russia-ukraine sanctions: what you need to know live webcast

Speaker Firms and Organization:

Husch Blackwell LLPLinda Tiller

Leader, Customs & Trade Practice

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Presented By:

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Partner Firms:

Greenberg Traurig, LLPRenee LatourShareholder

Hughes Hubbard & Reed LLPF. Amanda DeBusk

Partner

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Partner Firms:

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Hughes Hubbard & Reed LLP is an international law firm ranked for the ninth year, including five years in a row as the top-ranked New York-based firm, on The

American Lawyer’s A-List of what the magazine calls “the top firms among the nation’s legal elite.” Our

experienced practitioners advise and represent clients in over 30 specialized practices from offices in New York, Washington, D.C., Los Angeles, Miami, Jersey

City,Kansas City, Paris and Tokyo.

With offices in 15 U.S. cities and in London, Husch Blackwell has a heritage of nearly a century of

providing exceptional legal service. To meet client demands for the highest level of legal services,

customized to fit their specific needs, Husch Blackwell is structured by industry rather than by practice. At Husch Blackwell, teams of lawyers with a depth of

experience within a particular industry work together, across practice specialties, to deliver comprehensive solutions to help clients achieve their business goals.

Partners, associates and legal professionals collaborate closely on client matters, so that each

client benefits from the collective expertise of the firm.

Greenberg Traurig, LLP is an international, multi-practice law firm with approximately 1750 attorneys serving clients from 36 offices in the United States,

Latin America, Europe, Asia, and the Middle East. The firm is among the “Power Elite” in the 2014 BTI Client

Relationship Scorecard report, which assesses the nature and strength of law firms' client relationships.

For additional information, please visit www.gtlaw.com.

http://theknowledgegroup.org/%22http:/www.gtlaw.com/%22

Brief Speaker Bios:

F. Amanda DeBusk

F. Amanda DeBusk is a partner and Chair of the International Trade Department at Hughes, Hubbard & Reed LLP. Amanda concentrates in export controls and sanctions, trade remedies, customs, Foreign Corrupt Practices Act, and market access. She has advised clients in a wide variety of industries and has handled trade matters involving almost all parts of the world.

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Linda Tiller

Linda leads the firm’s Customs & Trade practice and is a member of the Technology, Manufacturing & Transportation team. She assists manufacturers and distributors in all corners of the world and represents a diverse clientele, such as suppliers to the oil and gas industry, importers of a variety of consumer and industrial products, and exporters of defense articles and technology. Her engagements cover a wide range of trade matters, including advising on U.S. economic sanctions, import seizures, export licensing, antidumping cases, trade compliance and foreign distribution.

► For more information about the speakers, you can visit: http://theknowledgegroup.org/event_name/russia-ukraine-sanctions-what-you-need-to-know-live-webcast/

Renee Latour

Renee A. Latour focuses her practice on international trade regulation with an emphasis on compliance with U.S. export controls and economic sanctions. Renee assists clients on matters related to international trade that arise under the jurisdiction of various U.S. governmental agencies, including the Departments of Commerce, State, Treasury, and Defense. She advises on U.S. export control laws, anti-boycott laws and special sanctions maintained by the U.S. Government against various countries including Iran, Cuba and Sudan.

http://theknowledgegroup.org/event_name/russia-ukraine-sanctions-what-you-need-to-know-live-webcast/

http://theknowledgegroup.org/event_name/russia-ukraine-sanctions-what-you-need-to-know-live-webcast/

In a two hour live webcast, a panel of thought leaders and practitioners assembled by The Knowledge Group will discuss the significant and latest issues regarding the sanctions imposed by the U.S. government against Russia and Ukraine for the former’s actions deemed as a violation of the sovereignty and territorial integrity of Ukraine.

Some of the major topics that will be covered in this course are:

• The broad scope and complexity of the sanctions, with a focus on their impact on the business community

• A look at the major Russian companies and banks that are sanctioned• An in depth discussion of the sectoral sanctions against the Russian energy, financial

and defense sectors• A comparison of US and EU sanctions• Predictions of what lies ahead

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Featured Speakers:

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Moderator:

F. Amanda DeBuskPartnerHughes Hubbard & Reed LLP

SEGMENT 3:

Linda TillerLeader, Customs & Trade PracticeHusch Blackwell LLP

SEGMENT 2:

Renee LatourShareholderGreenberg Traurig, LLP

Introduction

F. Amanda DeBusk is a partner and Chair of the International Trade Department at Hughes, Hubbard & Reed LLP. Amanda

concentrates in export controls and sanctions, trade remedies, customs, Foreign Corrupt Practices Act, and market access.

