United States Slaps Additional Sanctions on Russia Against Luxury Goods
Keeping up with the Russia Sanctions and Export Controls is a challenge. Each day a new sanction or restriction is adopted with ripple actions by United States Allies and partners.
Last Friday, March 11, 2022, was no exception to the shifting sanctions actions.
First, the White House issued a new Executive Order 14068, and four new General Licenses. EO 14068 banned exports of a number of “luxury goods,” and the Department of Commerce issued regulations prohibiting export of a laundry list of luxury goods. Additionally, EO 14068 prohibited the importation of Russian-origin fish and seafood, alcoholic beverages and non-industrial diamonds.
Second, the Department of Treasury Office of Foreign Asset Control (“OFAC”) added a number of individuals and entities to the Specially Designated Nationals List (“SDN”).
EO 14068 further restricts: (1) “new investments” by United States persons in any sector of the Russian economy; and (2) export, reexportation, sale or supply of US dollar denominated banknotes from the United States or by a United States person to the Russian Government or any person located in Russia.
The ban on luxury goods extends to a range of products designated by the Department of Commerce’s Bureau of Industry and Security (“BIS”), including alcoholic beverages, tobacco and tobacco products, perfumes and cosmetics, handbags, artworks, fur skins, silks, carpets, clothing, ceramics, jewels, precious stones and jewelry, passenger vehicles, and watches.
OFAC issued several General Licenses:
(1) General License 17 authorizes transactions until March 25, 2022, that are “ordinarily incident and necessary” to the import of Russian-origin fish, seafood, and preparations thereof, alcoholic beverages, and non-industrial diamonds provided that the written contract related to the transaction was executed prior to March 11, 2022.
(2) General License 18 authorizes transactions “ordinarily incident and necessary” to the transfer of US dollar-denominated banknote, noncommercial, personal remittances from the US person to an individual in Russia or a US person located in Russia. A Frequently Asked Question (FAQ 1028) explains that the authorized methods of payment include withdrawals of US dollar denominated banknotes via ATMs and hand-carrying of US dollar denominated banknotes.
General License 18 clarifies that The prohibition on the supply of US dollar banknotes from the United States does not authorize U.S. financial institutions to process transactions for the provisions of U.S. dollar-denominated banknotes to foreign financial institutions for distribution or supply to the Russian Government or any person located in Russia. (FAQ 1028).
(3) General License 19 authorizes US persons located in Russia to engage in certain transactions that are ordinarily incident and necessary for personal maintenance, including payment of housing expenses, acquisition of goods or services for personal use, payment of taxes or fees and purchase of permits, licenses or public utility services.
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