quarterly
| LATEST SANCTIONS FINES & PENALTIES |
This section of our newsletter provides information on the latest sanctions, fines and penalties for export violations or matters of non-compliance with the ITAR or EAR issued by the US government enforcement agencies. It is provided as a service to exporters and associates of FD Associates to remind them of the importance of extreme due diligence in all international trade and export compliance matters, particularly those involving exports subject to the ITAR or the EAR. Don't let this happen to you or your company! Call us with questions or concerns at 703-847-5801 or email info@fdassociates.net.
Sanctions
Department of Commerce, Bureau of Industry and Security (BIS)
September 8, 2022: 87 Fed. Reg. 55241: The Commerce Department’s Bureau of Industry and Security (BIS) issued an interim final rule revising the Export Administration Regulations (EAR) to authorize the release of certain technology and software in the context of standards setting and development in standards organizations. The changes made in this interim final rule address concerns from U.S. industry and other stakeholders about whether BIS licenses are required to release low-level technology for legitimate standards activities to parties on the Entity List stemming from the listing of Huawei and a number of its non-U.S. affiliates.
This rule is consistent with public comments received from the June 2020 interim final rule, specifically that additional actions are needed to protect U.S. technology without discouraging the full participation of U.S. companies in international standards development efforts. The rule amends the EAR to authorize the release of certain technology and software subject to the EAR to entities on the Entity List without a license when that release occurs in a standards-related activity with the intent that the resulting standard will be “published.” The requirement that the standard be published undermines any risk of unwanted transfer of proprietary technology.
The rule also revises the terms used in the EAR to describe the actions permissible under the authorization. As a result of this interim final rule, the release of EAR99 and Anti-Terrorism (AT) only controlled “software” and “technology,” as well as certain “software” and “technology” for specified cryptographic functionality, are included in the scope of the authorization. This interim final rule also defines the term “standards-related activity” to describe the actions permissible under the authorization.
Lastly, this interim final rule amends the scope of the authorization to apply to all entities listed in the Entity List. The rule only addresses Entity List related licensing requirements, and other export controls may apply and require authorization from BIS. BIS seeks public comments on the impact of these additional controls on participation in the standards-related activity.
https://www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3127-2022-09-08-bis-press-release-standards-rule/file and https://www.federalregister.gov/documents/2022/09/09/2022-19415/authorization-of-certain-items-to-entities-on-the-entity-list-in-the-context-of-specific-standards
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September 16, 2022: 87 Fed. Reg. 57068: In response to the Russian Federation’s (Russia’s) ongoing aggression against Ukraine, the Department of Commerce expanded the existing sanctions against Russia and Belarus by imposing new export controls, including expanding the scope of the Russian industry sector sanctions to add lower-level items potentially useful for Russia’s chemical and biological weapons production capabilities and items needed for advanced production and development capabilities to enable advanced manufacturing across a number of industries. This rule also added Belarus to the scope of industry sector sanctions that currently apply solely to Russia. With respect to end users, this rule expanded the ‘military end user’ and ‘military-intelligence end user’ controls and applies the Russian/Belarusian Military End User Foreign Direct Product (FDP) rule to ten existing entries on the Entity List for six existing end users that have continued to supply Russian entities on the Entity List or are under sanction since Russia’s further invasion of Ukraine. Labeling these six end users as Russian ‘military end users’ and applying the Russia/Belarus-Military End User FDP rule to them will degrade Russia’s war efforts in Ukraine, as these entities produce items needed by the Russian and Belarussian military and industrial sectors. Correspondingly, this rule further specifies with respect to Burmese, Cambodian, Chinese, and Venezuelan ‘military end users’ located outside of Burma, Cambodia, China, or Venezuela that the requirement is limited to only those ‘military end users’ identified on the ‘Military EndUser’ (MEU) List. Finally, this rule refined existing controls on Russia and Belarus by adding additional dollar value exclusion thresholds for ‘luxury goods;’ and makes twelve corrections and clarifications to existing controls on Russia and Belarus. The Department of Commerce took these actions to clarify and enhance the effectiveness of U.S. controls and to better align its controls on both Russia.
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September 19, 2022: The U.S. Commerce Department, through the Bureau of Industry and Security (BIS), updated its list of aircraft that have flown into Russia in apparent violation of the Export Administration Regulations (EAR) by adding the first three Iranian-owned and -operated aircraft providing cargo flight services on U.S.-origin aircraft to Russia. There are now a total of 183 aircraft identified on the list for apparent violations of U.S. export controls. Using commercially available data, BIS identified three Iranian cargo aircraft subject to the EAR flying and transporting goods, including electronic items, to Russia in apparent violation of BIS’s stringent export controls on Russia. These aircraft are operated by Mahan Air, Qeshm Fars Air, and Iran Air. Any subsequent actions taken with regard to any of the listed aircraft, including, but not limited to, refueling, maintenance, repair, or the provision of spare parts or services, are subject to the prohibitions outlined in General Prohibition Ten of the EAR (15 C.F.R. § 736.2(b)(10)).
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September 26, 2022: The U.S. Commerce Department, through the Bureau of Industry and Security (BIS), has updated its list of aircraft, a majority of which are U.S. origin, that have flown into Russia in apparent violation of the Export Administration Regulations (EAR) by adding a fourth Iranian-owned and -operated aircraft providing cargo flight services on U.S.-origin aircraft to Russia. Public reporting shows that an airplane owned by Saha Airlines, which itself is owned and operated by the Islamic Republic of Iran Air Force, has flown into Russia without BIS authorization since export controls were imposed on such aircraft on February 24, 2022. There are now a total of 184 aircraft identified on the list for apparent violations of U.S. export controls.
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Department of the Treasury, Office of Foreign Assets Control (OFAC)
September 2, 2022: The Department of the Treasury, Office of Foreign Assets Control (OFAC) announced that it will amend and reissue in their entirety, the Cyber-Related Sanctions Regulations, 31 C.F.R. part 578. This administrative action replaces the regulations that were published in abbreviated form on December 31, 2015, with a more comprehensive set of regulations that includes additional interpretive and definitional guidance, general licenses, and other regulatory provisions that will provide further guidance to the public. The Cyber-Related Sanctions Regulations became effective when they were published in the Federal Register on Tuesday, September 6, 2022.
In addition, the publication of this final rule has triggered an automatic administrative update to a number of sanctions entries. The unique identifier numbers (UIDs) for the affected entries are listed below as part of this administrative update. The UIDs for the sanctions entries affected by this update are found at the following link:
https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220902
and
https://home.treasury.gov/system/files/126/20220902_cyber_regulations.pdf
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September 8, 2022: The Department of the Treasury's Office of Foreign Assets Control (OFAC) designated an air transportation service provider for its involvement in the shipment of Iranian Unmanned Aerial Vehicles (UAVs) to Russia for its war against Ukraine. Additionally, OFAC designated three companies and one individual involved in the research, development, production, and procurement of Iranian UAVs and UAV components, including the Shahed series of drones, for Iran’s Islamic Revolutionary Guard Corps (IRGC) and its Aerospace Force (IRGC ASF) and Navy.
The following name has been added to OFAC's list of Specially Designated Nationals (SDN) List:
- Heidari, Rahmatollah of Iran;
The following entities have been added to OFAC's SDN List:
- Baharestan Kish Company of Iran;
- Design And Manufacturing Of Aero-Engine Company of Iran;
- Paravar Pars Company of Iran; and
- Safiran Airport Services of Iran.
OFAC also issued Russia-related General License 13B.
General License 13B: U.S. persons, or entities owned or controlled, directly or indirectly, by a U.S. person, are authorized to pay taxes, fees, or import duties, and purchase or receive permits, licenses, registrations, or certifications, to the extent such transactions are prohibited by Directive 4 under Executive Order (E.O.) 14024, 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, provided such transactions are ordinarily incident and necessary to the day-to-day operations in the Russian Federation of such U.S. persons or entities, through 12:01 a.m. eastern standard time, December 7, 2022.
