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Archive for March, 2014

Mar

27

BIS Halts Processing on All Export Licenses for Russia

Posted by Clif Burns at 12:28 pm on March 27, 2014

A notice that further processing of all export licenses for CCL items to Russia just appeared in the last several days in the slider on the home page of the website for the Bureau of Industry and Security (“BIS”):

(I’m posting a screenshot because there is no reliable permalink to the slider image).

Existing licenses are not affected; only license applications that were not granted as of March 1, 2014, are covered by this policy. Compare this to the U.K. action which suspended all existing licenses and applications for military and dual-use items destined for the Russian military “which could be or are being deployed against Ukraine.” The State Department has not yet taken action on licenses and applications for USML items to Russia, although possible action in that regard is rumored.

UPDATE: DDTC has just posted this on the home page of its website:

The Department of State has placed a hold on the issuance of licenses that would authorize the export of defense articles and defense services to Russia. State will continue this practice until further notice.

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Mar

25

OFAC: Keeping Us Safe from MOOCs

Posted by Clif Burns at 5:24 pm on March 25, 2014

Category: Cuba Sanctions • Economic Sanctions • Iran Sanctions • Sudan • Syria

By AristÃ³teles Sandoval [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons http://commons.wikimedia.org/wiki/File%3A16-02-2011_Guadalajara_Libre_en_Palacio_Municipal.jpg This blog previously reported on the impact of OFAC sanctions on the Massive Open Online Courses, quaintly known as MOOCs, offered by the for-profit Coursera. The sanctions have led Coursera to block students with IP addresses from Iran, Cuba and Sudan, a half-hearted attempt by the company to comply with U.S. sanctions. Â Those sanctions, in general, prevent providing services to nationals of blocked countries even outside their home countries, so offering MOOCs to Iranians in, say, Germany, would be equally problematic. (Coursera gave Syrian students a reprieve relying, rather questionably, on an exemption in Syria General License 11AÂ forÂ educational exports by NGOs).

Last week, the Office of Foreign Assets Control gave Iranian students, both inside and outside Iran, a partial reprieve from the ban on MOOCs when it issued Iran General License G. That license permits enrollment of Iranians, both in and out of Iran, in MOOCs

provided that the courses are the equivalent of courses ordinarily required for the completion of undergraduate degree programs in the humanities, social sciences, law, or business, or are introductory undergraduate level science, technology, engineering, or math courses ordinarily required for the completion of undergraduate degree programs in the humanities, social sciences, law, or business.

Sadly, there was no happiness in Coursera-ville, because the license is restricted to “accredited graduate and undergraduate degree-granting academic institutions.” Not all of Coursera’s courses are offered by accredited academic institutions, so some of its course offering will not benefit from this general license.

Another beneficiary of the new general license would appear to be EdX, the MOOC platform founded by Harvard and MIT. EdX partners with other accredited academic institutions that provide the various offerings made available by EdX. One significant difference between EdX and Coursera is that EdX sought and obtained a license to provide MOOCs to students in Â Cuba, Iran and Sudan. Apparently that license did not cover provision of STEM courses, i.e., courses in science, technology, engineering and mathematics, without specific approval by OFAC, according to this Harvard Crimson article. Â That article went on to noteÂ the refusal of OFAC to permit a MOOC entitled “Flight Vehicle Aerodynamics” taught by MIT faculty.

This would mean that EdX and Coursera no longer need specific licenses for Iranian students to participate in courses taught by accredited institutions other than certain advanced STEM courses. However, licenses will still be required to initiate Cuban and Sudanese students into the intricacies of George Eliot’s Middlemarch or the structure of French symbolist poetry. (It is well known that familiarity with Eliot and ValÃ©ry are mere stepping stones to terrorist and anti-American activity, so we will be safe from literary Cuban and Sudanese terrorists, at least for the moment.) This General License, however, probably has no effect on the “Flight Vehicle Aerodynamics” course, because although it is far from clear what is meant by STEM courts “ordinarily required for the completion of undergraduate degree programs in the humanities, social sciences, law, or business,” it is probably safe to assume that “Flight Vehicle Aerodynamics” is not among them.

