OFAC Guidance: On October 31, 2022, the Office of Foreign Assets Control ("OFAC") published Frequently Asked Question ("FAQ") 1094, confirming that Russian crude oil loaded onto a vessel at the port of loading for maritime transport prior to December 5, 2022, is not subject to a to-be-determined oil price cap, provided that the oil is unloaded at port of destination prior to January 19, 2023. FAQ 1094 also confirms that U.S. service providers can continue to provide services related to the maritime transport of Russian crude oil purchased above the price cap if it is loaded onto a vessel at the port of loading prior to 12:01 am December 5, 2022, and unloaded at the port of destination prior to January 19, 2023, at 12:01 am.
UK General License Updates:
On October 28, 2022, the UK released two General Licenses under its Russia and Belarus sanctions regimes. The first, General License INT/2022/2252300, permits designated persons ("DPs") and entities owned or controlled by DPs to pay legal fees to law firms and counsel until its expiration on April 28, 2023. General License INT/2022/2252300 also authorizes UK financial institutions to process payments authorized by the license. The general license placed a cap of £500,000, VAT included, on pre- and post-designation legal fees, a £1,500-per-hour cap for "Counsel" rates (including VAT), and a schedule of maximum permissible rates for "Legal Advisers."
On October 30, 2022, the UK issued a second license, General License INT/2022/2305324, "Securing Energy for Europe", which permits a person (an individual, or a body of persons corporate or unincorporated) to grant a "Category 5 loan," or enter into an arrangement to grant such a loan, to Gazprom Germania or any of its Subsidiaries, and to carry out any activity necessary to effect this, including, but not limited to, loans for certain listed purposes relating to, among other things, gas and power trading, purchases of gas, and clearing services relating to Gazprom Germania.
New UK Designations: On November 02, 2022, the UK designated Alexander Abramov and Alexander Frolov, Russian oligarchs who have been targeted for their involvement in the extractive, transport, and construction sectors. The UK also designated Airat Shaimiev and Albert Shigabutdino, the co-owners of the TAIF Group, for controlling 96% of Russia's chemical and petrochemical processing, including the production of crude oil.
New UK Russian Sanctions Package: On October 29, 2022, the UK updated its Russian and Belarus sanctions regimes via Amendment 15, which expands the types of loans, to include so-called "category five loans," and credit now prohibited from being granted directly, or indirectly, to all Russian-owned companies, both in and outside of Russia, if such loans or credit have a maturity exceeding 30 days. Category five loans may be extended to companies incorporated or constituted outside of Russia that were in existence on October 29, 2022, or entities owned by such a person. These new prohibitions effectively replace the EU's previous restrictions on "category three loans," as of October 29, 2022. Amendment 15 also prohibits the export, supply, and delivery of all goods critical for the functioning of the Russian economy. Amendment 15 further prohibits the export of G7 items, and prohibits the import into the UK of Russian gold, including gold processed in a third country, and liquid natural gas that was exported from Russia on certain dates.
Consumer Appliances Imports Into Countries Neighboring Russia Spark Export Control Evasion Concerns: On October 29, 2022, media outlets reported that a sudden spike in European exports of washing machines, refrigerators, and electric breast pumps to countries neighboring Russia, may be part of a Russian efforts to circumvent export controls to acquire chips and other components necessary for Russia's military equipment. EU trade data reported that the export of electric breast pumps to Armenia has nearly tripled in the first half of 2022, despite a 4.3% drop in the country's birth rate, and the country imported more washing machines from the EU during the first eight months of 2022 than the past two years combined. Similarly, Kazakhstan reportedly imported $21.4 million worth of refrigerators from the EU through August 2022, more than triple the amount for the same period last year, indicative of Russian efforts to evade EU's restrictive measures.
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