United States Continues to Increase Sanctions Against Russia and Belarus

Alerts / March 14, 2022

On March 11, 2022, President Biden signed an Executive Order prohibiting exports of US-origin luxury goods to Russia and Belarus and Russian and Belarusian oligarchs, broadening the US import ban on goods originating in the Russian Federation, and prohibiting exports and reexports of US dollar-denominated banknotes to the Russian Government or any person located in Russia. In addition, the President sanctioned additional Russian elites and their family members and laid the framework for additional restrictions on new US investment in Russia. Further, the United States and the G-7 nations announced they would seek to prohibit the issuance of loans to Russia by multilateral financial institutions, such as the World Bank and International Monetary Fund. These moves supplement and complement the broad-ranging sanctions already imposed by the United States and its allies against the Russian Federation and Belarus because of their activities in Ukraine.

A. US Ban on Exports of Luxury Goods to Russia and Belarus

Effective March 11, 2022, a license must be obtained from the US Department of Commerce to export, reexport (i.e., shipment from one third country to another third country), or transfer (i.e., within a third country) certain US-origin luxury goods to Russia, Belarus and Russian and Belarusian oligarchs and other individuals that have been designated by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) as blocked persons and added to OFAC’s Specially Designated Nationals and Blocked Persons (SDN) List under seven (7) Executive Orders specified in the new rule. Specifically, the US Department of Commerce amended the Export Administration Regulations (EAR) to prohibit, absent a license from the Commerce Department, certain US-origin spirits, tobacco products, clothing items, jewelry, vehicles, antiques and other goods frequently purchased by Russian and Belarusian elites from going to Russia, Belarus or the designated individuals regardless of their location. The luxury goods subject to the license requirement are set forth in a new Supplement 5 to Part 746 of the EAR found at pages 15 through 34 of the new rule and are identified by Schedule B numbers. There is a policy of denial for review of license applications and the availability of license exceptions has been severely limited, although the new rule does permit completion of certain shipments that were en route on March 11.

B. Ban on Imports Broadened

The Executive Order also imposed an import ban on Russian Federation origin goods from several notable sectors of the Russian economy, including fish, seafood, and preparations; alcoholic beverages; and non-industrial diamonds, into the United States. As the import ban is on goods of Russian Federation origin, it is broader than just an import ban of goods from Russia. Goods of Russian Federation-origin include goods produced, manufactured, extracted, or processed in the Russian Federation that have not been incorporated or substantially transformed into a foreign-made product. As set forth in an FAQ from OFAC, the goods covered by the import ban are covered in designated subsections of the Harmonized Tariff Schedule of the United States (HTSUS). The import ban does not extend to US persons engaging in transactions to sell or re-direct shipments of goods covered by the import ban outside the United States that were previously destined for the United States. Also, OFAC issued Russia-related General License (GL) 17, which authorizes the importation of the banned goods through March 24, 2022.

C. Ban on Issuance of US Dollar-Denominated Banknotes to Russia

Effective March 11, the Executive Order also prohibits the export and reexport of US dollar-denominated banknotes to the Russian Government or any person located in Russia. However, pursuant to General License (GL) 18, certain noncommercial personal remittances are authorized, including withdrawals of US dollar-denominated banknotes via automated teller machines and the hand carrying of US dollar-denominated banknotes. Specifically, GL 18 authorizes “certain transactions that are ordinarily incident and necessary to the transfer of US dollar-denominated banknotes for noncommercial, personal remittances from: (i) the United States or a US person, wherever located, to an individual located in the Russian Federation or (ii) a US person who is an individual located in the Russian Federation.” OFAC has stated that “GL 18 does not authorize US financial institutions to process transactions for the provision of US dollar-denominated banknotes to foreign financial institutions for further distribution or supply to the Government of the Russian Federation or any person located in the Russian Federation.”

D. More Specially Designated National Designations

Also effective March 11, OFAC imposed full blocking sanctions on more Russian elites and their family members. Yuri Kovalchuk, who is reputed to be “Putin’s personal banker,” Duma members who sponsored legislation to recognize the so-called “Donetsk People’s Republic” and “Luhansk People’s Republic,” and certain executives of sanctioned financial institutions were added to OFAC’s SDN List. Designation on OFAC’s SDN List effectively cuts off the designated parties from the US financial system and trade with the United States as well as freezes their assets, property and interests in property in the United States or held or controlled by US persons.

E. Further Sanctions to Come

In addition, the Executive Order signaled that the US will broaden the ban on US person investment into certain sectors of the Russian economy. As was discussed in our Alert of March 8, US persons are banned from making new investments in the Russian energy sector. The March 11 Executive Order states that US persons will be prohibited from making “new investment in any sector of the Russian Federation economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State, by a United States person.” We expect to see specific sectors designated soon.

Further, the United States and the G-7 nations also announced that they would seek to prohibit the issuance of loans to Russia by multilateral financial institutions, such as the World Bank and International Monetary Fund, and take action to revoke important benefits of Russia’s membership in the World Trade Organization. Importantly, the Joint Statement emphasized that the multilateral sanctions imposed to date “already cover crypto-assets” and that efforts to prevent evasion of sanctions will ensure that digital assets cannot be leveraged to evade sanctions.


This Alert is a tool to help businesses, both US and foreign, identify whether their business with Russia, Belarus or Ukraine may now be subject to US export license requirements or involve newly sanctioned or blocked persons. The Alert cannot be relied upon as legal advice; the sanctions and export controls are complex, detailed, and continuing to develop and legal counsel should be sought for guidance on specific transactions.

Please do not hesitate to reach out to any member of our International Trade and National Security team or your BakerHostetler relationship partner with questions. BakerHostetler continues to closely monitor the situation.

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