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On June 6 and June 9, 2022, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) issued additional guidance on the sanctions that prohibit U.S. persons from making a “new investment” in Russia and from providing accounting, trust and corporate formation, and management consulting services to any person located in Russia.

Separately, from June 15, 2022, the UK Office of Financial Sanctions Implementation (“OFSI”) gained new powers to impose financial penalties for breaches of UK sanctions regulations (including, but not limited to, the UK sanctions regulations with respect to Russia) on a strict liability basis and to publish reports of cases where it is satisfied that a breach of financial sanctions has occurred but where no penalty is imposed.

This alert summarizes these new sanctions developments.

New U.S. Sanctions Developments

Guidance on the Prohibitions on “New Investment” by U.S. Persons in Russia

On June 6, 2022, OFAC issued guidance in the form of responses to new frequently asked questions (“FAQs”) to clarify certain aspects of the prohibitions on “new investment” in Russia by U.S. persons that were imposed under the following executive orders (“E.O.s”):

  • E.O. 14066, issued on March 8, 2022 (prohibiting new investment by U.S. persons in the energy sector of the Russian Federation, as described in our March 10 alert); 
  • E.O. 14068, issued on March 11, 2022 (prohibiting new investment by U.S. persons in any sector of the Russian Federation economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State); and 
  • E.O. 14071, issued on April 6, 2022 (prohibiting “all new investment in the Russian Federation by U.S. persons, wherever located” as well as “any approval, financing, facilitation, or guarantee by a U.S. person, wherever located, of a transaction by a foreign person where the transaction by that foreign person would be prohibited by E.O. 14071 if performed by a U.S. person or within the United States,” as described in our April 11 alert.

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Continue Reading Recent Developments in U.S. and UK Sanctions: OFAC Guidance on “New Investment” and Prohibition on the Provision of Certain Services to Any Person in Russia; UK Sanctions Enforcement Developments

Administration Also Revises Russia Sanctions, Terminates Most Sudan Sanctions

On October 13, President Trump announced that he would no longer certify to Congress that the suspension of U.S. sanctions against Iran pursuant to the Joint Comprehensive Plan of Action (“JCPOA”) is “appropriate and proportionate” to the steps that Iran has taken to terminate its illicit nuclear program. The President’s much-anticipated announcement does not mean that the United States is withdrawing from the JCPOA, nor does it automatically result in the re- imposition of any U.S. sanctions against Iran. Rather, the President’s announcement gives the Congress 60 days to introduce legislation to re-impose U.S. sanctions that could be considered under expedited procedures. Importantly, although President Trump did not call on Congress to re-impose the pre-JCPOA U.S. nuclear-related sanctions, he did threaten to terminate U.S. participation in the JCPOA in the future if Congress and U.S. allies do not take action to address perceived flaws in the agreement.

At the same time, the Trump Administration expanded sanctions against Iran’s Islamic Revolutionary Guard Corps (“IRGC”), and designated four additional entities for sanctions for their support of Iran’s weapons proliferation activities. Further, Senators Bob Corker and Tom Cotton announced that they would be introducing legislation to address perceived shortcomings in the JCPOA, consistent with President Trump’s request.

The developments of late last week follow several other recent changes in U.S. sanctions involving Russia and Sudan.

On September 29, the Trump Administration, as expected, revised key aspects of the U.S. sectoral sanctions against Russia relating to dealings in debt of certain parties operating in Russia’s financial services and energy sectors. The move was required by the Countering America’s Adversaries Through Sanctions Act (“CAATSA”) discussed in our alert of July 28, 2017.

Finally, on October 12, the Trump Administration terminated most U.S. sanctions against Sudan, which had been substantially suspended since January 2017 pursuant to an Executive Order that President Obama issued in the waning days of his Administration.

Iran
Failure to Make INARA Certification 

The Iran Nuclear Agreement Review Act of 2015 (“INARA”) requires that the President certify to Congress every 90 days that: (1) “Iran is transparently, verifiably, and fully implementing” the JCPOA; (2) Iran has not committed a material breach with respect to the JCPOA, or if it has committed a material breach, then it has cured that breach; (3) Iran has not taken any action that could significantly advance its nuclear weapons program; and (4) suspension of U.S. sanctions against Iran in connection with the JCPOA is “appropriate and proportionate” to the specific and verifiable measures taken by Iran with respect to terminating its illicit nuclear program and is “vital to the national security interests of the United States.”…

Continue Reading Developments in U.S. Iran Sanctions

On January 16, 2016, the United States and the European Union (“EU”) significantly eased their sanctions against Iran, following verification by the International Atomic Energy Agency (“IAEA”) that Iran had carried out its commitments under the Joint Comprehensive Plan of Action (“JCPOA”), the multilateral agreement signed in mid-July 2015 in which Iran agreed to accept…

There are no changes in the application of US sanctions against Iran as a result of the framework parameters regarding Tehran’s nuclear program announced on April 2.  Additional sanctions relief will come only if there is a final agreement concluded among Iran, the United States, the United Kingdom, France, Russia, China, Germany, and the European…

On July 29, the EU and United States took coordinated steps to expand sanctions targeting the Russian financial services, energy, and defense sectors, including restrictions on energy-related exports to Russia.  The EU also took steps to limit certain types of trade and investment in Crimea, while both the EU and United States identified additional parties…