Export Compliance

New U.S. and U.K. Sanctions on Russia; Further Actions Likely

Last month, the United States and the United Kingdom announced a series of sweeping sanctions against Russia in response to its alleged involvement in activities against Western interests, and transgressions against its own neighbors.

In his Executive Order detailing the latest American sanctions, President Biden emphasized the seriousness of the situation by characterizing Moscow’s foreign maneuverings as “harmful”. Notably, these restrictions came in response to interference in recent U.S. Presidential elections, as well as involvement in “malicious cyber-enabled activities against the United States and its allies and partners”, which observers believe is referencing the recent SolarWind hacks. Russia’s “[violation of] well-established principles of international law, including respect for the territorial integrity of states” is also listed, believed to be in connection with the ongoing occupation of Crimea.

Meanwhile, the British sanctions specifically cited their newly-introduced Magnitsky Act. Not to be confused with the American act of the same name, this anti-corruption bill was invoked to hit high ranking officials who were purportedly involved in a corruption scheme and conspiracy worth $230 million, exposed by Russian lawyer Sergei Magnitsky (after whom the U.K. and U.S. bills are named).

Scope of the latest U.S. sanctions

The U.S. sanctions named six Russian technology companies believed to have assisted Russian intelligence in the SolarWind hacks, in addition to 32 further individuals and entities accused of being associated with the effort. Russian agencies including the Federal Security Service (abbreviated as the FSB), the Main Directorate of the General Staff of the Armed Forces of the Russian Federation (better known as the GRU), and the Foreign Intelligence Service (SVR) were also implicated. Beyond these specific entities, the U.S. also prohibited U.S. financial institutions from entering into transactions for bonds issued by Russia’s central bank (and other Russian financial institutions).

U.K. sanctions, and U.S. response

The U.K. invoked the Magnitsky Act to sanction 14 high ranking Russian officials. Among the individuals targeted were interior ministry officials Aleksey Anichin and Oleg Silchenko, prison officials Alexandra Gauss and Fikret Tagiyev, and finally, Alexander Bastrykin, Moscow’s top prosecutor.

Antony J. Blinken, Secretary of State of the United States, lauded the U.K. on its recent anti-corruption initiatives, noting that acting against such transgressions is something the U.S. government will also continue to do.

More Restrictions to come

While the Biden Administration’s actions are among the strongest taken by the U.S. government in years, they are also the latest in a series of ongoing measures against Moscow. And, there is every possibility that there are more restrictions on the way, especially since there are still several outstanding alleged Russian actions, including, apparently, the placing of bounties on American soldiers, that have gone unaddressed.

The implications for trade compliance efforts

The world of global trade compliance is typically fast-moving, so most compliance officials in commercial organizations should always be prepared for changes that bring in new regulations that must be complied with.

For companies unsure about their current readiness to handle the rapid pace of compliance additions, addendums and new promulgations, they should re-examine their international trade compliance processes and procedures to ensure they are keeping up with ever-changing rules. Several noteworthy software solutions provided by leading vendors, such as Descartes Visual Compliance, can help organizations rapidly deploy full-fledged compliance solutions, including denied and restricted party screening, sanctioned ownership screening to account for regulations such as the OFAC 50 percent rule, and export documentation and licensing management.

Compliance is an ongoing process, and the most important thing an organization can do to remain on the straight and narrow is to be aware of the ongoing changes in the compliance world as they occur, and to adapt to the changes in a timely manner.