She has advised clients in a wide variety of industries and has handled trade matters involving almost all parts of the

world.

Amanda served as Assistant Secretary for Export Enforcement at the U.S. Commerce Department. In this capacity, she

was in charge of enforcing export controls and anti-boycott regulations, oversaw eight field offices and the investigations

they handled, was responsible for a number of high-profile criminal investigations, negotiated agreements with foreign

governments, had leadership responsibility for a major regulation on export clearance, represented the U.S. government in

multilateral export controls negotiations, and served as a sub-cabinet level representative in interagency matters. She

serves on the U.S. Department of State’s Advisory Committee on International Economic Policy: Sanctions Subcommittee

and is a member of the Council on Foreign Relations. Amanda received her B.A. from the University of Richmond‚ summa

cum laude‚ and her J.D. from Harvard Law School.

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Moderator:


Outline

• Russia-Ukraine sanctions are complex

• Dual focus: sectoral sanctions and sanctions against specific individuals or entities

• Sanctions target the vital sectors of Russia’s economy

– Financial

– Energy

– Defense

• The sanctions are multilateral

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Moderator:


Sanctions Are Complex

• Many measures from many sources covering many topics

– President used authority under the International Emergency Economic Powers Act to issue a series of executive orders in March 2014 (Executive Orders 13660, 13661, 13662)

– Office of Foreign Assets Control (OFAC) issued the Ukraine-Related Sanctions Regulations to implement the substance of those orders

o OFAC has further issued Directives pursuant to the authority in Executive Order 13662 to implement the sanctions aimed at specific economic sectors of Russia’s economy

– The Bureau of Industry and Security issued Russia-specific export controls

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Moderator:


Highlights of What the Sanctions Do Prohibit

• Issuance of debt to major banks (with maturity over 30 days) and energy companies (with maturity over 90 days)

• Dealing in equity of major banks

• Trade with Russian defense companies

• Dealing with prohibited parties: Putin “cronies” and others involved in the conflict in Ukraine

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• Exports and provision of other support for deep water, Arctic offshore, and shale projects

Moderator:


What the Sanctions Do Not Prohibit

• The export of goods to Russia (provided the goods are not for deep water, Arctic offshore, or shale projects, or for the defense sector)

• Importing goods from Russia

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• Financial transactions that flow through banks subject to sectoral sanctions (provided that there is no debt/equity issue)

• Travel to and from Russia

Moderator:


Sanctions Change Frequently and are Immediately Effective

• New individuals and entities are added nearly every week

• When new names are released, the prohibitions related to those persons or entities are effective immediately

• President Obama has been clear that the U.S. is prepared to impose additional sanctions to be responsive to any escalation in the conflict and to put increased pressure on Putin

• The U.S. also issues “back door” sanctions, sanctioning Russian entities under Syria and Iran sanctions programs

– Tempbank (Syria sanctions): a “second-tier”, Moscow-based bank

– Asia Bank, a/k/a Chemeximbank (Iran sanctions): a Moscow-based bank that has facilitated U.S. dollar transactions between Moscow and Tehran in the past

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Moderator:


Sanctions Apply Broadly

• Broad application:

– All U.S. persons (wherever located) and all persons within the U.S. (whatever the nationality or origin)

o Includes US employees of foreign corporations

– However, not as broad as some other U.S. sanctions programs

o Does not extend to foreign subsidiaries owned by U.S. persons (Iran, Cuba)

– The 50% ownership rule: any entity owned 50% or more by a sanctioned entity is subject to the same prohibitions

o Cascades without dilution

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Moderator:


Overview of Office of Foreign Assets Control (OFAC) Sectoral Sanctions

• Sectoral sanctions focus on inhibiting the operation of key sectors of the Russian economy. These are not general blocking sanctions

– Financial Services: U.S. persons may not deal in new debt of longer than 30 days maturity or new equity for sanctioned financial institutions. The restriction on equity is thus far unique to the financial sector

– Examples of sanctioned entities:

o Sberbank,VTB, Bank of Moscow: Russia’s first, second, and fifth largest banks, respectively

o VEB: Russia’s state economic development bank

o Russian Agricultural Bank: Russia’s state-owned bank promoting agricultural and raw material development

o Gazprombank: provides financing for energy sector

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Moderator:


