Key takeaways from G7 Summit on Russia

Not surprisingly, last month’s G7 Summit solidified the persistent and unified commitment in support of Ukraine through new sanctions and export restrictions on Russia and Belarus.  The purpose remains the same – the G7 countries’ continuation to cripple Russia’s ability to source goods and technology required for the war in Ukraine.

This results in the increased burden on exporters to not only be aware of the new and amended sanctions from BIS, OFAC and DDTC, but also to understand, comply with and implement them across all functions.  This includes your company’s finance, supply chain, logistics, shipping, operations, sales, customer service and all other related departments.

Enhanced due diligence screening is vital given the complex and constantly changing regulations.

Screening is Key! 

• There have been 126 additions to the OFAC SDN List which not only blocks those listed entities/individuals but also their 50% or more owned affiliates from the US financial system and from receiving US goods
• The new actions include 71 additions to the BIS Entity List in Armenia, Kyrgyzstan and Russia
• Two hundred entities were added to the US Department of State blocked list (individuals, vessels and aircraft) from participating in various Russian markets
• Several Russian financial institutions are now caught under amended EO 14024, Directive 4; prohibiting them from engaging with US entities/persons

When performing export license determinations, the US Government also made several changes.

Export License Considerations

• 1,224 HTS codes (specifically HTS Chapters 84, 85 and 90) for items classified as EAR99 are now subject to export licensing requirements to Russia or Belarus
• End Use due diligence is necessary to remain compliant due to the expansion of existing construction, manufacturing and transportation restrictions which now include architecture and engineering services
• OFAC has amended General Licenses pertaining to an entity’s day-to-day operations in Russia impacted by Directive 4 (ex. Tax payments) and a new General License for specific wind-down activities
• Foreign-produced items that are direct products of US-origin software or technology are increasingly difficult to export to Russia or Belarus

The increasing sanctions means that additional Red Flag training is necessary at companies to remain compliant.  Companies must be wary of the risk of diversion … especially as these new restrictions build on already complex and overlapping global export controls on Russia.

If your company needs help understanding these new regulations and applying them to your business, please schedule a no-charge consultation today.