US Issues More Russia Sanctions, Adds to Entity List

The new designations, announced by the Treasury and State departments, include Russia’s State Corporation Rostec, a “massive” state-owned technological, aerospace and military-industrial enterprise, and its subsidiaries. Others sanctioned include a Russian aerospace company and its affiliates, the country’s largest truck exporter, defense industry executives and government officials. Treasury also designated members of Russia’s Federal Security Service for running a sanctions evasion scheme designed to import electronics for the military, and sanctioned a private military company with close ties to Russia’s intelligence services.

Treasury also issued five new general licenses. GL 39 authorizes the wind down of transactions involving State Corporation Rostec and any entity it owns by 50% or more through 12:01 a.m. EST, Aug. 11. GL 40 authorizes certain transactions related to “civil aviation safety” involving a range of entities listed in the license. GL 41 authorizes certain transactions related to agricultural equipment produced by Nefaz and the Tutaev Motor Plant through 12:01 a.m. EST, Dec. 22. GL 42 authorizes certain transactions with the Russian Federal Security Service related to the use of “information technology products” in Russia, as long as the fees associated with the transactions are less than $5,000 per year.

GL 43 authorizes certain transactions involving Severstal and Nord Gold PLC through 12:01 a.m. EST, Aug. 31. The license also authorizes certain transactions necessary for the wind-down of certain derivative contracts through 12:01 a.m. EST, Aug. 31, as long as the contracts were entered into before June 2.

The U.S. also issued new export restrictions. Commerce’s Bureau of Industry and Security added 36 entities to the Entity List, including six for helping Russia evade U.S. export controls. The six entities, located in China, Lithuania, Russia, the U.K., Uzbekistan and Vietnam, have supported Russia’s defense industrial base before and after the country invaded Ukraine in February, BIS said. The entities, five of which have locations in China, will be subject to a license requirement for all items subject to the Export Administration Regulations, and BIS will review licenses under a policy of denial, except for food and medicine designated as EAR99, which will be subject to a case-by-case review policy. No license exceptions will be available. The additions took effect June 28.

The move is the first BIS enforcement action taken against companies for helping Russia backfill items subject to U.S. export restrictions. The entities are: Connec Electronic Ltd.; King Pai Technology Co., Ltd.; Sinno Electronics Co., Ltd.; Winninc Electronic; World Jetta; and Promcomplektlogistic Private Company. BIS also identified two Chinese entities that are already on the Entity List but also have helped Russia evade U.S. export controls: China Electronics Technology Group Corporation 13th Research Institute and Micro Electronic Technology.

“Our rules are clear, and we will not hesitate to take action when parties backfill in violation of them,” said Matthew Axelrod, BIS’s top export enforcement official. Thea Kendler, BIS’s assistant secretary for export administration, said the agency is “well positioned not only to impose restrictions but also to track and cut off private firms that may seek to support Russia.”

BIS and the Treasury Department’s Financial Crimes Enforcement Network also issued an alert to help industry identify and report export control evasion attempts related to Russia. The 10-page guidance includes a list of commodities of “special concern” that may be most frequently diverted and how banks and companies can identify “suspicious” activity. The alert also includes a list of “red flags” that may indicate export control evasion tactics.

BIS also added other entities to the list for supplying Iran with U.S.-origin electronics, and trying to acquire U.S. items for various “military applications” counter to U.S. national security, and others for diverting items subject to the EAR to certain nuclear, rocket systems and unmanned aerial vehicle end-uses. One entity was added for “preventing the accomplishment” of an end-use check, while others were added for acting “contrary” to U.S. foreign policy or national security interests.

Most of the entities are either subject to a license review policy of denial or presumption of denial, while some are subject to specific EAR license review policies for nuclear, rocket systems, UAV or chemical and biological weapons end-uses. No license exceptions will be available. Two entities -- Russia-based FASTAIR and Avcom-Technique -- are subject to a case-by-case license review policy

BIS also revised several existing entries to clarify they may be eligible for License Exception GOV because they are “integral to supporting the International Space Station,” the agency said. BIS also corrected an entry and made several other changes to the list, including removing two entities: China-based Nanchang O-Film Tech and Pakistan-based Mushko Electronics Pvt. Ltd.

It also revised the entry for China National Offshore Oil Corporation Ltd., added to the list last year (see 2101140003), after receiving “numerous questions” about how a license requirement applies to the entity. The entry previously included a license requirement exclusion for certain joint ventures “not operating in the South China Sea,” but it now includes specific coordinates and a map to better show the area subject to the requirement. “This modification provides greater clarity, thus reducing the compliance burden on the public,” BIS said.

All exports that now require a license as a result of these changes that were aboard a carrier to a port as of June 28 may proceed to their destinations under the previous eligibility, BIS said.

The 36 new entities, added under 41 entries because some entities were added under multiple destinations, are:

China

• At One Electronics
• Beijing Highlander Digital Technology Co. Ltd
• Blueschip Company Limited
• Chuangxinda Electronics-Tech Co.
• Chen Zhouqian
• China Academy of Science – Shenyang Institute of Automation
• China State Shipbuilding Corp. – Systems Engineering Research Institute
• Chipwinone Electronics Co., Limited
• Connec Electronic Ltd.
• CSSC Electronic Technology
• Ehang International Trade Limited
• Gaohui HK Electronics
• Highlander (Hong Kong) Maritime Navigation Science and Technology LLC
• ICSOSO Electronics Co. Ltd.
• King Pai Technology Co., Ltd.
• Laurel Technologies Co. Ltd.
• Sansha Highlander Marine Information Technology Co. Ltd.
• Sanya Highlander Huanyu Ocean Information Technology Corporation
• Shenzhen Avanlane
• Sinno Electronics Co., Ltd.
• Suntric Company Limited
• Wayne Weipeng
• Winninc Electronic
• World Jetta (H.K.) Logistics Limited
• Yiru Zhuang

Lithuania

• Sinno Electronics

Pakistan

• Industrial Process Automation
• Jim Corporation
• Maira Trade International

Russia

• Avcom-Technique
• FASTAIR
• Intertech Rus LLC
• KingPai Technology Int’l Co., Limited
• Laboratory Systems and Technologies LTD

Singapore

• Beijing Highlander Digital Technology Co., Ltd.

United Arab Emirates

• Al Noor Alaili Trading Company
• Gulf Trade House FZC
• Scott Technologies FZE

U.K.

• Connec Electronic

Uzbekistan

• Promcomplektlogistic Private Company

Vietnam

• KingPai Technology Int’l Co., Limited.