This general license does not authorize:
(1) Any debit to an account on the books of a U.S. financial institution of the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation; or
(2) Any transactions otherwise prohibited by the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR), including transactions involving any person blocked pursuant to the RuHSR, unless separately authorized.
Effective September 8, 2022, General License No. 13A, dated May 25, 2022, is replaced and superseded in its entirety by this General License No. 13B.
https://home.treasury.gov/system/files/126/russia_gl13b.pdf and https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220908 and https://home.treasury.gov/news/press-releases/jy0940
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September 9, 2022: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Iran’s Ministry of Intelligence and Security (MOIS) and its Minister of Intelligence for engaging in cyber-enabled activities against the United States and its allies. Since at least 2007, the MOIS and its cyber actor proxies have conducted malicious cyber operations targeting a range of government and private-sector organizations around the world and across various critical infrastructure sectors. In July 2022, cyber threat actors assessed to be sponsored by the Government of Iran and MOIS disrupted Albanian government computer systems, forcing the government to suspend online public services for its citizens.
As a result of these designations, all property and interests in property of the designated targets that are subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them. Additionally, any entities that are owned 50 percent or more by one or more designated persons are also blocked. All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.
In addition, non-U.S. persons that engage in certain transactions with the persons designated may themselves be exposed to the designation. Furthermore, any foreign financial institution that knowingly conducts or facilitates a significant transaction for or on behalf of the persons designated could be subject to U.S. correspondent or payable-through account sanctions.
The following individual has been added to OFAC's SDN List:
- Khatib, Esmail of Iran.
The following changes have been made to OFAC's SDN List:
- Iranian Ministry Of Intelligence And Security (a.k.a. Vezarat-E Ettela'at Va Amniat-E Keshvar; a.k.a. "MOIS"; a.k.a. "VEVAK"), bounded roughly by Sanati Street on the west, 30th Street on the south, and Iraqi Street on the east, Tehran, Iran; Ministry of Intelligence, Second Negarestan Street, Pasdaran Avenue, Tehran, Iran; Additional Sanctions Information - Subject to Secondary Sanctions;
- Iranian Ministry Of Intelligence And Security (a.k.a. Vezarat-E Ettela'at Va Amniat-E Keshvar; a.k.a. "MOIS"; a.k.a. "VEVAK"), bounded roughly by Sanati Street on the west, 30th Street on the south, and Iraqi Street on the east, Tehran, Iran; and
- Ministry of Intelligence, Second Negarestan Street, Pasdaran Avenue, Tehran, Iran.
https://home.treasury.gov/news/press-releases/jy0941 and https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220909
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September 9, 2022: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) published Preliminary Guidance on Implementation of a Maritime Services Policy and Related Price Exception for Seaborne Russian Oil.
As part of a coalition of countries including the G7 and the EU, the United States will implement a policy with regard to a broad range of services related to the maritime transportation (the “maritime services policy”) of Russian Federation origin crude oil and petroleum products (“seaborne Russian oil”). This ban will take effect on December 5, 2022, with respect to maritime transportation of crude oil, and on February 5, 2023, with respect to maritime transportation of petroleum products.
This policy, constructed as a ban on services, will have an important exception: jurisdictions or actors that purchase seaborne Russian oil at or below a price cap to be established by the coalition (the “price exception”) will expressly be able to receive such services. This policy is intended to expressly establish a framework for Russian oil to be exported by sea under a capped price and achieve three objectives:
- Maintain a reliable supply of seaborne Russian oil to the global market;
- Reduce upward pressure on energy prices; and
- Reducing the revenues the Russian Federation earns from oil after its own war of choice in Ukraine has inflated global energy prices.
https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220909_33 and https://home.treasury.gov/system/files/126/cap_guidance_20220909.pdf
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September 13, 2022: The Department of the Treasury's Office of Foreign Assets Control (OFAC) published new Cyber-related Frequently Asked Questions (1076-1079).
Question 1076: What is prohibited as a result of OFAC’s designation of Tornado Cash?
Answer: On August 8, 2022, OFAC designated the entity Tornado Cash for facilitating the laundering of proceeds of cybercrimes, including those committed by the Lazarus Group, a North Korea state-sponsored hacking group that was sanctioned in 2019. As described in FAQs 561 and 562, OFAC may include identifiers on the Specially Designated Nationals and Blocked Persons List (SDN List) specific virtual currency wallet addresses associated with blocked persons. As part of the SDN List entry for Tornado Cash, OFAC included as identifiers certain virtual currency wallet addresses associated with Tornado Cash, as well as the URL address for Tornado Cash’s website. The Tornado Cash website has since been deleted from the Internet, but it currently remains available through certain Internet archives.
While engaging in any transaction with Tornado Cash or its blocked property or interests in property is prohibited for U.S. persons, interacting with open-source code itself in a way that does not involve a prohibited transaction with Tornado Cash is not prohibited. For example, U.S. persons would not be prohibited by U.S. sanctions regulations from copying the open-source code and making it available online for others to view, as well as discussing, teaching about, or including open-source code in written publications, such as textbooks, absent additional facts. Similarly, U.S. persons would not be prohibited by U.S. sanctions regulations from visiting the Internet archives for the Tornado Cash historical website, nor would they be prohibited from visiting the Tornado Cash website if it again becomes active on the Internet.
Question 1077: Can U.S. persons engage in transactions involving identified Tornado Cash virtual currency wallet addresses absent a specific license from OFAC?
Answer: No. U.S. persons are prohibited from engaging in transactions involving Tornado Cash, including through the virtual currency wallet addresses that OFAC has identified. If U.S. persons were to initiate or otherwise engage in a transaction with Tornado Cash, including or through one of its wallet addresses, such a transaction would violate U.S. sanctions prohibitions unless exempt or authorized by OFAC.
Question 1078: Do OFAC reporting obligations apply to “dusting” transactions?
Answer: OFAC is aware of reports following the designation of Tornado Cash that certain U.S. persons may have received unsolicited and nominal amounts of virtual currency or other virtual assets from Tornado Cash, a practice commonly referred to as “dusting.” Technically, OFAC’s regulations would apply to these transactions. To the extent, however, these “dusting” transactions have no other sanctions nexus besides Tornado Cash, OFAC will not prioritize enforcement against the delayed receipt of initial blocking reports and subsequent annual reports of blocked property from such U.S. persons.
For guidance related to filing an initial and annual report of the blocked property, please see FAQs 49, 50, and 646, respectively, and 31 C.F.R. § 501.603. Please note that the annual filing requirement for 2022 applies only to persons holding blocked property as of June 30 of this year.
Question 1079: I sent the virtual currency to Tornado Cash but did not complete the mixing transaction or otherwise withdraw my virtual currency before Tornado Cash’s August 8, 2022 designation. How can I complete the transaction or withdraw my virtual currency without violating U.S. sanctions regulations?
Answer: For transactions involving Tornado Cash that were initiated prior to its designation on August 8, 2022, but not completed by the date of designation, U.S. persons or persons conducting transactions within U.S. jurisdiction may request a specific license from OFAC to engage in transactions involving the subject virtual currency. U.S. persons should be prepared to provide, at a minimum, all relevant information regarding these transactions with Tornado Cash, including the wallet addresses for the remitter and beneficiary, transaction hashes, the date and time of the transaction(s), as well as the amount(s) of virtual currency. OFAC would have a favorable licensing policy towards such applications, provided that the transaction did not involve other sanctionable conduct.
