Sanctions Weekly Update – Ukraine/Russia Conflict – April 3, 2023 | Perspectives & Events

US Sanctions | EU Sanctions | UK Sanctions | Russia/Ukraine Sanctions | Other Notable Developments

Russia/Ukraine Sanctions Update – Week of April 3, 2023

I. US SANCTIONS

• OFAC Updates FAQ on Payment of Russian “Exit Tax”: On March 30, the Office of Foreign Assets Control (OFAC) issued an amended FAQ 1118 on the payment of “exit tax” to the Russian Central Bank and the Ministry of Finance, as may be required by the Russian government before divesting any assets located in Russia. OFAC reiterated that a specific license must be obtained from the OFAC before such payments can be made; however, given the Commission established by Russia to review such divestments may include U.S.-sanctioned individuals, U.S. persons do not need to seek separate OFAC authorization for their Russian buyers to submit an application to the Commission regarding a divestment transaction. Read more>>
• BIS Renews Temporary Denial Orders on Entities Violating Russia Sanctions: On April 3 and 4, the Commerce Department’s Bureau of Industry and Security (BIS) granted the requests of the Office of Export Enforcement (OEE) to renew the temporary denial orders previously issued on October 3, 2022 against PJSC Aeroflot, UTair Aviation JSC, and Azur Air respectively. BIS found that renewals of the orders were necessary in the public interest to prevent an imminent violation of the Export Administration Regulations (EAR); specifically, evidence showed that these entities violated Russia sanctions by continuing to fly designated aircrafts into Russia without BIS authorization. Read more>>, Read more>> and Read more>>
• Microsoft Fined $3.3 Million for Violations of Russia Sanctions; Violations Predate Ukraine Invasion: On April 6, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) announced that they had issued a combined $3.3 million in civil penalties on Microsoft for violations of sanctions and export control laws on Russia; the violations occurred before the invasion of Ukraine. Microsoft voluntarily disclosed the violations and cooperated with both agencies over the course of the investigation. Read more>> and Read more>>
• Treasury Sanctions Illicit Darknet Marketplace Purportedly Located in Russia: On April 5, pursuant to Executive Order (E.O.) 13694, the Treasury Department imposed sanctions on Genesis Market, one of the world’s largest illicit marketplaces which is believed to be located in Russia. According to its published statement, Genesis Market is one of the most prominent brokers of stolen credentials and other sensitive information, gaining unauthorized access to victim devices and selling stolen data to cybercriminals for further exploitation. Read more>> and Read more>>
• Connecticut Company Ordered to Forfeit $826,000 for Violation of Export Controls on Russia: On April 5, a U.S. District Court judge ordered a Connecticut-based manufacturer to forfeit $826,000 that had been sent by a Latvian company working as part of a conspiracy to transport a jig grinder, made by the Connecticut manufacturer, to Russia without a license in violation of U.S. export control laws. The investigation into the matter was coordinated by Task Force KleptoCapture. Read more>>
• Assistant Secretary of the Treasury Discusses Russia Sanctions Program: On April 6, Assistant Secretary of the Treasury Elizabeth Rosenberg spoke at the Center for Strategic and International Studies. She discussed the current landscape of the sanctions program, highlighting new designations of Russian persons and entities and the oil price cap. She next discussed what the Department has learned from the experience, praising the value of coordination with both allies and the private sector on implementing sanctions, noting that loopholes remain in sanctions infrastructure, and expressing the need for the U.S. to help developing countries build capacity in their sanctions programs. Read more>>
• Secretary Yellen Welcomes IMF Approval of Ukraine Economic Program: On March 31, Secretary of the Treasury Janet Yellen released a statement welcoming the International Monetary Fund (IMF) Executive Board’s decision in approving a $15.6 billion economic program for Ukraine. Secretary Yellen commended Ukraine’s efforts to pursue broad-based structural reforms under the program despite Russia’s aggression and strongly supports the program’s measures in securing economic and financial stability. Read more>> and Read more>>
• Defense Department Offers Ongoing Military Training for Ukrainians: On March 30, Department of Defense representatives said that apart from providing more than $32.5 billion of security assistance in the form of military hardware and ammunition to Ukraine, it is also providing substantial training to Ukrainians to make good use of the equipment that has been supplied. According to Pentagon Press Secretary Pat Ryder, the U.S. has trained more than 7,000 members of the Ukrainian armed forces ever since Russia’s invasion of Ukraine in 2022, and will continue to do so to ensure the Ukrainian people have the security assistance they need to defend their country against Russian aggression. Read more>>
• USAID Provides Winter-Related Assistance to Ukraine: On March 30, the U.S. Agency of International Development (USAID) reported that during the past winter, it had provided Ukraine with $400 million worth of winter-related assistance, including energy repair equipment, power generators, support for heating points, and humanitarian supplies, with more assistance on the way. The assistance helped provide the people of Ukraine with access to heat, hot water, electricity, healthcare, and basic supplies during the height of winter, as they continue to defend themselves against Russia’s aggression. Read more>>
• U.S. and EU Continue Work on Energy Security and Reducing Reliance on Russian Energy: On April 3, the joint U.S.-EU Task Force on Energy Security, launched by President Biden and President von der Leyen of the European Union (EU) one year ago, released its progress report and outlook for the year 2022-2023, stressing that it has made major progress during the year in meeting its goals to reduce the EU’s reliance on Russian energy. The 10th U.S.-EU Energy Council also met in Brussels on April 4, where leaders discussed strategic energy issues and how the U.S. and EU should respond to Russia’s threat to global energy security. Read more>> and Read more>>
• Additional U.S. Security Assistance to Ukraine: On April 4, the Biden administration authorized its 35th drawdown of U.S. arms and equipment for Ukraine valued at $500 million, including more ammunition for U.S.-provided HIMARS, air defense interceptors, artillery rounds, anti-armor systems, small arms, heavy equipment transport vehicles, and maintenance support. In addition, the Department of Defense is also providing a significant package under its Ukraine Security Assistance Initiative, which includes air defense capabilities, artillery and tank ammunition, mortar systems, rockets, and anti-armor systems. Read more>> and Read more>> 
• World Leaders Discuss Coordination of Economic Support for Ukraine: On April 5, Deputy National Security Advisor for International Economics Mike Pyle, Finance Minister of Ukraine Sergii Marchenko, and European Commission Director-General for Neighborhood and Enlargement Negotiations Gert Jan Koopman co-chaired the second meeting of the Steering Committee of the Multi-agency Donor Coordination Platform for Ukraine. During the meeting, the leaders as well as representatives from international financial institutions discussed the coordination of economic support for Ukraine’s financing needs and future economic recovery and reconstruction efforts. Ukraine highlighted its early recovery priorities for 2023 in the areas of energy infrastructure, civilian demining, critical and social infrastructure, housing, and support to the private sector. The Steering Committee agreed that the Platform was critical as a catalyst for mobilizing international commitments required to respond to Ukraine’s needs in 2023. Read more>>