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Mar

24

Issuing Credit Cards to Russian Oligarchs Again: Priceless

Posted by Clif Burns at 5:05 pm on March 24, 2014

Category: OFAC • Russia Sanctions

SMP Bank Credit Cards via http://smpbank.ru/uploads/show/c20c2f8bd8d7d2550bdd3b4c38bbdd00839d8fd2.jpg [Fair Use] Last week, this blog reported that the effect of the Russia sanctions was, at least in certain instance, the imposition of sanctions on certain parties not named in the designation lists. This would occur due to OFAC’s rule that treats entities not named in specific designation orders as blocked if the unnamed entity is owned 50 percent or greater by parties blocked in a designation order (or as a result of the 50 percent rule). In this regard, we noted that SMP Bank in Russia was blocked because of the ownership interests of Arkady and Boris Rotenberg in the bank. Both Rotenbergs were specifically named in designation orders. As a result, MasterCard and Visa stopped allowing their credit cards to be processed through SMP Bank.

Well, today Visa and MasterCard had a change of heart and permitted SMP Bank to continue serving its Russian oligarchs and other customers. Although details of this change of heart are scarce, this blog has learned that the reason for this has to do with informal guidance from OFAC. Since neither Arkady nor Boris Rotenberg individually hold 50 percent or greater in SMP Bank, their interests are not aggregated merely because of their family relationship. This does not, however, preclude OFAC from adding SMB Bank by name to a future designation list based on the participation and control of the brothers Rotenberg.

So, for the moment at least, oligarchs can go back to charging their purchases of Almas Beluga caviar once again.

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Mar

21

Beware the Fifty Percent Rule

Posted by Clif Burns at 6:15 pm on March 21, 2014

Category: Russia Sanctions

Central Branch, Bank Rossiya via http://web.abr.ru/moscow/office/4375/ [Fair Use] One of the challenges in compliance with the requirement to refrain from doing business with individuals and entities sanctioned under the new Russian sanctions (or any other sanctions program for that matter) is dealing with the so-called 50 percent rule used by the Office of Foreign Assets Control in enforcing sanctions programs. Under that rule, any entity controlled by a designated individual or entity, or in which a designated entity or individual owns a 50 percent or greater interest, is itself deemed to be designated. Even though this entity is not specifically named or designated, the effect of this rule is to require U.S. persons to block its assets and to refrain from engaging in transaction with this entity.

That means, of course, that compliance requires you to Â trace all the way up the ladder the ownership structure of any entity with which you are doing business to assure that a designated party does not have an ownership interest that would cause the entity you are dealing with to also be subject to sanctions. The designated entity could be three or more layers up, and as long each company in the chain has at least 50 percent of the company below, the bottom layer company will also be designated.

With that principal in mind, it is not surprising that the new Russia/Ukraine designations have effectively designated parties not actually appearing by name on the lists of sanctioned parties. The first such instance I’ve discovered is Sobinbank which is owned by Rossiya Bank. The second is SMP Bank which is owned by Arkady and Boris Rotenberg, both of whom were named as individuals covered by the Russia sanctions.

Both Visa and Mastercard have cut off dealings with both Sobinbank and SMP Bank because of their connections to individuals and entities designated under the Russia sanctions.

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Mar

20

More Designations under the Russia/Ukraine Sanctions

Posted by Clif Burns at 8:19 pm on March 20, 2014

Category: Russia Designations

There has been considerable interest among clients and readers to keep abreast of the designations under the new Russia sanctions program. As a result, we now have a new category dedicated solely to these new designations which will be updated promptly as the designations are made. Click on the “Russia Designations” category in the right-hand column and it will take you to all posts containing the designated names and entities so far. You can also subscribe to email notices from us that will contain the names of designated persons and entities shortly after they announced. Click this link to subscribe. There is also a link in the column on the right to subscribe to Russia designation emails.

Here is the complete current list including both lists of designated persons and entities that have been announced so far.

AKSYONOV, Sergey Valeryevich (a.k.a. AKSENOV, Sergei; a.k.a. AKSYONOV, Sergei; a.k.a. AKSYONOV, Sergey; a.k.a. AKSYONOV, Sergiy; a.k.a. AKSYONOV, Serhiy Valeryevich); DOB 26 Nov 1972; POB Balti, Moldova (individual) [UKRAINE].