In order to apply for a specific license to complete a transaction or withdraw virtual currency involving Tornado Cash that was deposited prior to its designation or to engage in other transactions or dealings with Tornado Cash, you are encouraged to file a licensing request by visiting the following link: https://home.treasury.gov/policy-issues/financial-sanctions/ofac-license-application-page.
https://home.treasury.gov/policy-issues/financial-sanctions/faqs/added/2022-09-13 and https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220913_33
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September 14, 2022: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned ten individuals and two entities for their roles in conducting malicious cyber acts, including ransomware activity. These designations are part of joint action with the Department of Justice, Department of State, Federal Bureau of Investigation, U.S. Cyber Command, National Security Agency, and Cybersecurity and Infrastructure Security Agency. The individuals and entities designated are all affiliated with Iran’s Islamic Revolutionary Guard Corps (IRGC). These actions continue the series of OFAC designations that aim to protect U.S. persons from ransomware activity, facilitators of ransomware activity, and other cybercrime.
The following individuals have been added to OFAC's SDN List:
- Agha Ahmadi, Mohammad of Iran;
- Agha-Ahmadi, Ali of Iran;
- Ahmadi, Mansour of Iran;
- Haji Hosseini, Mojtaba of Iran;
- Haji Hosseini, Mostafa of Iran;
- Khatibi Aghada, Ahmad of Iran;
- Mahdavi, Mo'in of Iran;
- Nikaeen Ravari, Amir Hossein of Iran;
- Rashidi-Barjini, Aliakbar of Iran;
- Shakeri Ashtijeh, Mohammad of Iran.
The following entities have been added to OFAC’s SDN List:
- Afkar System Yazd Company of Iran; and
- Najee Technology Hooshmand Fater LLC of Iran.
https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220914 and https://home.treasury.gov/news/press-releases/jy0948
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September 15, 2022: The Department of the Treasury's Office of Foreign Assets Control (OFAC) has issued Russia-related General License 51 "Authorizing the Wind Down of Transactions Involving Limited Liability Company Group of Companies Akvarius." All transactions ordinarily incident and necessary to the wind-down of any transaction involving Limited Liability Company Group of Companies Akvarius (Aquarius), or any entity in which Aquarius owns, directly or indirectly, a 50 percent or greater interest, that are prohibited by Executive Order (E.O.) 14024, are authorized through 12:01 a.m. eastern daylight time, October 15, 2022, provided that any payment to a blocked person must be made into a blocked account in accordance with the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR).
https://home.treasury.gov/system/files/126/russia_gl51.pdf
The following individuals have been added to OFAC's SDN List:
- Akhmadova, Aminat of Russia;
- Astanin, Eddie Vladimirovich of Russia;
- Balytskyi, Yevhen Vitaliiovych of Russia;
- Bandura, Volodymyr Volodymyrovich of Ukraine;
- Belousov, Mikhail Nikolaevich of Russia and the Ukraine;
- Bespalov, Vladimir Aleksandrovich of Russia and the Ukraine;
- Bulgakov, Sergei Viktorovich of the Ukraine;
- Cherevko, Serhiy Mykolayovych of the Ukraine;
- Dolgopolov, Andrey Nikolayevich of Russia, the Ukraine, and Kyrgyzstan;
- Emelianenko, Viktor Andriyovych of the Ukraine;
- Ermakova, Mariya Gennadevna of Russia and the Ukraine;
- Filipchuk, Pavlo Ihorovych of the Ukraine;
- Gramashov, Dmitry Sergeevich of the Ukraine;
- Ibragimov, Turpal-Ali Vakhayevich of Russia;
- Kadyrov, Ramzan Akhmatovich of Russia;
- Kadyrova, Ayshat Ramzanovna of Russia;
- Kadyrova, Karina Ramzanovna of Russia;
- Kadyrova, Medni Musaevna of Russia;
- Kadyrova, Tabarik Ramzanovna of Russia;
- Khazueva, Fatima Shaykhievna of Russia;
- Kobets, Oleksandr Yuriyovych of the Ukraine;
- Koltsov, Anton Viktorovich of Russia;
- Komlev, Vladimir Valerievich of Russia;
- Kryllo, Pavel Velerevich of Russia;
- Kuz'mych, Tetyana Oleksandrivna of the Ukraine;
- Lvova-Belova, Maria Alexeyevna of Russia;
- Milchakov, Alexey Yurevich of Russia;
- Mozhelyanskiy, Viktor Anatolyevich of Russia and the Ukraine;
- Mutamba, Stephen of Zimbabwe;
- Oreshkin, Maxim Stanislavovich of Russia;
- Pakhnyts, Valery Mykhailovych of the Ukraine;
- Petrovskiy, Yan Igorevich of Russia and the Ukraine;
- Rodikov, Mikhail Leonidovich of Russia and the Ukraine;
- Rogov, Volodymyr Valeriyovych of the Ukraine;
- Samoilenko, Mykyta Ivanovich of the Ukraine;
- Saulenko, Oleksandr Fedorovych of the Ukraine;
- Selivanov, Oleksiy Sergeevich of the Ukraine;
- Semenchev, Ihor Ihorovych of the Ukraine;
- Shelestenko, Hennadiy Oleksandrovych of the Ukraine;
- Siguta, Andriy Leonidovich of the Ukraine;
- Titskiy, Anton Robertovich of the Ukraine;
- Trofimov, Andriy Yuriovych of the Ukraine
- Tumilina, Tetyana Yuriivna of the Ukraine;
- Zhidkov, Viktor Olegovich of Russia.
The following entities have been added to OFAC’s SDN List:
- Baikal Electronics JSC of Russia;
- Elvees Research And Development Center JSC of Russia;
- Federal Research Center Institute Of Applied Physics Of The Russian Academy Of Sciences of Russia;
- Federal State Financed Institution Of Science Higher Education Institution Spectroscopy Of The Russian Federation Academy Of Sciences of Russia;
- Federal State Financed Institution Of Science Physical Higher Education Institution Named After P. N. Lebedeva Of The Russian Federation Academy Sciences of Russia;
- Federal State Financed Institution Of Science Physics And Technology Institute Named After A. F. Ioffe Of The Russian Federation Academy Of Sciences of Russia;
- Federal State Financed Institution Of Science Physics And Technology Institute Named After K. A. Valieva Of The Russian Federation Academy Of Sciences of Russia;
- International Center For Quantum Optics And Quantum Technologies Limited Liability Company of Russia;
- Joint Stock Company Angstrem of Russia;
- Joint Stock Company Element of Russia;
- Joint Stock Company Institute For Scientific Research Elektronnoy Tekhniki of Russia;
- Joint Stock Company Institute For Scientific Research Vychislitelnykh Kompleksov Named After M. A. Kartseva of Russia;
- Joint Stock Company Production Association Sever of Russia;
- Joint Stock Company Research And Development Enterprise Radiosvyaz of Russia;
- Joint Stock Company Research And Development Enterprise Sapfir of Russia;
- Joint Stock Company Research And Production Association Named After S. A. Lavochkina of Russia;
- Joint Stock Company Research Center Elins of Russia;
- Joint Stock Company Rossiyskiye Kosmicheskiye Sistemy of Russia;
- Joint Venture Quantum Technologies of Russia;
- JSC Academician M.F. Reshetnev Information Satellite Systems of Russia;
- JSC Additive Technologies Center of Russia;
- JSC Moscow Center Of Sparc Technologies of Russia;
- JSC Scientific And Technical Center Zaslon of Russia;
- D. Landau Institute For Theoretical Physics Of Russian Academy Of Sciences of Russia;
- Limited Liability Company Firdaws of Russia;
- Limited Liability Company Group Of Companies Akvarius of Russia;
- Limited Liability Company Krokus Nanoelektronika of Russia;
- Limited Liability Company Yadro Fab Dubna of Russia;
- Multiclet Corporation of Russia;
- Rzhanov Institute Of Semiconductor Physics Siberian Branch Of Russian Academy Of Sciences of Russia;
- Specialized Engineering And Design Bureau Of Electronic Systems Joint Stock Company of Russia; and
- Task Force Rusich of Russia.
https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220915
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September 15, 2022: The Department of the Treasury's Office of Foreign Assets Control (OFAC) issued Russia-related General License 52. News reporting organizations that are U.S. persons, and individual U.S. persons who are journalists (including photojournalists) or broadcast or technical personnel, are authorized to engage in the following transactions, where such transactions are ordinarily incident and necessary to such U.S. persons’ journalistic activities or to the establishment or operation of a news bureau and are prohibited by Executive Order (E.O.) 14024 or section (1)(a)(i) of E.O. 14071, provided that the only involvement of blocked persons is the processing of funds by financial institutions blocked pursuant to E.O. 14024:
(1) Compensating support staff (e.g., stringers, translators, interpreters, camera operators, technical experts, freelance producers, or drivers), persons to handle logistics or other office personnel;
(2) Leasing or renting office space;
(3) Purchasing, leasing, or renting goods and services (e.g., mobile phones and related airtime); or
(4) Paying for all other expenses ordinarily incident and necessary to journalistic activities, including sales or employment taxes.