Overview of OFAC Sanctions

• Energy:

– U.S. persons may not deal in new debt of longer than 90 days maturity for sanctioned energy companies

– U.S. persons may not, directly or indirectly, provide, export, or re-export any U.S. or non-U.S. goods, services (except financial services), or technology to sanctioned parties in support of deep water, Arctic offshore, or shale projects

• Examples of sanctioned entities:

– Lukoil: Russia’s second largest oil company and second largest oil producer

– Gazprom: world’s largest extractor of natural gas

– Gazprom Neft: Russia’s fourth largest oil producer

– Rosneft: Russia’s largest extraction and refinement company

– Surgutneftegas: large oil and gas company with close ties to the Kremlin

– Novatek: Russia’s largest independent natural gas producer

– Transneft: world’s largest oil pipeline company

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Moderator:


Overview of OFAC Sanctions

• Defense: U.S. persons may not transact in, provide financing for, or otherwise deal in, new debt of longer than 30 days maturity

– Rostec: state-owned defense technology development company

• Some major defense companies have been added to the SDN list

– Almaz-Antey: world’s twelfth largest defense contractor, specializes in anti-aircraft systems

– Kalashnikov Concern: a large firearm manufacturer, including of AK-47 assault rifles

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Moderator:


Overview of Bureau of Industry and Security (BIS) Sanctions

• BIS export controls restrict the export, reexport, and transfer of certain items subject to the Export Administration Regulations

– Items subject to the EAR include US-origin items wherever located, items being exported from the US, and foreign items including above de minimis (25% for Russia) US content

– Energy: BIS has amended the Export Administration Regulations to impose new licensing requirements for the supply of items for use in exploration for or production of Russian deep water, Arctic offshore, or shale projects

o A set of restrictions apply to specifically restricted items, regardless of end-user, if the item is for use in a deep water, Arctic offshore, or shale project

o A separate set of restrictions apply to entities placed on the entity list. For these entities, the export of any item subject to U.S. jurisdiction is prohibited if it would be used in a deep water, Arctic offshore, or shale project. Sanctioned entities include entities also sanctioned by OFAC (Rosneft, Lukoil, Gazprom, Gazprom Neft, Surneftegas)

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Moderator:


Overview of Bureau of Industry and Security (BIS) Sanctions

• Defense:

– The export of any EAR item to any Russian defense company included in the Entity List is subject to licensing, with a presumption of denial. Entities include:

o Tikhomirov Scientific Research Institute: develops weaponry control systems for fighter planes and anti-aircraft devices

o Mytishchinski Mashinostroitelny Zavod: manufactures naval, aircraft, and field artillery products

o Dolgoprudny Research Production Enterprise: designs and manufactures both land- and sea-based anti-aircraft devices

o Almaz-Antey: described in OFAC section; also controls SDN Kalinin Machine Plant, which specializes in anti-aircraft devices

– The export of certain items that are known to be at least in part for a military end-use or military end-user are subject to licensing requirements, and will be reviewed for whether the transaction would make a material contribution to Russian military capabilities

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Moderator:


Specially Designated Nationals

• U.S. persons cannot do business with Specially Designated Nationals (SDNs). An SDN’s interests in property are frozen

– SDNs are designated for their involvement in or responsibility for the conflict in Ukraine, their affiliations with the Russian government, or their operation in certain sectors of the Russian economy

o Activities that qualify as involvement in or responsibility for the conflict in Ukraine include undermining democracy in Ukraine and threatening the sovereignty of Ukraine, among others

o For example, senior members of Putin’s inner circle (e.g., Sergei Ivanov, Putin’s Chief of Staff), Ukrainian politicians sympathetic to Russia (e.g., Vladimir Konstantinov, who served as Chairman of the Supreme Council of the Autonomous Republic of Crimea), and entities owned by such people qualify as SDNs

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Moderator:


Sanctions Are Multilateral

• Other countries besides the United States have enacted sanctions against Russia, which overlap with but are not identical to U.S. sanctions—creating difficulties for compliance programs

– The EU has a similarly broad sanctions program in place, with some areas of divergence

– In some cases the U.S. sanctions are more restrictive, and in some cases the EU sanctions are more restrictive

• In addition to the U.S. and EU, Japan, Switzerland, Canada, Australia, and other countries have sanctions regimes in place

