The U.S. is preparing to roll out a “substantial package” of new sanctions and export controls against Russia for its war in Ukraine, including by adding about 70 new entities to the Commerce Department’s Entity List and introducing more than 300 new financial sanctions against people, entities, vessels and aircraft, a senior administration official said. The measures, which will be coordinated alongside allies as part of the Group of 7 summit in Japan May 19-21, are aimed at closing “loopholes” used by Russia to evade sanctions and “extensively restricting categories of goods key to the battlefield,” the official said during a May 18 call with reporters.
The Bureau of Industry and Security announced a host of new Russia-related export controls, including measures that expand its Russian and Belarusian Industry Sector Sanctions, broaden its foreign direct product rule restrictions and add 71 new entities to the Entity List. Some of the changes, outlined in a 106-page final rule effective May 19, “better align” U.S. export controls with allies, place new export license requirements on additional “industrial items” and chemicals destined to Russia, and impose controls on certain electrical parts destined to Iran for use in unmanned drones. The Entity List changes, also effective May 19, add entities in Armenia, Kyrgyzstan and Russia for either supporting Russia’s military sector, diverting U.S.-controlled items to Russia or preventing a U.S. end-use check.
China denounced recent U.S. enforcement actions by the Disruptive Technology Strike Force against various Chinese and Russian individuals for allegedly violating sanctions by conspiring to export technology, trade secrets and aircraft parts 2305160047). A spokesperson for the Ministry of Foreign Affairs said May 17 the U.S. "has kept stretching the national security concept to abuse export control regimes and its leading technological advantage," according to a transcript in English of the regular press conference the spokesperson holds with media in Beijing. The spokesperson urged the U.S. to stop suppressing China in the field of technology and using judicial power to target Chinese researchers, adding "China will do what is necessary to firmly safeguard the lawful rights and interests of Chinese citizens."
A series of export control indictments announced this week, including several for illegal shipments to China and Russia, only scratched the surface of prosecutions expected to be brought as part of the new Disruptive Technology Strike Force, said Matthew Axelrod, the Bureau of Industry and Security's top export enforcement official. “It’s just the beginning,” Axelrod said during a May 17 law conference hosted by the American Bar Association, Mayer Brown and American University. “I think you can expect to continue to see actions come out from the strike force as this work continues.”
The U.K. corrected or amended various entries under its Russia, Global Anti-Corruption and Syria sanctions regimes. Under the Russia sanctions list, the Office of Financial Sanctions Implementation amended the listing for Roman Nikolaevich Lepa, a member of the Donetsk People's Council. OFSI also corrected the listing for Zvonko Veselinovic under the anti-corruption sanctions regime, and amended the entry for Damascus Cham Holding under the Syria sanctions regime.
The European Commission this month added a new frequently asked question covering the "Asset Freeze and Prohibition to Make Funds and Economic Resources Available" to its Russia sanctions FAQs. The entry asks whether a non-sanctioned entity can request permission to use derogations on trade in fertilizers if it does not consider itself to be owned by a sanctioned party, but its counterparts do. "Would that amount to an acknowledgement of ownership and/or control by the sanctioned person over the company?” the FAQ asks.
The Office of Foreign Assets Control this week sanctioned Russian national Mikhail Matveev for helping to launch cyberattacks against U.S. law enforcement, businesses and critical infrastructure. Matveev is a “central figure” in the development and deployment of several Russia-linked “ransomware variants,” OFAC said, including Hive, LockBit and Babuk. OFAC said the designation was announced alongside an indictment by DOJ and a $10 million reward by the State Department for information that leads to Matveev’s arrest or conviction.
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The Group of 7 countries likely will discuss sanctions, trade and a host of other issues at the upcoming summit in Japan, but the most consequential topic may surround the group’s emerging “de-risking” policy toward China, experts said this week. Several said they expect the G-7 countries to end the summit by releasing more information on the approach, although they also noted that not all Europeans yet agree with the strategy.
DOJ this week unsealed indictments of six people for trying to illegally ship sensitive items from the U.S., including shipments of dual-use technologies and aircraft parts to Russia, isostatic graphite to Iran and trade secrets to China. The charges are the first enforcement actions brought by the Disruptive Technology Strike Force, a group launched by DOJ and the Commerce Department in February to investigate and prosecute criminal export violations (see 2302160019).