Russia Sanctions – What Should You Know?
Russia Sanctions – What Should You Know?
Posted on Mar 10
03/10/2022
Russia Sanctions – What Should You Know?
Article by: Glenn Shearron, Trade Compliance Specialist, TradeInsights
In light of the recent activity in the past few weeks surrounding the invasion of Ukraine by Russia, many people are hearing about our government issuing sanctions against certain people, and individual companies. How is that accomplished? It’s handled by the Office of Foreign Assets Control, or OFAC for short. OFAC administers and enforces economic sanctions programs, and they are separate from the Bureau of Industry and Security (BIS) embargoes. OFAC sanctions are aimed primarily at countries and groups of individuals, such as terrorists and drug traffickers. The sanctions can be either comprehensive (think an entire country like Iran or Cuba), or selective (think of a person or business). OFAC works by blocking the assets, and administering trade restrictions to accomplish our countries foreign policy and national security goals. In many cases, their regulations prohibit almost any transaction with a country, person, or entity, so it is vital to have a written compliance program and policy in place. There are also instances where both OFAC and BIS will require you to submit a license application.
So, who must comply with OFAC regulations? Well, U.S. persons must comply with OFAC regulations, including all U.S. citizens and permanent resident aliens, regardless of where they are located, all persons and entities within the United States, all U.S. incorporated entities and their foreign branches. In the cases of certain programs, foreign subsidiaries owned or controlled by U.S. companies also must comply. Certain programs also require foreign persons in possession of U.S. origin goods to comply. As you can see, OFAC regulations are very complex, so we implore everyone to become familiar with these regulations, and consult with your legal counsel if there is any doubt about a transaction.
What happens if I have a violation, am I penalized? In most cases, yes. OFAC is a small agency, but they swing a huge stick. Penalty amounts vary by sanctions program, but in many cases, the fine amounts will be in the six figures, and they have been known to issue fines into the millions of dollars.
Are all transactions prohibited? No. OFAC does issue general licenses for certain transactions, and specific licenses on a case-by-case basis. However, you should be aware that certain license applications are handled on a presumption of denial.
So how do I comply? One of the best ways to ensure compliance is to screen every entity that has a role in your transaction. OFAC publishes several lists that must be checked prior to your export transaction. These lists include individuals and companies that are owned, controlled, or acting for or on behalf of, targeted countries. It also lists actual individuals, groups, and other entities that are not associated with a particular country.
You can also visit the following link to view OFAC’s sanctions programs and country information, including Ukraine:
We suggest all exporters maintain a written export compliance manual to address these and other issues. If you do not have a written export compliance manual, or if you are unfamiliar with the screening process, or how to ensure your transactions are screened, please feel free to give me a call or send me an email.
Glenn Shearron
Trade Compliance Specialist
gshearron@valexander.com
tradeinsights@valexander.com
Tel: 615-885-0020, ext. 2400
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