– Germany, the UK and the Netherlands have issued various guidance documents for the implementation of EU sanctions in their jurisdictions

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Moderator:


Guidance From the Government

• Most government authorities are taking an expansive view of the applicability of the sanctions to various business transactions

• OFAC has published FAQs related to the sanctions on its website

– http://www.treasury.gov/resource-center/faqs/Sanctions/Pages/ques_index.aspx

• Consequences of non-compliance can be severe: individual imprisonment of up to 20 years and fines up to $1 million per violation for criminal violations, up to the greater of $250,000 or twice the value of a transaction for civil violations under OFAC sanctions. BIS has similar penalties in place

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Moderator:


Practical Considerations

• Some banks refuse to do business with designated banks, even if that specific transaction is permitted

– Risk assessment

– Due diligence: raises red flag for banks

• Higher risks for doing business in Russia

• Sanctions are designed to impose a cost on the Russian economy

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Moderator:


Russian Retaliation

• Imposed ban on certain food imports

• Visa and MasterCard were targeted

• Russia is considering a bill that would allow the Russian government to seize foreign assets

• Russia has threatened to close its airspace to western flights

• Closed several McDonald’s restaurants

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Moderator:


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Introduction

Renee A. Latour focuses her practice on international trade regulation with an emphasis on compliance with U.S. export

controls and economic sanctions. Renee assists clients on matters related to international trade that arise under the

jurisdiction of various U.S. governmental agencies, including the Departments of Commerce, State, Treasury, and Defense.

She advises on U.S. export control laws, anti-boycott laws and special sanctions maintained by the U.S. Government

against various countries including Iran, Cuba and Sudan.

Renee also assists clients with matters relating to issues arising under the anti-bribery and record-keeping provisions of the

Foreign Corrupt Practices Act (FCPA), the OECD Convention and the United Nations (UN) Convention Against Corruption.

Additionally, she assists clients in designing and implementing internal compliance policies and procedures and conducting

cross-border export and sanctions regulatory due diligence, particularly in the context of mergers and acquisitions. Renee

also counsels on the Exon-Florio provisions of the Committee on Foreign Investment in the United States (CFIUS), and

assists clients in mitigating foreign ownership, control or influence (FOCI) under the applicable national industrial security

regulations.

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SEGMENT 2:


Russia-Ukraine Sanctions:Developments in U.S. Economic Sanctions and Export Controls

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SEGMENT 2:


Agenda

> U.S. Economic Sanctions: New Ukraine-related Sanctions

> U.S. Export Controls:

– Update on status of export controls with respect to Russia

– New U.S. export restrictions targeting Russia’s energy sector

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SEGMENT 2:


U.S. Economic Sanctions U.S. Department of Treasury,

Office of Foreign Assets Control (“OFAC”)

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SEGMENT 2:


Ukraine-related Sanctions Overview

> Russia is not subject to comprehensive sanctions

> Most economic sanctions are targeted, or “list-based”

– List of Specially Designated Nationals and Blocked Persons (“SDN List”) (OFAC)

– Sectoral Sanctions Identifications List (“SSI List”) (OFAC)

– Entity List (BIS)

> Sectoral sanctions target financial and energy sectors

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SEGMENT 2:


OFAC SDN List

U.S. Persons

> All persons and entities that OFAC has identified under Executive Orders 13660 and 13661 are Specially Designated Nationals and are now included in OFAC’s SDN List

> OFAC sanctions apply to the activities of “U.S. Persons”

> A U.S. Person includes:

(i) any business entity organized under the laws of the U.S. (including its unincorporated non-U.S. branches);

(ii) U.S. citizens and permanent residents, whether acting in the U.S. or elsewhere (for this purpose, a person who holds a U.S. and non-U.S. passport-a dual national-is considered to be a U.S. person);

(iii) any non-U.S. company acting in the U.S.; and

(iv) any non-U.S. individual for his or her activities within the U.S.

> No U.S. person may transact business with or otherwise deal in any property or property interests of the SDN

> U.S. persons are also prohibited from approving or facilitating acts by non-U.S. persons that a U.S. person could not do directly

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SEGMENT 2:


What Is Meant By Property Or Interests In Property

• The terms “property” and “interest in property” are defined very broadly, and cover almost any conceivable form of property or interest in property, tangible, intangible and contingent. (See USR, 31 C.F.R. &589.308)

• Considering that what constitutes “dealing” in blocked property is undefined, OFAC has an extremely broad scope to effectively prohibit U.S. persons from engaging in almost any form of transaction with an SDN, unless specifically authorized by OFAC

• SDN assets are frozen when SDN property or interests in property come into the United States or possession or control of a U.S. Person, they must be blocked

36

SEGMENT 2:


What Is Meant By Property Or Interests In Property (Cont.)

