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OFAC issues Food Security Fact Sheet on Russia sanctions and agricultural trade

The United States strongly supports efforts by the United Nations to bring both Ukrainian and Russian grain to world markets and to reduce the impact of the war, says the US Department of the Treasury

Update : 17 Jul 2022, 09:56 PM

The United States Department of the Treasury (Treasury) has issued a fact sheet clarifying that it has not imposed sanctions on the production, manufacturing, sale, or transport of agricultural commodities (including fertilizer), agricultural equipment, or medicine relating to the Russian Federation (Russia).

In addition, the Treasury’s Office of Foreign Assets Control (OFAC) has issued a broad general license (GL) to authorize certain transactions related to agricultural commodities, agricultural equipment, medicine, and medical devices, according to a statement issued on Thursday.

The United States strongly supports efforts by the United Nations to bring both Ukrainian and Russian grain to world markets and to reduce the impact of Russia’s unprovoked war on Ukraine on global food supplies and prices, the statement read. 

“Agricultural and medical trade are not targets of the sanctions imposed by the United States on Russia for its atrocities in Ukraine,” it added. 

The US department has released the “Fact Sheet: Preserving Agricultural Trade, Access to Communication, and Other Support to Those Impacted by Russia’s War Against Ukraine” for more details on authorizations under US sanctions related to agricultural and medical transactions, NGO activities, Covid-19 relief, the free flow of information, humanitarian assistance, and other support to people impacted by Russia’s war. 

The United States has not imposed sanctions on the exportation of agricultural commodities from, to, or involving Russia, according to the fact sheet. 

In addition, to the extent transactions related to the exportation of agricultural commodities from, to, or involving Russia may be otherwise prohibited by the Russian Harmful Foreign Activities Sanctions Regulations (RuHSR), OFAC issued Russia-related GL 6B to authorize certain transactions related to the production, manufacturing, sale, or transport of agricultural commodities and agricultural equipment, among other products and activities. 

The United States has imposed a prohibition on the importation of Russian Federation-origin fish, seafood, and preparations thereof into the United States. However, the prohibition does not restrict the importation of Russian Federation-origin fish, seafood, and preparations thereof from Russia into other countries besides the United States.

The Executive Order 14068 prohibits the importation into the United States of fish, seafood, and  preparations thereof, alcoholic beverages and non-industrial diamonds of Russian Federation  origin, the statement reads.

However, to the extent the importation of such products of Russian origin into jurisdictions outside of the United States does not involve a sanctioned person or an otherwise  prohibited transaction, non-US persons are not exposed to sanctions under the order. In addition, GL 6B authorizes certain transactions related to the exportation of Russian Federation origin fish, seafood, and preparations thereof, provided such transactions are not for the importation of these Russian Federation origin goods into the United States. 

Moreover, the United States has not imposed sanctions on the exportation of fertilizer from, to, transiting, or involving Russia. 

Hence, providing insurance or reinsurance related to the transportation or shipping of these products is not prohibited. To the extent transactions related to such insurance or reinsurance services may be otherwise prohibited by the RuHSR.

The US has also not imposed general sanctions on the exportation of agricultural equipment and spare parts to Russia. To the extent transactions related to the exportation of agricultural equipment and spare parts to Russia may be otherwise prohibited by the RuHSR, GL 6B authorizes certain transactions related to agricultural equipment. Additionally, Russia-related GL 41, “Authorizing Certain Transactions Related to Agricultural Equipment,” authorizes transactions related to agricultural equipment, components, or spare parts produced by certain blocked Russian persons.

The US Department of the Treasury in its statement said that the Port of Novorossiysk is not listed on OFAC’s Specially Designated Nationals and Blocked  Persons List (SDN List) and is not subject to blocking sanctions under the RuHSR or any other US sanctions authority. To the extent transactions involving the exportation of products from Port of Novorossiysk may be otherwise prohibited by the RuHSR, GL 6B authorizes certain transactions related to agricultural commodities, agricultural equipment, medicine, medical devices, replacement parts and components for medical devices, or software updates for medical devices, as well as transactions related to the prevention, diagnosis, or treatment of Covid-19 (including research or clinical studies relating to Covid-19), or ongoing clinical trials. This would include exporting such products from Novorossiysk port. 

Foreign financial institutions may engage in or facilitate transactions that would be authorized for US persons under GL 6B without exposure to sanctions.

Moreover, the Joint Stock Company Russian Agricultural Bank (Russian Agricultural Bank) is not listed on OFAC’s SDN List. It is not subject to blocking sanctions under the RuHSR or any other US sanctions authority. However, US persons are subject to certain restrictions on dealing in debt and equity of Russian Agricultural Bank. US persons involved in a transaction where Russian Agricultural Bank is a counterparty should ensure that payment terms provided to Russian Agricultural Bank comport with these restrictions on dealing in its debt and equity.

Specifically, Russian Agricultural Bank is subject to Directive 3 under “Prohibitions Related to New Debt and Equity of Certain Russia-related Entities” (Russia-related Entities Directive). The directive prohibits, among other things, transactions and dealings by US persons or within the United States in new debt of longer than 14 days maturity or new equity of Russian Agricultural Bank where such new debt or new equity is issued on or after 12:01 a.m. eastern daylight time on March 26, 2022. 

The Russian Agricultural Bank is also subject to Directive 1 under E.O. 13662, § 589.202 of the Ukraine-/Russia-Related Sanctions Regulations. The prohibitions of § 589.202 apply only to certain dealings in new debt or equity of Russian Agricultural Bank. 

The US department encouraged anyone with specific questions about transactions involving Russian Agricultural Bank to contact the OFAC Compliance Hotline at 1-800-540-6322 or email [email protected].

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