For the purposes of this general license, the term “news reporting organization” means an entity whose primary purpose is the gathering and dissemination of news to the general public.
https://home.treasury.gov/system/files/126/russia_gl52.pdf
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September 15, 2022: The Department of the Treasury's Office of Foreign Assets Control (OFAC) has published a Determination Pursuant to Section 1(a)(i) of Executive Order 14024, a Determination Pursuant to Section 1(a)(ii) of Executive Order 14071, four related Frequently Asked Questions (FAQs) (1083-1086), and five amended FAQs (1033, 1034, 1059, 1061, 1062).
Determination Pursuant to Section 1(a)(i) of Executive Order 14024: Section 1(a) of Executive Order (E.O.) 14024 of April 15, 2021 (“Blocking Property With Respect To Specified Harmful Foreign Activities of the Government of the Russian Federation”) imposes economic sanctions on any person determined by the Secretary of the Treasury, in consultation with the Secretary of State, or the Secretary of State, in consultation with the Secretary of the Treasury, to operate or have operated in such sectors of the Russian Federation economy as may be determined, pursuant to section 1(a)(i) of E.O. 14024, by the Secretary of the Treasury, in consultation with the Secretary of State. To further address the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States described in E.O. 14024, and in consultation with the Department of State and pursuant to 31 CFR § 587.802, OFAC determined that section 1(a)(i) shall apply to the quantum computing sector of the Russian Federation economy. Any person that the Secretary of the Treasury or the Secretary of the Treasury’s designee, in consultation with the Secretary of State or the Secretary of State’s designee, or the Secretary of State or the Secretary of State’s designee, in consultation with the Secretary of the Treasury or the Secretary of the Treasury’s designee, subsequently determines operates or has operated in this sector shall be subject to sanctions pursuant to section 1(a)(i).
https://home.treasury.gov/system/files/126/determination_09152022_eo14024.pdf
Determination Pursuant to Section 1(a)(ii) of Executive Order 14071: Pursuant to sections 1(a)(ii), 1(b), and 5 of Executive Order (E.O.) 14071 of April 6, 2022 (“Prohibiting New Investment in and Certain Services to the Russian Federation in Response to Continued Russian Federation Aggression”) and 31 CFR § 587.802, the Director of the Office of Foreign Assets Control, in consultation with the Department of State, hereby determines that the prohibitions in section 1(a)(ii) of E.O. 14071 shall apply to quantum computing services. As a result, the following activities are prohibited, except to the extent provided by law, or unless licensed or otherwise authorized by the Office of Foreign Assets Control: the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of quantum computing services to any person located in the Russian Federation.
This determination excludes the following:
(1) any service to an entity located in the Russian Federation that is owned or controlled, directly or indirectly, by a United States person; and
(2) any service in connection with the wind-down or divestiture of an entity located in the Russian Federation that is not owned or controlled, directly or indirectly, by a Russian person.
https://home.treasury.gov/system/files/126/determination_09152022_eo14071.pdf
OFAC has published four Frequently Asked Questions:
Answer: Since Russia’s further invasion of Ukraine beginning in February 2022, OFAC has blocked a number of Russian financial institutions pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy (see FAQ 966). In addition, all property and interests in property of any financial institution that is owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked. Accordingly, U.S. persons are prohibited from transacting with these financial institutions unless the activity is exempt or authorized by OFAC.
Answer: No. GL 50 authorizes individuals with accounts at Russian financial institutions blocked pursuant to E.O. 14024 to unblock and lump sum transfer funds to an account at a non-designated financial institution. Individuals do not need to provide official documentation proving they have closed their account at the blocked Russian financial institution when utilizing the GL.
Answer: NSPK is the operator of Russia’s MIR National Payment System, which clears and settles payments between consumers, merchants, and banks for debit and credit card payments, primarily in the Russian Federation. NSPK and the MIR National Payment System process transactions for designated Russian banks and may be used to process transactions involving other sanctioned persons or activity under the RuHSR. Accordingly, those non-U.S. financial institutions that enter into new or expanded agreements with NSPK risk supporting Russia’s efforts to evade U.S. sanctions through the expanded use of the MIR National Payment System outside the territory of the Russian Federation.
The RuHSR authorizes OFAC to impose blocking sanctions on persons determined to have materially assisted, sponsored or provided financial, material, or technological support for, or goods or services to or in support of (i) any activity sanctionable under the RuHSR, including deceptive or structured transactions or dealings to circumvent any United States sanctions or (ii) any person whose property and interests in property are blocked pursuant to the RuHSR. OFAC is prepared to use these targeting authorities in response to supporters of Russia’s sanctions evasion, including Russia’s efforts to expand the use of NSPK or the MIR National Payment System outside of the territory of the Russian Federation.
Question 1083: What actions were taken on September 15, 2022, related to certain quantum computing services?
Answer: On September 15, 2022, the Director of OFAC, in consultation with the Department of State, issued a determination pursuant to Executive Order (E.O.) 14071, “Prohibitions Related to Certain Quantum Computing Services,” prohibiting the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of certain quantum computing services to any person located in the Russian Federation. This determination takes effect on October 15, 2022. This determination excludes from the scope of the prohibited services: (1) any service to an entity located in the Russian Federation that is owned or controlled, directly or indirectly, by a United States person; and (2) any service in connection with the wind-down or divestiture of an entity located in the Russian Federation that is not owned or controlled, directly or indirectly, by a Russian person. For more information, please see FAQ 1084.
Answer: For the purposes of the determination, OFAC anticipates publishing regulations defining this term to include any of the following services when related to quantum computing, quantum computers, electronic assemblies thereof, or cryogenic refrigeration systems related to quantum computing: infrastructure, web hosting, or data processing services; custom computer programming services; computer systems integration design services; computer systems and data processing facilities management services; computing infrastructure, data processing services, web hosting services, and related services; repairing computer, computer peripherals, or communication equipment; other computer-related services; as well as services related to the exportation, reexportation, sale, or supply, directly or indirectly, of quantum computing, quantum computers, electronic assemblies thereof, or cryogenic refrigeration systems related to quantum computing to any person located in the Russian Federation.
For the purposes of the determination, OFAC also anticipates publishing regulations defining the term “person located in the Russian Federation” as set forth in FAQ 1058, as well as regulations defining the term “Russian person” to mean an individual who is a citizen or national of the Russian Federation, or an entity organized under the laws of the Russian Federation.
Answer: No. The Director of OFAC, in consultation with the State Department, has issued a determination pursuant to E.O. 14024 that authorizes the imposition of economic sanctions against persons that operate or have operated in the quantum computing sector of the Russian Federation economy.