> Under 31 CFR §589.308 Property; property interest, the terms property and property interest include, but are not limited to:

“money, checks, drafts, bullion, bank deposits, savings accounts, debts, indebtedness, obligations, notes, guarantees, debentures, stocks, bonds, coupons, any other financial instruments, bankers acceptances, mortgages, pledges, liens or other rights in the nature of security, warehouse receipts, bills of lading, trust receipts, bills of sale, any other evidences of title, ownership or indebtedness, letters of credit and any documents relating to any rights or obligations thereunder, powers of attorney, goods, wares, merchandise, chattels, stocks on hand, ships, goods on ships, real estate mortgages, deeds of trust, vendors' sales agreements, land contracts, leaseholds, ground rents, real estate and any other interest therein, options, negotiable instruments, trade acceptances, royalties, book accounts, accounts payable, judgments, patents, trademarks or copyrights, insurance policies, safe deposit boxes and their contents, annuities, pooling agreements, services of any nature whatsoever, contracts of any nature whatsoever, and any other property, real, personal, or mixed, tangible or intangible, or interest or interests therein, present, future, or contingent.”

37

SEGMENT 2:


The 50% Rule> Per updated OFAC guidance of August 2014, entities owned 50% or more

by SDNs are deemed SDNs, even if not specifically listed> Ownership interest of two or more SDNs may be combined to get to 50%> The 50% ownership cascades down—If person A is an SDN and owns 50%

of X and X owns 50% of Y, and Y owns 50% of Z, X, Y, and Z will be an SDN

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SEGMENT 2:


Dollar Denominated Transactions• OFAC compliance issues may arise when engaging in U.S. dollar-denominated transactions

with a sanctioned person or entity• Even if the transaction is permitted because no U.S. person is involved, the transaction may

face obstacles when it is presented for clearance through the U.S. financial system• The same problem may arise even when a U.S. person is engaged in a permissible transaction • If a U.S. bank’s screening identifies a party to a U.S. dollar-denominated transaction as an

SDN, the financial institution will freeze the transfer and notify OFAC of the attempted transaction

• If the transaction is covered by the SSIL sanctions, the U.S. bank will reject the transaction and will notify OFAC

• Even if the transaction is legal, the Bank may decide to reject it to avoid being involved in transaction with sanctions persons or entities

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SEGMENT 2:


OFAC SSI Entities by Sector

> Financial Sector

> BANK OF MOSCOW

> GAZPROMBANK

> RUSSIAN AGRICULTURAL BANK

> SBERBANK OF RUSSIA

> VNESHECONOMBANK

> VNESHTORGBANK

> Defense Sector

> ROSTEC

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> Energy Sector

> GAZPROM NEFT

> NOVATEK

> ROSNEFT

> TRANSNEFT

> GAZPROM

> LUKOIL

> SURGUTNEFTEGAS

SEGMENT 2:


U.S. Export RegulationsDepartment of Commerce, Bureau of Industry and Security (“BIS”)

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SEGMENT 2:


List-based Export Restrictions – BIS Entity List

Basis Of BIS Jurisdiction Compared To OFAC

> OFAC applies to acts of U.S. persons

> BIS applies to dealing in U.S.-origin goods, software, or technology

> Non-U.S. item with more than 25% U.S. content is also subject to BIS controls

> Non-U.S. persons are subject to BIS controls anywhere in the world if dealing with items that are subject to the EAR

> BIS License required to export, reexport, or transfer any item subject to the EAR to any person or entity named to the Entity List if project involves one of the three kinds of oil and gas projects

> If the exporter, re-exporter or transferor is unable to determine what kind of project the item will be used in, the exporter must assume that the export is covered by the new controls

> Presumption of denial for a license applications to persons and entities named to Entity List

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SEGMENT 2:


Increased U.S. Export Restrictions

> Controls on exports and reexports to Russia tightened:

– Denial of license applications for exports/reexports to Russia or occupied Crimea of high-tech items that could contribute to Russian military capabilities

