U.S. Imposes New ITAR/EAR Export Control Restrictions and OFAC Sanctions on Russia

On March 2, 2021, the U.S. announced new sanctions on Russia over the 2020 poisoning and imprisonment of opposition leader Alexei Navalny. The U.S. government’s primary export regulators—the Directorate of Defense Trade Controls (DDTC) at the State Department, the Bureau of Industry and Security (BIS) at the Commerce Department, and the Office of Foreign Assets Control (OFAC) at the Treasury Department—imposed the new restrictions, which U.S. persons doing business connected with Russia should incorporate into their compliance and business planning going forward. The sanctions and export restrictions are focused particularly on individuals and entities associated with Russia’s Federal Security Service (FSB). The FSB has responsibility for securing Russia’s telecommunications and internet sector, which does overlap with activities conducted by non-Russian companies selling services and equipment into the Russian Federation.

The new measures will also further tighten existing restrictions around the export of defense articles to Russia, as the State Department announced it is amending the International Traffic in Arms Regulations (ITAR) § 126.1 to include Russia in the list of countries subject to a policy of denial for exports of defense articles and defense services, with certain exceptions and subject to a Congressional notification requirement. Adding Russia to this list effectively prohibits the export of most ITAR-controlled defense articles and services to Russia, unless exceptions apply. One such exception the State Department noted was for exports to Russia when in furtherance of government space cooperation, which allows for case-by-case review of such exports.

The Commerce Department added 14 entities in Russia, Switzerland, and Germany to its Entity List based on their relation to Russia’s weapons of mass destruction programs and chemical activities. This generally bars exports of services and items subject to the Export Administration Regulations (EAR) to these newly designated entities.

The Treasury Department added seven Russian government officials, including the Director of the FSB and two deputy defense ministers, and three entities to the Specially Designated Nationals (SDN) List and imposed new sanctions on existing Russian SDNs. As a result, the U.S. government generally prohibits U.S. persons from dealing with these new SDNs. Five of these individuals had already been designated by the European Union, and the U.S. and the E.U. are closely coordinating their activities on these measures according to the Department of State. OFAC also announced it would issue an updated General License 2 (GL) to authorize certain transactions with the FSB to incorporate the new authorities, but the scope of GL2 was not changed.

If you have questions concerning the impact of these recently announced restrictions, Ice Miller has extensive experience assisting companies to comply with laws governing the export of goods, technology, software, and services, and helping companies navigate economic sanctions. Our team includes Guillermo Christensen, managing partner of the firm’s Washington DC office and a former CIA officer with national security experience in the intelligence community and internationally with the State Department; Dale Stackhouse, chairperson of Ice Miller’s International Group and co-chairperson of its Regulatory Compliance Group; Meghann Supino, a partner in Ice Miller’s Business Group who regularly assists clients with international trade matters related to DDTC, BIS, and OFAC regulations; and Christian Robertson, a former U.S. Air Force intelligence officer who regularly advises clients on government contract matters.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.