Answer: For the purposes of the determination of September 15, 2022, made pursuant to E.O. 14024, OFAC interprets the term “quantum computing sector of the Russian Federation economy” to include activities related to products and services in or involving the Russian Federation in research, development, manufacturing, assembling, maintenance, repair, sale, or supply of quantum computing, quantum computers, electronic assemblies thereof, or cryogenic refrigeration systems related to quantum computing. OFAC also interprets the term “quantum computing sector of the Russian Federation economy” to include any of the following services when related to quantum computing: infrastructure, web hosting or data processing services; custom computer programming services; computer systems integration design services; computer systems and data processing facilities management services; computing infrastructure, data processing services, web hosting services, and related services; repairing computer, computer peripherals, and communication equipment; other computer-related services; as well as the exportation, reexportation, sale, or supply, directly or indirectly, of quantum computing, quantum computers, electronic assemblies thereof, or cryogenic refrigeration systems related to quantum computing to or from the Russian Federation.
A sector determination pursuant to E.O. 14024 exposes persons that operate or have operated in an identified sector to sanctions risk; however, a sector determination does not automatically impose sanctions on all persons who operate or have operated in the sector. Only persons determined, pursuant to E.O. 14024, by the Secretary of the Treasury in consultation with the Secretary of State, or by the Secretary of State in consultation with the Secretary of the Treasury, or their delegates, to operate or have operated in the above-identified sectors are subject to sanctions.
Persons sanctioned pursuant to E.O. 14024 for operating or having operated in an identified sector are added to one or more OFAC sanctions lists based on the type of sanction, including the Specially Designated Nationals and Blocked Persons List (SDN List), the List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions (CAPTA List), and the Non-SDN Menu-Based Sanctions List (NS-MBS List).
On September 15, 2022, the Director of OFAC, in consultation with the Department of State, also issued a sectoral determination pursuant to E.O. 14024 that authorizes the imposition of economic sanctions on individuals and entities that are determined to operate or have operated in the quantum computing sector of the Russian Federation economy. The determination regarding this sector pursuant to E.O. 14024 takes effect immediately.
Individuals who have filed a blocking report with OFAC and are availing themselves of GL 50 must file an unblocking report with OFAC within 10 business days of the unblocking in accordance with 31 CFR § 501.603(b)(3). For guidance related to filing an initial report of the blocked property, an annual report of the blocked property, and an unblocking report, please see FAQs 49, 50, and 646, respectively, and 31 C.F.R. § 501.603. Please note that the annual filing requirement for 2022 applies only to persons holding blocked property as of June 30 of this year.
In practice, this means that accounts held by U.S. persons at any blocked Russian financial institutions generally are themselves considered blocked property unless exempt. This includes, for example, checking and savings accounts, credit cards, CDs, loans, and mortgages. U.S. persons must stop utilizing such accounts and treat them as blocked, even if the designated Russian financial institution does not. Additionally, within 10 business days of the blocking of the account or other property, U.S. persons are required to file a blocking report with OFAC describing any property or interests in property (e.g., accounts, etc.). Information on the requirement to report blocked property, including accounts, and on filing initial and annual reports of blocked property with OFAC can be found in FAQs 49, 50, and 646, respectively, and 31 CFR § 501.603. Please note that the annual filing requirement for 2022 applies only to persons holding blocked property as of June 30 of this year.
On August 19, 2022, OFAC issued Russia-related General License (GL) 50 authorizing individuals, wherever located, to engage in all transactions ordinarily incident and necessary to close their individual accounts held at a financial institution blocked pursuant to E.O. 14024. GL 50 also authorizes the unblocking and lump sum transfer to the account holder of all remaining funds and other assets in the account at the blocked financial institution, including to an account held at a non-blocked financial institution. Individuals may avail themselves of GL 50 to terminate their accounts with Russian financial institutions blocked pursuant to E.O. 14024 and repatriate the proceeds of any account closures. Individuals who have filed a blocking report with OFAC and are availing themselves of GL 50 must file an unblocking report with OFAC within 10 business days of the unblocking in accordance with 31 CFR § 501.603(b)(3).
https://home.treasury.gov/policy-issues/financial-sanctions/faqs/added/2022-09-15
OFAC Amended Five Frequently Asked Questions:
Answer: On May 8, 2022, the Director of OFAC, in consultation with the Department of State, issued a determination pursuant to Executive Order (E.O.) 14071, “Prohibitions Related to Certain Accounting, Trust and Corporate Formation, and Management Consulting Services,” prohibiting the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of certain accounting, trust, and corporate formation, and management consulting services to any person located in the Russian Federation. This determination takes effect on June 7, 2022. For more information, please see FAQ 1034.
On May 8, 2022, the Director of OFAC, in consultation with the Department of State, also issued a sectoral determination pursuant to E.O. 14024 that authorizes the imposition of economic sanctions on individuals and entities that operate or have operated in the accounting, trust and corporate formation services, or management consulting sectors of the Russian Federation economy. This determination takes effect on May 8, 2022. For further information, please see FAQ 1037.
Answer: For the purposes of the determination of May 8, 2022, made pursuant to E.O. 14071, OFAC anticipates publishing regulations defining these terms to include the following:
- “Accounting services” – includes services related to the measurement, processing, and evaluation of financial data about economic entities. Please note that OFAC has issued General License 35 to authorize certain transactions ordinarily incident and necessary to the exportation, reexportation, sale, or supply, directly or indirectly, from the United States or by a United States person, wherever located, of credit rating or auditing services to any person located in the Russian Federation through 12:01 a.m. eastern daylight time, August 20, 2022. See FAQ 1035.
- “Trust and corporate formation services” – includes services related to assisting persons in forming or structuring legal persons, such as trusts and corporations; acting or arranging for other persons to act as directors, secretaries, administrative trustees, trust fiduciaries, registered agents, or nominee shareholders of legal persons; providing a registered office, business address, correspondence address, or administrative address for legal persons; and providing administrative services for trusts. Please note that all of these activities are common activities of the trust and corporate service providers (TCSPs), although they may be provided by other persons.
- “Management consulting services” – includes services related to strategic business advice; organizational and systems planning, evaluation, and selection; development or evaluation of marketing programs or implementation; mergers, acquisitions, and organizational structure; staff augmentation and human resources policies and practices; and brand management.
This determination excludes from the scope of the aforementioned services: (1) any service to an entity located in the Russian Federation that is owned or controlled, directly or indirectly, by a United States person; and (2) any service in connection with the wind-down or divestiture of an entity located in the Russian Federation that is not owned or controlled, directly or indirectly, by a Russian person.
For the purposes of the prohibitions set forth in the determination of May 8, 2022, made pursuant to E.O. 14071, OFAC anticipates publishing regulations defining the term “person located in the Russian Federation” as set forth in FAQ 1058. For the purposes of the exclusion set forth in the determination of May 8, 2022, made pursuant to E.O. 14071, OFAC anticipates publishing regulations defining the term “Russian person” to mean an individual who is a citizen or national of the Russian Federation or an entity organized under the laws of the Russian Federation.
Answer: No, provided that the provision of services is not an indirect export to a person located in the Russian Federation. For the purposes of these determinations, OFAC interprets the “indirect” provision of the prohibited services to include when the benefit of the services is ultimately received by a “person located in the Russian Federation.”
In contrast, OFAC would not consider to be prohibited the provision of services to a non-Russian company that has a physical presence and operations outside of the Russian Federation, including such a company owned or controlled by persons located in the Russian Federation, provided that the services will not be further exported or reexported to persons located in the Russian Federation.
For example, the following scenarios describe services that would be prohibited under the determination:
- A U.S. corporate service provider administers a trust established under the laws of a U.S. state, where the trust exists predominantly to hold, sell, or purchase assets on behalf of a settlor, trustor, or beneficiary who is an individual ordinarily resident in Russia.
