US Sectoral Sanctions

Basic Framework - US/EU United States - Treasury Dep't (Office of Foreign Assets Control - OFAC) "sectoral" sanction Directives as amended to date, most recently in Aug. 2018 (based on EO 13662 from March 2014) - Generally applies only to "US persons" (citizens and US permanent residents) wherever located, any persons / entities in the US, US companies (including branches abroad), and US subs/branches of foreign companies But may also be applied to non-US persons anywhere, for activity that causes (i) US persons to violate or (ii) a violation to occur within the US - this expansive application being somewhat controversial And all the SDN designations / sanctions are also under OFAC (based on EOS 13660, 13661 etc. of 2014) And Treasury's further expansive secondary sanctions authorities under CAATSA (slides 47-61) Feb. 2020 Notice (by President Trump) of Continuation of the National Emergency with Respect to Ukraine - routine annual required extension on which the relevant EOs are based Commerce Dep't (Bureau of Industry and Security - BIS) export restrictions - 15 CFR §746.5, "Russian Industry Sector Sanctions", amended most recently Dec. 2017 Applies to activities of any "US person" or within the US And also to US-origin goods, technology, software etc. or foreign-produced goods with sufficient US-origin controlled content, wherever located See also 15 CFR §744.10 (Restriction on certain entities in Russia), §744.19 (Denial of BIS licenses for sanctioned countries or entities), and §744.21 (Restrictions on military end users in Russia - see slide 13) Note: there may well be overlapping OFAC and BIS licensing and enforcement authority - and thus thorough analysis of both sets of rules (and perhaps authorizations from both agencies) re same proposed transaction may be required in some cases State Dep't - Has primary authority for certain sections of CAATSA (see slide 48); and contributing authority for most other Russia-related sanctions (now including those under the CBW Act - see next slide) Also has had / will continue to have important behind-the-scenes role in inter-agency consultations on Treasury / Commerce application of OFAC- and BIS-administered sanctions in general Morgan Lewis 16

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