GLAZYEV, Sergey (a.k.a. GLAZYEV, Sergei); DOB 01 Jan 1961; POB Zaporozhye, Ukraine; Presidential Advisor (individual) [UKRAINE2].

KLISHAS, Andrei (a.k.a. KLISHAS, Andrey); DOB 09 Nov 1972; POB Yekaterinburg, Sverdlovsk, Russia; Chairman of the Russian Federation Council Committee on Constitutional Law, Judicial and Legal Affairs and the Development of Civil Society (individual) [UKRAINE2].

KONSTANTINOV, Vladimir Andreyevich, Crimea, Ukraine; DOB 19 Nov 1956 (individual) [UKRAINE].

MATVIYENKO, Valentina Ivanovna; DOB 07 Apr 1949; POB Shepetovka, Khmelnitsky, Ukraine; Federation Council Speaker; Chairman of the Russian Federation Council (individual) [UKRAINE2].

MEDVEDCHUK, Viktor; DOB 07 Aug 1954; POB Pochyot, Krasnoyarsk Krai, Russia (individual) [UKRAINE].

MIZULINA, Yelena (a.k.a. MIZULINA, Elena; a.k.a. MIZULINA, Elena Borisovna; a.k.a. MIZULINA, Yelena Borisovna); DOB 09 Dec 1954; POB Bui, Kostroma, Russia; State Duma Deputy; Chairman of the State Duma Committee on Family, Women and Children (individual) [UKRAINE2].

ROGOZIN, Dmitry Olegovich (a.k.a. ROGOZIN, Dmitriy; a.k.a. ROGOZIN, Dmitry); DOB 21 Dec 1963; POB Moscow, Russia; Deputy Prime Minister of the Russian Federation (individual) [UKRAINE2].

SLUTSKY, Leonid (a.k.a. SLUTSKIY, Leonid; a.k.a. SLUTSKY, Leonid E.; a.k.a. SLUTSKY, Leonid Eduardovich); DOB 04 Jan 1968; State Duma Deputy; Chairman of the Committee on Affairs of the Commonwealth of Independent States (CIS); First Deputy Chairman of the Committee on International Affairs; Chairman of the Russian World Fund Administration (individual) [UKRAINE2].

SURKOV, Vladislav Yurievich; DOB 21 Sep 1964; POB Solntsevo, Lipetsk, Russia; Presidential Aide (individual) [UKRAINE2].

YANUKOVYCH, Viktor Fedorovych; DOB 09 Jul 1950; POB Yenakiyeve, Donetsk Region, Ukraine; alt. POB Makiivka, Donbas, Ukraine; Former President of Ukraine (individual) [UKRAINE].

BUSHMIN, Evgeni Viktorovich (a.k.a. BUSHMIN, Evgeny; a.k.a. BUSHMIN, Yevgeny); DOB 10 Oct 1958; POB Lopatino, Sergachiisky Region, Russia; Deputy Speaker of the Federation Council of the Russian Federation; Chairman of the Council of the Federation Budget and Financial Markets Committee (individual) [UKRAINE2].

DZHABAROV, Vladimir Michailovich; DOB 29 Sep 1952; First Deputy Chairman of the International Affairs Committee of the Federation Council of the Russian Federation (individual) [UKRAINE2].

FURSENKO, Andrei Alexandrovich (a.k.a. FURSENKO, Andrei; a.k.a. FURSENKO, Andrey); DOB 17 Jul 1949; POB St. Petersburg, Russia; Aide to the President of the Russian Federation (individual) [UKRAINE2].

GROMOV, Alexei; DOB 1960; POB Zagorsk (Sergiev, Posad), Moscow Region, Russia; First Deputy Chief of Staff of the Presidential Executive Office; First Deputy Head of Presidential Administration; First Deputy Presidential Chief of Staff (individual) [UKRAINE2].

IVANOV, Sergei (a.k.a. IVANOV, Sergey); DOB 31 Jan 1953; POB St. Petersburg, Russia; Chief of Staff of the Presidential Executive Office (individual) [UKRAINE2].

