US attempts to curb Russia further in retaliation for its ‘malign activities’

The US administration has used the Countering America’s Adversaries Through Sanctions Act (‘CAATSA’), signed into law in August 2017, to penalise Russia for its ‘malign activities’, including suspected interference in the US elections, cyberattacks and aggression in the Ukraine.

President Trump issued an executive order (‘EO’) on 20 September authorising the implementation of certain sanctions under CAATSA. The US Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’) has issued a FAQ on the EO, which states that it ‘provides for comprehensive implementing and penalties provisions that enable OFAC, among other things, to promulgate regulations and issue administrative subpoenas, licenses, and the full range of civil enforcement actions with respect to sanctions violations.’

The Secretary of State also took two concurrent actions under CAATSA, listing 33 persons for their connections to the Russian defence or intelligence sectors, bringing the total number of persons – individuals or entities – on the List of Specified Persons (‘LSP’) to 72.

Although those listed are not subject to sanctions, anyone who ‘knowingly’ engages in a ‘significant’ transaction with these persons is subject to mandatory sanctions under s231 of CAATSA.

The second action was the use of s231 of CAATSA for the first time ever to impose sanctions on Chinese entity Equipment Development Department (‘EDD’) and its director, Li Shangfu, for engaging in ‘significant’ transactions with listed Russian arms exporter Rosoboronexport, concerning the delivery of Su-35 combat aircraft and surface-to-air missile system related equipment from Russia to China. EDD has also been placed on OFAC’s Specially Designated Nationals (‘SDN’) List. The following five sanctions were selected from s235 to impose on EDD:

• ‘a denial of export licenses;
• a prohibition on foreign exchange transactions under United States jurisdiction;
• a prohibition on transactions with the United States financial system;
• blocking of all property and interests in property within United States jurisdiction; and
• the imposition of sanctions on an EDD principal executive officer, its director Li Shangfu, which include a prohibition on foreign exchange transactions under United States jurisdiction, a prohibition on transactions with the United States financial system, blocking of all property and interests in property within United States jurisdiction, and a visa ban.’

In other Russia-related actions, OFAC has extended the expiration date for general licences 13D, 14A, 16A, which authorise certain business with RUSAL and EN+ Group, until 12 November 2018.

The executive order can be found here:
https://www.whitehouse.gov/presidential-actions/executive-order-authorizing-implementation-certain-sanctions-set-forth-countering-americas-adversaries-sanctions-act/

The Department of State factsheet can be found here:
https://www.state.gov/r/pa/prs/ps/2018/09/286077.htm

OFAC’s FAQ on the executive order can be found here:
https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#627

OFAC’s notice on EDD can be found here:
https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20180920_33.aspx