2. EU Sanctions

• European Commission Updates its Russia Sanctions FAQs on Export-Related Restrictions for Dual-Use Goods and Advanced Technologies: On 31 March 2023, the EU updated its FAQ with regards to Export-Related Restrictions for Dual-Use Goods and Advanced Technologies by adding a question on the transit of goods through Russia and by updating the correlation table. Read more>> 
• EU Adopts Restrictive Measures to Suspend the Broadcasting Activities of RT Arabic and Sputnik Arabic: On 31 March 2023, the Council of the EU has concluded that restrictive measures suspending the broadcasting activities in the Union of RT Arabic and Sputnik Arabic shall apply from 10 April 2023. Read more>>
• Bulgaria Closes Ports for all Russian Ships in Line With EU Sanctions: Ships under Russian flags already cannot enter Bulgarian ports catering to the traffic from the Black Sea. The country’s Maritime Administration set the ban on April 17, making an exception only for deliveries of critical products from Russia. Read more>>
• Lithuania Launches Investigation Into International Sanction Circumvention: The Lithuanian authorities have transferred to the financial crime investigation service data on a Cessna 172, which sought to fly from Lithuania to Russia in violation of international sanctions. Read more>>
• EU Proposes Measures to Block Import of Russian Arctic LNG: After sanctioning the import of most pipeline gas from Russia, the EU is now beginning to target the flow of Russian LNG into the bloc. EU member states increased consumption of Arctic LNG by 50 percent since the beginning of sanctions. A new proposal would allow EU member states to block the import of LNG. Read more>>
• Commission Approves €2 Billion Austrian Support to Wien Energie in The Context of Russia’s War Against Ukraine: The European Commission has approved a €2 billion Austrian measure to support the energy supplier Wien Energie GmbH in the context of Russia’s war against Ukraine. Read more>>
• Commission Approves €3.5 Billion French Scheme to Support Small Companies in the Context of Russia’s War Against Ukraine: The European Commission has approved a €3.5 billion French scheme to support small and medium-sized enterprises (‘SMEs’) and microenterprises in the context of Russia’s war against Ukraine. The scheme was approved under the State aid Temporary Crisis and Transition Framework. Read more>>
• Commission Approves €70 Million Dutch Scheme to Support the Greenhouse Horticulture Sector in the Context of Russia’s War Against Ukraine: The European Commission has approved a €70 million Dutch scheme to support small and medium-sized enterprises (SMEs) active in the greenhouse horticulture sector in the context of Russia’s war against Ukraine. The scheme was approved under the State aid Temporary Crisis and Transition Framework. Read more>>
• Commission Approves €30 Million Italian Scheme to Support Commercial Bus Transport Operators in the Context of Russia’s War Against Ukraine: The European Commission has approved a €30 million Italian scheme to support commercial bus transport operators in the context of Russia’s war against Ukraine. The scheme was approved under the State aid Temporary Crisis and Transition Framework. Read more>> 
• Commission Approves €25 Million Greek Scheme to Support Apple and Chestnuts Producers in the Context of Russia’s War Against Ukraine: The European Commission has approved an approximately €25 million Greek scheme to support apple and chestnuts producers in the context of Russia’s war against Ukraine. The scheme was approved under the State aid Temporary Crisis and Transition Framework. Read more>>
• EU Plan to Buy Ukraine Shells Hits Legal Snag Over Who Gets the Money: Countries have already agreed to jointly buy Kyiv piles of ammunition, but ambassadors can’t agree on whether the contracts will stay within the bloc. Read more>>
• Five EU Countries Urge Brussels to Buy Ukrainian Grain: The leaders of the five European Union member states, which help transit Ukrainian agricultural products to third countries, called on the EU to take measures in connection with the a backup of grain stored in their countries, which arose because the goods do not reach their destinations. The prime ministers of Poland, Slovakia, Hungary, Romania and Bulgaria asked Brussels to consider the possibility of urgent purchase of surplus products by the EU, and to allocate funds for the fastest development of transport and warehouse infrastructure. Read more>>