- A U.S. corporate service provider registers a limited liability company in a third country on behalf of an individual ordinarily resident in Russia for the purpose of holding real estate assets, and this company has no other physical presence or operations in the third country.
The following scenarios illustrate services to a non-Russian subsidiary of a Russian person that would not be prohibited under the determination:
- A U.S. accounting firm provides tax advisory and preparation services to the U.S. subsidiary of a Russian company. This U.S. subsidiary has an office and employees in the United States and conducts business in the United States, and the services will not be exported or reexported to the Russian parent company.
- A U.S. management consulting firm provides strategic business advice to the subsidiary of a Russian company located in a third country. This subsidiary has an office and employees in a third country and conducts business in this third country, and the services will not be reexported to the Russian parent company.
Answer: Not necessarily. Under the determinations, U.S. persons are prohibited from exporting, reexporting, selling, or supplying, directly or indirectly: management consulting, trust and corporate formation services; accounting services; or quantum computing services to persons located in the Russian Federation. Thus, U.S. persons are prohibited from providing these services to companies located in the Russian Federation (“Russian companies”) in their capacity as employees. However, the determinations do not prohibit U.S. persons from providing other services not covered by these determinations as part of their employment by Russian companies.
In addition, please note that the determinations exclude from the scope of the aforementioned services: (1) any service to an entity located in the Russian Federation that is owned or controlled, directly or indirectly, by a United States person; and (2) any service in connection with the wind-down or divestiture of an entity located in the Russian Federation that is not owned or controlled, directly or indirectly, by a Russian person.
Answer: Yes. The prohibitions apply to services provided to a company located in the Russian Federation (the “Russian company”) by any U.S. person, including the Russian company’s U.S. subsidiary.
https://home.treasury.gov/policy-issues/financial-sanctions/faqs/updated/2022-09-15
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September 22, 2022: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Iran’s Morality Police for abuse and violence against Iranian women and the violation of the rights of peaceful Iranian protestors. The Morality Police are responsible for the recent death of 22-year-old Mahsa Amini, who was arrested and detained for allegedly wearing a hijab improperly.
OFAC also targeted seven senior leaders of Iran’s security organizations: the Morality Police, the Ministry of Intelligence and Security (MOIS), the Army’s Ground Forces, Basij Resistance Forces, and Law Enforcement Forces. These officials oversee organizations that routinely employ violence to suppress peaceful protesters and members of Iranian civil society, political dissidents, women’s rights activists, and members of the Iranian Baha’i community.
The following individuals have been added to OFAC's SDN List:
- Abnoush, Salar of Iran;
- Amanollahi, Manouchehr of Iran;
- Heidari, Kiyumars of Iran;
- Mirzaei, Haj Ahmad of Iran;
- Rezaei, Qasem of Iran;
- Esmail Khati of Iran; and
- Rostami Cheshmeh Gachi, Mohammad of Iran.
The following entity has been added to OFAC’s SDN List:
Iran's Morality Police of Iran.
https://home.treasury.gov/news/press-releases/jy0969 and https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220922
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September 23, 2022: The U.S. Department of the Treasury issued Iran General License (GL) D-2 to increase support for internet freedom in Iran by bringing U.S. sanctions guidance in line with the changes in modern technology since the issuance of Iran GL D-1. The Iranian government cut off access to the Internet for most of its 80 million citizens to prevent the world from watching its violent crackdown on peaceful protestors sparked by the brutal death of Mahsa Amini in the custody of Iran’s Morality Police. While Iran’s government is cutting off its people’s access to the global internet, the United States is taking action to support the free flow of information and access to fact-based information to the Iranian people. The updated guidance will authorize technology companies to offer the Iranian people more options of secure, outside platforms and services.
Iran General License (GL) D-2: The following transactions are authorized:
(1) Fee-based or no-cost services. The exportation or reexportation, directly or indirectly, from the United States or by a U.S. person, wherever located, to Iran of fee-based or no-cost services incident to the exchange of communications over the Internet, such as instant messaging, chat and email, social networking, sharing of photos and movies, web browsing, blogging, social media platforms, collaboration platforms, video conferencing, e-gaming, e-learning platforms, automated translation, web maps, and user authentication services, as well as cloud-based services in support of the foregoing or of any other transaction, authorized or exempt under the ITSR.
(2) Fee-based or no-cost software. (i) Software subject to the EAR. The exportation, reexportation, or provision, directly or indirectly, to Iran of fee-based or no-cost software subject to the Export Administration Regulations, 15 CFR parts 730 through 774 (EAR), that is incident to or enables services incident to, the exchange of communications over the Internet, such as instant messaging, chat and email, social networking, sharing of photos and movies, web browsing, blogging, social media platforms, collaboration platforms, video conferencing, e-gaming, e-learning platforms, automated translation, web maps, and user authentication services, as well as cloud-based services in support of the foregoing or of any other transaction authorized or exempt under the ITSR, provided that such software is designated EAR99 or classified by the U.S. Department of Commerce on the Commerce Control List, 15 CFR part 774, Supplement No. 1 (CCL), under export control classification number (ECCN) 5D992.c.
(ii) Software that is not subject to the EAR because it is of foreign origin and is located outside the United States. The exportation, reexportation, or provision, directly or indirectly, by a U.S. person, wherever located, to Iran of fee-based or no-cost software that is not subject to the EAR because it is of foreign origin and is located outside the United States that is incident to, or enables services incident to, the exchange of communications over the Internet, such as instant messaging, chat and email, social networking, sharing of photos and movies, web browsing, blogging, social media platforms, collaboration platforms, video conferencing, e-gaming, e-learning platforms, automated translation, web maps, and user authentication services, as well as cloud-based services in support of the foregoing or of any other transaction authorized or exempt under the ITSR, provided that such software would be designated EAR99 if it were located in the United States or would meet the criteria for classification under ECCN 5D992.c if it were subject to the EAR.
(3) Additional Software, Hardware, and Related Services. To the extent not authorized by paragraphs (a)(1) or (a)(2) of this general license, the exportation, reexportation, or provision, directly or indirectly, to Iran of certain software and hardware incident to communications, as well as related services, as follows: (i) In the case of hardware and software subject to the EAR, the items specified in the Annex to this general license; (ii) In the case of hardware and software that is not subject to the EAR because it is of foreign origin and is located outside the United States that is exported, reexported, or provided, directly or indirectly, by a U.S. person, wherever located, hardware and software that is of a type described in the Annex to this general license provided that it would be designated EAR99 if it were located in the United States or would meet the criteria for classification under the relevant ECCN specified in the Annex to this general license if it were subject to the EAR; and (iii) In the case of software not subject to the EAR because it is described in 15 CFR § 734.3(b)(3) that is exported, reexported, or provided, directly or indirectly, from the United States or by a U.S. person, wherever located, software that is of a type described in the Annex to this general license.
(4) Internet connectivity services and telecommunications capacity. The exportation or reexportation, directly or indirectly, from the United States or by a U.S. person, wherever located, to Iran of non-commercial-grade Internet connectivity services, including cloud-based services, and the provision, sale, or leasing of capacity on telecommunications transmission facilities (such as satellite or terrestrial network connectivity) incident to communications.
(5) Importation into the United States of hardware and software previously exported to Iran. The importation into the United States of hardware and software authorized for exportation, reexportation, or provision to Iran under 31 CFR § 560.540(a), paragraphs (a)(2) or (a)(3) of this general license, or paragraphs (a)(2) or (a)(3) of General License D-1, by an individual entering the United States, directly or indirectly, from Iran, provided that the items previously were exported, reexported, or provided by the individual to Iran pursuant to 31 CFR § 560.540(a), paragraphs (a)(2) or (a)(3) of this general license, or paragraphs (a)(2) or (a)(3) of General License D-1 when it was in effect.
