On June 28, 2023, the United States Department of the Treasury's Office of Foreign Assets Control ("OFAC") and His Majesty's Treasury's Office of Financial Sanctions Implementation ("OFSI") published a joint Humanitarian Assistance and Food Security Fact Sheet ("Joint Fact Sheet") that provides clarity on U.S. and UK Russia-related sanctions and the relevant authorizations, exceptions, and public guidance. Per OFAC, OFAC and OFSI are continuing to work together to reduce the impacts of Russia's war on global food supplies and prices along with addressing humanitarian concerns associated with sanctions. The Joint Fact Sheet is intended for use as a guide for financial institutions, companies engaged in agricultural trade, humanitarian actors, non-governmental organizations and other relevant entities when engaging in transactions that may be impacted by sanctions.
The first question addressed by the Joint Fact Sheet is whether U.S. and/or UK Russia-related sanctions provide exceptions for non-governmental organizations or international organizations that are providing humanitarian assistance. The Joint Fact Sheet generally states that activities by non-governmental organizations or international organizations that provide relief to people impacted by Russia's war against Ukraine are not the target of either U.S. or UK sanctions, and gives further analysis from both a U.S. and UK perspective:
U.S. Response
Among other things, the U.S. stated that to the extent that activities by non-governmental organizations or humanitarian assistance by non-governmental organizations or international organizations may otherwise be prohibited, Section 587.510 of the Russian Harmful Foreign Activities Sanctions Regulations provides a general license stating that activities that would otherwise be prohibited are authorized for the conduct of the official business of the following entities: the United Nations, the International Centre for Settlement of Investment Disputes and the Multilateral Investment Guarantee Agency, the African Development Bank Group, the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank Group, the International Committee of the Red Cross, and the International Federation of Red Cross and Red Crescent Societies. OFAC also noted that the U.S. has issued multiple general licenses regarding the provision of humanitarian assistance to the Crimea region of Ukraine alongside the so-called Donetsk People's Republic ("DPR") and Luhansk People's Republic ("LPR").
UK Response
OFSI issued GL INT/2022/1947936, which covers humanitarian activities and other activities that support basic human needs related to the conflict in Ukraine, along with the DPR and LPR. While the specific conditions are set out in the license, the license generally permits specified humanitarian organizations and their service providers to carry out any activity necessary for the delivery of these activities.
The second question addressed by the Joint Fact Sheet is whether U.S. and/or UK financial institutions are permitted to process transactions related to the exportation of agricultural commodities, medicine, or medical devices to, from, transiting, or related to Russia.
U.S. Response
The U.S. has not imposed sanctions on the exportation of agricultural commodities, medicine or medical devices to, from, or related to Russia, and has issued Russia-related GL 6C which authorizes certain transactions related to these items. OFAC notes that U.S. financial institutions are authorized to process transactions that are authorized by GL 6C, and that foreign financial institutions may engage in or facilitate transactions that would be authorized by a U.S. person under GL 6C without exposure to sanctions.
UK Response
The UK states that this activity is permitted where the finances are being provided in the context of humanitarian delivery of other activities that support basic human needs.
The third and final question addressed in the Joint Fact Sheet is if U.S. and/or UK financial institutions can process transactions involving Joint Stock Company Russian Agricultural Bank ("Russian Agricultural Bank") related to the exportation of agricultural commodities to, from, transiting, or related to Russia.
U.S. Response
OFAC noted that while Russian Agricultural Bank is not blocked as an SDN, U.S. persons are subject to certain restrictions on dealing in debt and equity of Russian Agricultural Bank and should ensure that the payment terms provided to Russian Agricultural Bank comport with these restrictions on dealing in tis debt and equity. These specific restrictions can be found in Directive 1 and Directive 3 under E.O. 14024.
UK Response
OFSI stated that where Russian Agricultural Bank is subject to an asset freeze under GL INT/2022/2349952, Russian Regulations are not contravened by Designated Persons transferring Funds or Economic Resources to an exporter, producer, seller, or transporter of Agricultural Commodities, DBT Licence Holders, or UK Corporates in connection with the export, sale, or production of Agricultural Commodities. The license also allowed a designated person to receive Funds or Economic Resources from an exporter, producer, seller or transporter of Agricultural Commodities, DBT Licence Holders, UK Corporates, Relevant Institutions or Insurance Providers in connection with the export, sale, or production of Agricultural Commodities, and that these permissions extend to Russian Agricultural Bank as a Designated Person.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
