More than a month after a British appellate court suggested the U.K. government could treat every Russian public and private entity as a sanctioned party because they can potentially be controlled by Russian President Vladimir Putin, a U.K. sanctions agency said it doesn’t plan to enforce its sanctions in that manner. The court ruling had caused widespread concern among the U.K. legal and business community, but the U.K.’s latest guidance means that uncertainty “is effectively resolved,” said law firm Osborne Clarke.
Ian Cohen
Ian Cohen, Deputy Managing Editor, is a reporter with Export Compliance Daily and its sister publications International Trade Today and Trade Law Daily, where he covers export controls, sanctions and international trade issues. He previously worked as a local government reporter in South Florida. Ian graduated with a journalism degree from the University of Florida in 2017 and lives in Washington, D.C. He joined the staff of Warren Communications News in 2019.
A U.S. semiconductor company and a Canadian electronics component manufacturer are locked in a legal battle that could have implications for the export compliance responsibilities of sellers and buyers, particularly within the chip industry.
A recent ruling by a U.K. appellate court “sent the sanctions legal community into a bit of a tailspin” after it appeared to pave the way for the government to treat every Russian public and private entity as a sanctioned party, said Daniel Martin, a sanctions lawyer with HFW. Although the U.K. has since clarified that its sanctions aren’t necessarily meant to apply to every Russian company, Martin said questions remain, including whether banks now will be even less willing to handle Russia-related transactions, whether U.K. lawyers will continue to be able to participate in Russian-related proceedings, and whether similar logic could apply to U.K. sanctions against other countries.
DOJ is looking to apply its recently revamped corporate enforcement principles “across the entire Department,” including in cases involving the Committee on Foreign Investment in the U.S., Deputy Attorney General Lisa Monaco said during an event last week held by the Society of Corporate Compliance and Ethics. Monaco said companies “should expect more to come on this topic” as DOJ extends its policies “beyond the criminal context to other enforcement resolutions -- from breaches of affirmative civil case settlements to violations of CFIUS mitigation agreements or orders.”
The U.S. unsealed an indictment this week against a Russian citizen and Hong Kong resident who helped illegally procure U.S. dual-use microelectronics with military applications for Russian end users. Maxim Marchenko used a network of shell companies to source the items from the U.S., DOJ said, giving false information to American distributors to assure them the products weren’t destined for Russia. Marchenko was charged with conspiring to defraud the U.S. along with money laundering, wire fraud and smuggling offenses.
A new U.K. law that could prevent lawyers from providing certain legal services in the context of Russia sanctions is causing uncertainty within the legal industry, law firms said. Baker McKenzie said the legal community is working with U.K. authorities to “clarify the scope of the new sanctions measures,” but “in lieu of any imminent published guidance, businesses should assess” their in-house legal teams, particularly if they’re providing legal advisory services from the U.K.
A former board member of a Russian state-owned bank asked a federal court to order the U.S. to remove her from a U.S. sanctions list, saying there is “no factual basis” that supports her listing. In a complaint recently filed with the U.S. District Court for the District of Columbia, Elena Titova, a dual Russian and U.K. citizen, said she resigned from her position eight days after Russia’s invasion of Ukraine last year but was still added to the Treasury Department’s Specially Designated Nationals List even though she hasn’t been designated by any “other nation in the world.”
An Iranian car manufacturer is asking a federal court to order the Treasury Department to remove it from a U.S. sanctions list, saying Treasury has “no real intention of rescinding” its designation no matter what evidence it is shown. Bahman Group, which was first sanctioned in 2018, said Treasury continues to “manufacture a pretext” to maintain sanctions against the company despite being provided proof that it’s no longer engaging in sanctionable activities.
Germany charged four managers of spyware company FinFisher with intentionally violating dual-use export controls after they sold surveillance products, without licenses, to countries outside the EU. The managers of the FinFisher group of companies, which were some of the “world's leading” spyware firms before declaring insolvency last year, never “even applied for” export licenses from German authorities and tried to evade detection, Munich’s public prosecutor announced this week, according to an unofficial translation.
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).