(6) Publicly available, 2 no cost services and software to the Government of Iran. 3 (i) Services. The exportation or reexportation, directly or indirectly, from the United States or by a U.S. person, wherever located, to the Government of Iran of services described in 31 CFR § 560.540(a)(1) or categories (6) through (11) of the Annex to this general license, provided that such services are publicly available at no cost to the user. (ii) Software. The exportation, reexportation, or provision, directly or indirectly, to the Government of Iran of the software described in 31 CFR § 560.540(a)(2) or categories (6) through (11) of the Annex to this general license, read in conjunction with paragraph (a)(3) of this general license, provided that such software is publicly available at no cost to the user.
https://home.treasury.gov/news/press-releases/jy0974 and https://home.treasury.gov/system/files/126/iran_gld2.pdf
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September 26, 2022: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Diana Kajmakovic, a state prosecutor in Bosnia and Herzegovina (BiH), pursuant to Executive Order (E.O.) 14033 for being responsible for or complicit in corruption or the undermining of democratic processes or institutions in the Western Balkans. This action furthers the United States strategy to hold accountable those who carry out the destabilizing activity in the Western Balkans. These activities occur against the backdrop of BiH’s most serious political crisis since 1995, as ethno-nationalist politicians and affiliated patronage networks continue to undermine the country.
https://home.treasury.gov/news/press-releases/jy0975
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September 26, 2022: The Department of the Treasury's Office of Foreign Assets Control (OFAC) published one new Cuba Frequently Asked Question (1090):
Question 1090: Can U.S. persons send remittances to Cuba using digital payments?
Answer: Yes, provided the underlying remittance transactions are authorized under 31 CFR § 515.570 of the Cuban Assets Control Regulations (CACR), and the digital payment service provider is a U.S.-registered money transmitter or other qualifying banking institution within the definition of that term provided in 31 CFR § 515.314. For purposes of this FAQ, “digital payments” means transfers of funds sent through mobile money, mobile wallets, digital bank accounts, credit/debit cards, online payments, or other digital technology.
Pursuant to 31 CFR § 515.570 of the CACR, OFAC authorizes persons subject to U.S. jurisdiction to make certain categories of remittances to persons in Cuba, subject to certain conditions (please see FAQ 732 for an overview of the types of remittances U.S. persons can send and applicable conditions and requirements). Additionally, pursuant to 31 CFR § 515.572(a)(3) of the CACR, banking institutions, as defined in 31 CFR § 515.314, including U.S.-registered money transmitters, are authorized to provide services in connection with the collection, forwarding, or receipt of authorized remittances. Thus, digital payments service providers that fall within the definition of “banking institution” provided in 31 CFR § 515.314, including U.S.-registered money transmitters, can process authorized remittances to Cuba via digital payments.
A banking institution is expected to conduct a level of due diligence commensurate with its overall risk profile and internal compliance policies and procedures. However, as noted in FAQ 1057, banking institutions, including U.S-registered money transmitters within the context of § 515.572(a)(3), may rely on the statements of their customers that remittance transactions are authorized unless they know or have reason to know a transaction is not authorized.
Section 515.572(a)(3) of the CACR does not authorize any transaction related to the collection, forwarding, or receipt of remittances involving any entity or subentity identified on the State Department’s Cuba Restricted List (CRL).
Generally, OFAC’s general licenses are self-executing. This means that if U.S. persons assess that their transactions fall within the scope of the authorizations in 31 CFR § 515.570 and 31 CFR § 515.572, they may execute such transactions without further assurance from OFAC.
For transactions that do not fall within the scope of these authorizations, U.S. persons may apply for an OFAC specific license. For example, financial institutions that fall outside the scope of 31 CFR § 515.572(a)(3) that seek to provide remittance forwarding services would not qualify for the authorization and would require a specific license. Consistent with U.S. foreign policy, OFAC will prioritize specific license applications seeking authorization to enable remittances to flow more freely to the Cuban people via digital payments. It is OFAC’s policy to deny specific license requests that involve transactions with CRL-listed entities for the purpose of collection, forwarding, or receipt of remittances.
https://home.treasury.gov/policy-issues/financial-sanctions/faqs/1090
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September 28, 2022: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) reissued in their entirety the Central African Republic Sanctions Regulations, 31 CFR part 553, and the Western Balkans Stabilization Regulations, 31 CFR 588. The Central African Republic Sanctions Regulations were previously published in abbreviated form in 2014. The Western Balkans Stabilization Regulations were originally published in abbreviated form in 2002 and last amended in 2011. These publications include additional interpretive guidance and definitions, general licenses, and other regulatory provisions that will provide further guidance to the public.
https://home.treasury.gov/system/files/126/fr87_58972.pdf and https://home.treasury.gov/system/files/126/fr87_58983.pdf
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September 29, 2022: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned an international network of companies involved in the sale of hundreds of millions of dollars worth of Iranian petrochemicals and petroleum products to end users in South and East Asia. This action targets Iranian brokers and several front companies in the UAE, Hong Kong, and India that have facilitated financial transfers and shipping of Iranian petroleum and petrochemical products. These entities have played a critical role in concealing the origin of the Iranian shipments and enabling two sanctioned Iranian brokers, Triliance Petrochemical Co. Ltd. (Triliance) and Persian Gulf Petrochemical Industry Commercial Co. (PGPICC), to transfer funds and ship Iranian petroleum and petrochemicals to buyers in Asia. In addition to OFAC’s designations, the Department of State is designating two entities based in the People’s Republic of China (PRC), Zhonggu Storage and Transportation Co. Ltd. and WS Shipping Co. Ltd., for their involvement in Iran’s petrochemical trade.
The following entities have been added to OFAC's SDN List:
- Clara Shipping LLC of the United Arab Emirates;
- Iran Chemical Industries Investment Company Public Joint Stock of Iran;
- Middle East Kimiya Pars CO., of Iran;
- ML Holding Group Limited of China;
- Sierra Vista Trading Limited of China;
- Sophychem HK Limited of China;
- Tibalaji Petrochem Private Limited of India;
- Virgo Marine of the United Arab Emirates;
- WS Shipping Co. Ltd., of China; and
- Zhonggu Storage And Transportation Co., Ltd., of China.
The following vessel has been added to OFAC’s SDN List:
- Gas Allure (3E2066) Chemical/Oil Tanker Panama flag; Vessel Registration Identification IMO 9142150.
https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220929 and https://home.treasury.gov/news/press-releases/jy0980
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September 30, 2022: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated 14 persons in Russia’s military-industrial complex, including two international suppliers, three key leaders of Russia’s financial infrastructure, immediate family members of some of the senior Russian officials, and 278 members of Russia’s legislature for enabling Russia’s sham referenda and attempt to annex sovereign Ukrainian territory. In addition, OFAC issued new guidance that warns of the heightened sanctions risk that international actors outside of Russia would face for providing political or economic support to Russia as a result of its illegal attempts to change the status of Ukrainian territory.
https://home.treasury.gov/news/press-releases/jy0981
For this complete list of designated individuals and entities please see the following link:
https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220930
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September 30, 2022: The Department of the Treasury's Office of Foreign Assets Control (OFAC) published a Russia-related Frequently Asked Question (1091).
Question 1091: Do non-U.S. persons face sanctions risk for supporting Russia following its sham referenda, purported annexation, and continued occupation of the Kherson, Zaporizhzhya, Donetsk, and Luhansk regions of Ukraine?
Answer: Yes. On September 23, G7 Leaders issued a statement condemning Russia’s sham referenda and noting their collective readiness to impose further economic costs on Russia and on individuals and entities both inside and outside of Russia that provide political or economic support for Russia’s illegal attempts to change the status of Ukrainian territory.