Department of State, Directorate of Defense Trade Controls imposes a similar policy

– Addition of “Russian Industry Sector Sanctions” to the EAR (Part 746.5)

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SEGMENT 2:


CCL-based Export Licensing Requirements

> A BIS license is required to export from the United States to Russia, reexport from a third-country to Russia, or transfer within Russia if:

– Listed in Supp. No. 2 to Part 746 (new) or specified in any of eight Export Control Classification Numbers (“ECCNs”) on the CCL and

– The item will be used directly or indirectly in exploration for, or production of:

– oil or gas in Russian deepwater

– Arctic offshore locations, or

– shale formations in Russia

> License applications will be treated with a presumption of denial:

> If the exporter, re-exporter or transferor is unable to determine what kind of project the item will be used in, the exporter must assume that the export is covered by the new controls

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SEGMENT 2:


Supp. No. 2 to Part 746

> Supp. No. 2 to EAR Part 746 includes:

– Pipes

– Well tubings and casings

– Drill bits and tools

– Oilfield pumps

– Gas separation equipment

– Oil drilling and production platforms/machinery

– Drilling derricks

> Items are identified by Census Bureau “Schedule B” numbers (not ECCNs because they are EAR99)

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SEGMENT 2:


Existing ECCNS

> Items classified under the following existing ECCNs :

– 1C992: Commercial charges and devices

– 3A229: Firing sets and equivalent high-current pulse generators

– 3A231: Neutron generator systems

– 3A232: Detonators and multipoint initiation systems

– 6A991: Marine or terrestrial acoustic equipment

– 8A992: Vessels, marine systems, or equipment and various parts, components, and related items

October 08, 2014

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SEGMENT 2:


New ECCNs

> Items classified under the following new ECCNs are in scope:

– 8D999: Software specially designed for the operation of unmanned vessels used in Russia’s oil and gas industry

– 0A998: Oil and gas exploration data and software

Includes seismic analysis data, hydraulic fracturing design and analysis software and data, and hydraulic fracturing materials

Broader than “technology” elsewhere controlled on CCL (specific information necessary for the development, production, or use of items on the CCL)

October 08, 2014

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SEGMENT 2:


Restricted End-Uses: Deepwater, Arctic, Shale

> Direct or indirect use in oil or gas production or exploration

> Russian deepwater

– More than 500 feet

> Arctic offshore locations in Russia

– “Arctic” is undefined but BIS guidance expected

> Shale formations in Russia

– “Shale” is undefined but BIS guidance expected

October 08, 2014

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SEGMENT 2:


Introduction

Linda leads the firm’s Customs & Trade practice and is a member of the Technology, Manufacturing & Transportation team.

She assists manufacturers and distributors in all corners of the world and represents a diverse clientele, such as suppliers

to the oil and gas industry, importers of a variety of consumer and industrial products, and exporters of defense articles and

technology. Her engagements cover a wide range of trade matters, including advising on U.S. economic sanctions, import

seizures, export licensing, antidumping cases, trade compliance and foreign distribution.

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SEGMENT 3:


EU/US Sanction Regimes:Aligned or Not?

October 08, 2014

50

SEGMENT 3:


Agenda

EU sanctions – key differences from US sanctions

Sanctions by other countries

Impact on global companies

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SEGMENT 3:


EU Sanction Implementation

Implemented under the Common Foreign and Security Policy (CFSP)

Council of European Union imposes restrictive measures

Additional implementing action may be required

Y̶ Arms embargoes and travel bans – implemented directly by member states

Y̶ Asset freezes and export bans – require EU Council implementing legislation

October 08, 2014

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SEGMENT 3:


EU Sanctions - Jurisdiction

EU restrictive measures only apply within the jurisdiction of the EU:

Y̶ Within EU territory, including its airspace

Y̶ To all EU persons (anywhere in the world)

Y̶ To companies organized under the law of a member state (including foreign branches)

Y̶ To any business done in whole or in part within the EU

Y̶ On board aircrafts or vessels under the jurisdiction of a member state

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SEGMENT 3:


EU Targeted Sanction List

119 persons and 23 entities designated under Ukraine/Crimea related sanctions

Y̶ Consolidated List (http://ec.europa.eu/external_relations/cfsp/sanctions/list/version4/global/e_ctlview.html)

