The Executive Order prohibits “U.S. persons” — defined to include citizens and permanent residents, wherever located, as well as U.S. entities and their foreign branches, and any person physically in the U.S. — from engaging in the importation or exportation of goods, services, or technology to/from Crimea. The prohibition applies broadly to re-exportation, sale, or supply, whether direct or indirect, as well as to facilitation (including approval, financing, and guarantees) by a U.S. person of a transaction by a foreign person. The Executive Order also bans new investments in Crimea by U.S. persons.
On that same day, the Treasury Department’s Office of Foreign Assets Control (OFAC) issued corresponding General License No. 4 authorizing the exportation (and re-exportation) to Crimea of certain agricultural commodities, medicine, medical supplies, and replacement parts for medical supplies. The authorization, however, does not apply to transactions where military or law enforcement purchasers or importers are involved.
Simultaneously, OFAC added 24 Ukrainian and Russian-backed separatists (17 individuals and 7 entities) to its Specially Designated Nationals (SDN) list. For those unfamiliar, OFAC’s SDN list, one of many U.S. export control/sanctions blacklists, identifies parties with whom U.S. persons are prohibited from engaging in transactions. Making for a very tangled web of sanctions compliance, U.S. persons are also prohibited from engaging with entities that are owned, directly or indirectly, 50 percent or more in the aggregate, by parties on the SDN List. Examples of the newly listed SDNs include PROFAKTOR TOV, an accounting and bookkeeping company based in Donetsk, and Marshall Capital Partners, an equity investment group based in Moscow.
In related news, just one day earlier, on December 18th, the President signed into law the Ukraine Freedom Support Act of 2014 (UFSA), providing the administration with a combination of mandatory and discretionary sanctions, expanding its authority to target Russia’s defense, energy, and financial sectors. Notably, UFSA provides the administration with a variety of sanctions measures that it may impose on foreign persons and entities, similar to the Iran Sanctions Act. Some of the sanctions measures include arms export or dual-use export bans, asset freezes, and prohibitions on certain U.S. banking transactions. UFSA also provides $350 million in military assistance and over $120 million in energy, defense sector, and civil society assistance to Ukraine.
In light of UFSA’s authorization of both OFAC and the Commerce Department’s Bureau of Industry and Security (BIS) to impose additional export restrictions, new regulations and directives from the two agencies can be expected in the coming weeks and months.
Nina Mohseni is an associate attorney at Sandler, Travis & Rosenberg in Chicago where she practices customs and international trade law. She is the vice president of the Chicago chapter of the Organization of Women in International Trade (OWIT Chicago) and vice chair of the Chicago Bar Association’s International Corporate and Trade Law Committee.