The United States is prepared to more aggressively use its authorities under existing U.S. sanctions programs to target such persons whose activities may constitute material assistance, sponsorship, financial, material, or technological support for, or goods or services to, or in support of (together “material support”), sanctioned persons or sanctionable activity. Particular areas of targeting focus include entities and individuals in jurisdictions outside Russia that provide political or economic support for Russia’s illegal attempt to annex Ukrainian sovereign territory. Examples of activities that could be targeted include those related to:
- Providing material support for the organization of Russia’s sham referenda or annexation, as well as economic or other activity that seeks to legitimize Russia’s sham referenda or annexation;
- Providing material support to Russia’s military and defense industrial base, including significant transactions by entities in third countries that provide material support to Russia’s military, defense industrial base, and designated entities and persons operating in Russia’s defense industrial base;
- Attempting to circumvent or evade U.S. sanctions on Russia and Belarus; and
- Providing material support to Russian entities or individuals subject to certain blocking sanctions.
Multiple Executive Orders (E.O.) — including E.O.s 13660, 14024, and 14065 — authorize the imposition of blocking sanctions on categories of persons — inside or outside Russia — who provide material support for Russia following its sham referenda, purported annexation, and continued occupation of the Kherson, Zaporizhzhya, Donetsk, and Luhansk regions of Ukraine.
U.S. sanctions are not designed to target Ukraine or the Ukrainian people, including those living in areas occupied or purportedly annexed by Russia. In addition, as noted in OFAC’s Fact Sheet: Preserving Agricultural Trade, Access to Communication, and Other Support to Those Impacted by Russia’s War Against Ukraine and Frequently Asked Question (FAQ) 1007, OFAC sanctions do not target transactions related to the export of food or medicine, the response to the Coronavirus Disease 2019 (COVID-19) pandemic, the official business of an international organization, or the activities of nongovernmental organizations, as well as personal remittances, telecommunications, internet services, or mail.
Finally, OFAC sanctions do not prohibit transactions related to the sale of or transport of crude oil; petroleum; petroleum fuels, oils, and products of their distillation; liquefied natural gas; coal; and coal products of Russian Federation origin, aside from the importation of such products into the United States. OFAC will generally not impose sanctions on non-U.S. persons that engage in transactions that would be authorized for U.S. persons. For additional information, please see Russia-related General License (GL) 8C, FAQ 980, and FAQ 1018. OFAC has issued preliminary guidance on the planned maritime services policy and related price exception for seaborne Russian oil and intends to issue additional guidance in the coming weeks.
https://home.treasury.gov/policy-issues/financial-sanctions/faqs/1091
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September 30, 2022: The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) is publishing "Sanctions Compliance Guidance for Instant Payment Systems,” which emphasizes the importance of taking a risk-based approach to managing sanctions risks in the context of new payment technologies such as instant payment systems and to highlight considerations relevant to managing those risks. This guidance also encourages developers of instant payment systems to incorporate sanctions compliance considerations and features as they develop these systems.
See the following link for guidance:
https://home.treasury.gov/system/files/126/instant_payment_systems_compliance_guidance_brochure.pdf
OFAC is also reissuing in their entirety the Libyan Sanctions Regulations, 31 CFR 570, which were previously published in abbreviated form in 2011. This reissuance of the Libyan Sanctions Regulations includes additional interpretive guidance and definitions, general licenses, and other regulatory provisions that will provide further guidance to the public.
The Libyan Sanctions Regulations can be found at the following link:
https://home.treasury.gov/system/files/126/20220930_libya_regulations_0.pdf
Fines and Penalties
September 7, 2022: The Department of Justice announced that Instec Inc. (Instec), located in Boulder, Colorado, and Dr. Zhong Zou, Instec’s owner, and president, has agreed to pay $625,000 to resolve allegations that the company and Zou violated the False Claims Act by failing to comply with the requirements of the Buy American Act (BAA) when selling scientific instruments to federal agencies and national laboratories.
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September 26, 2022: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a settlement with CA Indosuez Switzerland S.A. (“CAIS”), an indirect subsidiary of Credit Agricole Corporate and Investment Bank located in Switzerland that specializes in wealth management and corporate and investment banking. CAIS agreed to remit $720,258 to settle its potential civil liability for apparent violations of sanctions against Cuba, Ukraine-related, Iran, Sudan, and Syria. CAIS operated U.S. dollar (USD) banking and securities accounts on behalf of 17 individual customers located in sanctioned jurisdictions and conducted USD business on behalf of these customers through the U.S. financial system, including through U.S. correspondent banks and the U.S. registered brokers or dealers in securities.
https://home.treasury.gov/system/files/126/20220926_CAIS.pdf
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September 26, 2022: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a settlement with CFM Indosuez Wealth (“CFM”), an indirect subsidiary of Credit Agricole Corporate and Investment Bank located in Monaco that specializes in wealth management and corporate and investment banking. CFM agreed to remit $401,039 to settle its potential civil liability for apparent violations of sanctions against Cuba, Iran, and Syria. CFM operated U.S. dollar (USD) banking and securities accounts on behalf of 11 individual customers located in sanctioned jurisdictions and conducted USD business on behalf of these customers through the U.S. financial system, including through U.S. correspondent banks and the U.S. registered brokers or dealers in securities.
https://home.treasury.gov/system/files/126/20220926_CFM.pdf
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September 27, 2022: A federal jury convicted Ji Chaoqun, 31, of Chicago, a Chinese national and former Army Reservist, yesterday for acting within the United States as an illegal agent of the People’s Republic of China.
According to court documents and evidence presented at trial, Ji was found guilty on one count of conspiracy to act as an agent of a foreign government, specifically the People’s Republic of China, without first notifying the Attorney General; one count of acting as an agent of the People’s Republic of China without first notifying the Attorney General; and one count of making a material false statement to the U.S. Army. The jury acquitted Ji on two counts of wire fraud.
Evidence presented at the two-week trial revealed that Ji worked at the direction of a high-level intelligence officer in the Jiangsu Province Ministry of State Security (JSSD), a provincial department of the Ministry of State Security for the People’s Republic of China. Ji, a Chinese citizen residing in Chicago, was tasked with providing the intelligence officer with biographical information on certain individuals for possible recruitment by the JSSD. The individuals included Chinese nationals who were working as engineers and scientists in the United States, some of whom were U.S. defense contractors.
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September 29, 2022: Jareh Sebastian Dalke, 30, of Colorado Springs, made his initial appearance in federal court on charges that he attempted to transmit classified National Defense Information (NDI) to a representative of a foreign government.
Dalke was an employee of the National Security Agency (NSA) where he served as an Information Systems Security Designer from June 6, 2022, to July 1, 2022. According to the affidavit in support of the criminal complaint, between August and September 2022, Dalke used an encrypted email account to transmit excerpts of three classified documents he had obtained during his employment to an individual Dalke believed to be working for a foreign government. In actuality, that person was an undercover FBI agent. Dalke subsequently arranged to transfer additional classified information in his possession to the undercover FBI agent at a location in Denver, Colorado. The FBI arrested Dalke on Sept. 28 after Dalke arrived at the specified location.
https://www.justice.gov/opa/pr/former-nsa-employee-arrested-espionage-related-charges
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September 30, 2022: OFAC announced a settlement with Tango Card, Inc. (Tango Card), a Seattle, Washington-based company that supplies and distributes electronic rewards. Tango Card agreed to remit $116,048.60 to settle its potential civil liability for 27,720 apparent violations of multiple U.S. sanctions programs. As a result of deficient geolocation identification processes, Tango Card transmitted stored value products to individuals with Internet Protocol (IP) and email addresses associated with Cuba, Iran, Syria, North Korea, and the Crimea region of Ukraine. The settlement amount reflects OFAC’s determination that Tango Card’s apparent violations were non-egregious and voluntarily self-disclosed.
https://home.treasury.gov/system/files/126/20220930_tango_card.pdf