Asset Freeze

Y̶ Target assets blocked

Y̶ Ban on providing resources to the target

Visa/Travel Ban

Y̶ No entry into EU and no visas issued for entry

Y̶ EU member states may allow entry to its own nationals

October 08, 2014

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SEGMENT 3:


http://ec.europa.eu/external_relations/cfsp/sanctions/list/version4/global/e_ctlview.html

EU Restrictions for Crimea/Sevastopol

No imports from Crimea or Sevastopol (CS) unless accompanied by a certificate of origin from the Ukrainian authorities

Trade and investment restrictions on CS infrastructure projects in transport, telecommunications and energy or related to exploitation of oil, gas, and minerals

Prohibition on:

Y̶ Exports to CS of key equipment for those sectors

Y̶ Loans, insurance, etc. related to such transactions

Y̶ Investment in Crimean companies in those sectors

Y̶ Joint ventures for such activities

October 08, 2014

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SEGMENT 3:


EU Arms Embargo

Embargo on the import and export of items on the EU Common Military List (CML) and related material to/from Russia

Prohibition on providing direct or indirect technical assistance, financing or financial assistance related to goods and technology on the CML to Russia

Link to the CML:

Y̶ http://www.eeas.europa.eu/non-proliferation-and-disarmament/arms-export-control/

October 08, 2014

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SEGMENT 3:


http://www.eeas.europa.eu/non-proliferation-and-disarmament/arms-export-control/

EU Dual Use Items

Prohibition - sales, supply, transfer, or export of dual use goods and technology to:

Y̶ Russia for military use or to/for a military end user

Y̶ Specified Russian entities

Applies regardless of whether the targeted entity is a military end user or the item will have a military end use

Prohibition - providing financing, financial assistance, technical assistance, brokering services, or "other services" related to dual-use goods and technology to the specified Russian entities

Grandfather Exception – pre-9/12/2014 contracts

October 08, 2014

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SEGMENT 3:


EU Sectoral Sanctions–Energy Sector

Restrictions on exports of specified energy-related equipment, technology & related services to Russia

Prohibition on:

Y̶ Provision of drilling, well testing, logging, and completion services for deep-water oil exploration and production, arctic oil exploration or production, and shale oil projects in Russia

Y̶ Provision of specialized floating vessels for use in deep water or arctic oil exploration

Possible Exceptions:

Obligations arising under a pre-existing contract

Emergency situation impacting human health or the environment

October 08, 2014

58

SEGMENT 3:


EU Sectoral Sanctions – Capital Markets

Prohibitions:

Y̶ Dealing in newly issued transferable securities issued by specified Russian banks, with a maturity exceeding 30 days if issued after 9/12/2014 (90 days if issued between 8/1/2014 -9/12/2014 by certain banks)

Y̶ Participating in making new loans with a maturity exceeding 30 days issued after 9/12/2014 to targeted Russian banks, entities, or individuals

Applicable to other persons or entities established outside the EU that are owned 50% or more by a target; and any other person or entity that acts at the direction of a target

October 08, 2014

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SEGMENT 3:


Other Countries Imposing Sanctions

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Canada

Japan

Australia

Norway

Iceland

Albania

Switzerland

Montenegro

Ukraine

SEGMENT 3:


Impact on Global Companies

October 08, 2014

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SEGMENT 3:


Dealing with multiple sanction regimes

Banks refusing to handle permitted transactions with Russian companies and banks

Payments blocked because they flowed through a targeted bank

Agricultural sales to Russia from S. America are on the rise

Shut down of major contracts

Threat of potential seizure of assets in Russia

Wrap Up

• Russia sanctions are a sea change from previous sanctions programs

– Very targeted, leading to complexities

– Use of sectoral sanctions and directives are a new trend

• There are no U.S. sunset provisions

• U.S. Congress considering sanctions legislation

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Moderator:


Wrap Up

• Putin does not appear to be finished in the Ukraine--expect further escalation and more sanctions

• Unchartered territory

– U.S. and Europe have neverattempted to sanction a country as powerful as Russia

– Russia is reportedly in a recession—global consequences

• More to come!

October 08, 2014

63

Moderator:


► You may ask a question at anytime throughout the presentation today. Simply click on the question mark icon located on the floating tool bar on the bottom right side of your screen. Type your

question in the box that appears and click send.

► Questions will be answered in the order they are received.

Q&A:

October 08, 2014

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Moderator:


SEGMENT 3:


SEGMENT 2:


October 08, 2014

65

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