IVANOV, Victor Petrovich (a.k.a. IVANOV, Viktor); DOB 12 May 1950; alt. DOB 1952; POB Novgorod, Russia (individual) [UKRAINE2].

KOZHIN, Vladimir Igorevich; DOB 28 Feb 1959; POB Troitsk, Chelyabinsk Oblast, Russia (individual) [UKRAINE2].

KOVALCHUK, Yuri Valentinovich (a.k.a. KOVALCHUK, Yury Valentinovich); DOB 25 Jul 1951; POB Saint Petersburg, Russia (individual) [UKRAINE2].

MIRONOV, Sergei Mikhailovich (a.k.a. MIRONOV, Sergei); DOB 14 Feb 1953; POB Pushkin, Saint Petersburg, Russia; Member of the Council of the State Duma; Leader of A Just Russia Party; Member of the State Duma Committee on Housing Policy and Housing and Communal Services (individual) [UKRAINE2].

NARYSHKIN, Sergey Yevgenyevich (a.k.a. NARYSHKIN, Sergei); DOB 27 Oct 1954; POB Saint Petersburg, Russia (individual) [UKRAINE2].

OZEROV, Viktor Alekseevich (a.k.a. OZEROV, Viktor Alexeyevich); DOB 05 Jan 1958; POB Abakan, Khakassia, Russia; Chairman of the Security and Defense Federation Council of the Russian Federation (individual) [UKRAINE2].

PANTELEEV, Oleg Evgenevich (a.k.a. PANTELEEV, Oleg); DOB 21 Jul 1952; POB Zhitnikovskoe, Kurgan Region, Russia; First Deputy Chairman of the Committee on Parliamentary Issues (individual) [UKRAINE2].

ROTENBERG, Arkady; DOB 15 Dec 1951; POB St. Petersburg, Russia (individual) [UKRAINE2].

ROTENBERG, Boris; DOB 03 Jan 1957; POB St. Petersburg, Russia (individual) [UKRAINE2].

RYZHKOV, Nikolai Ivanovich (a.k.a. RYZHKOV, Nikolai); DOB 28 Sep 1929; POB Duleevka, Donetsk Region, Ukraine; Senator in the Russian Upper House of Parliament; Member of the Committee for Federal Issues, Regional Politics and the North of the Federation Council of the Russian Federation (individual) [UKRAINE2].

SERGUN, Igor Dmitrievich; DOB 28 Mar 1957; Lieutenant General; Chief of the Main Directorate of the General Staff (GRU); Deputy Chief of the General Staff (individual) [UKRAINE2].

TIMCHENKO, Gennady (a.k.a. TIMCHENKO, Gennadiy Nikolayevich; a.k.a. TIMCHENKO, Gennady Nikolayevich; a.k.a. TIMTCHENKO, Guennadi), Geneva, Switzerland; DOB 09 Nov 1952; POB Leninakan, Armenia; alt. POB Gyumri, Armenia; nationality Finland; alt. nationality Russia; alt. nationality Armenia (individual) [UKRAINE2].

TOTOONOV, Aleksandr Borisovich (a.k.a. TOTOONOV, Alexander; a.k.a. TOTOONOV, Alexander B.); DOB 03 Mar 1957; POB Ordzhonikidze, North Ossetia, Russia; alt. POB Vladikavkaz, North Ossetia, Russia; Member of the Committee on Culture, Science, and Information, Federation Council of the Russian Federation (individual) [UKRAINE2].

YAKUNIN, Vladimir; DOB 30 Jun 1948; POB Vladimir Oblast, Russia (individual) [UKRAINE2].

ZHELEZNYAK, Sergei Vladimirovich (a.k.a. ZHELEZNYAK, Sergei; a.k.a. ZHELEZNYAK, Sergey); DOB 30 Jul 1970; POB Saint Petersburg, Russia; Deputy Speaker of the State Duma of the Russian Federation (individual) [UKRAINE2].

The following entity has been added to OFAC’s SDN List:

BANK ROSSIYA (f.k.a. AKTSIONERNY BANK RUSSIAN FEDERATION), 2 Liter A Pl. Rastrelli, Saint Petersburg 191124, Russia; SWIFT/BIC ROSY RU 2P; Website www.abr.ru; Email Address [email protected] [UKRAINE2].

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