Regulatory intelligence for US exporters

Speed, Complexity of Russia Sanctions Regime Unprecedented, Lawyers Say

Keeping pace with the multinational sanctions being imposed on Russia following the invasion of Ukraine has become a difficult but necessary task for lawyers and businesses, said sanctions and international trade lawyers at Crowell & Moring on a March 2 briefing hosted by the firm. The sanctions are already remarkably complex, totaling over 1,200 pages of new regulations, and more are expected. This marks the "fastest moving sanctions regime that we have seen," said Dj Wolff, a partner at the firm.

Further complicating the issue is that not all the sanctions are perfectly aligned internationally, Wolff said. For instance, the EU covered its entire export control list while the U.S. covered only categories 3 through 9, he said. "This is unprecedented," Wolff said. "None of us have ever lived in this world where all the major sanctions authorities" are "implementing regular daily restrictions." Wolff said he "firmly expects" the pace of new sanctions to continue.

Carlton Greene, also with Crowell, urged caution when doing business in Eastern Ukraine as the Office of Foreign Assets Control hasn't given clarity on geographic boundaries of the Luhansk and Donetsk republics and governments may change definitions of "covered regions" with little notice if the situation on the ground changes. Some "unintended backlash" from the new rules seems likely, Crowell senior counsel Clif Burns said. Multiple issues deserve more clarity, such as whether Russian ships and aircraft currently in the U.S. can return to Russia and if regulations limit remote access to company data by Russian employees, he said.

The rapid pace of sanctions and export controls is expected to exacerbate global supply chain woes. "We already have supply chain issues in the shipping world," Michelle Linderman said. "This will not help." There is also a shortage of planes designed to carry specialty cargo due to bans on Russian aircraft and airlines. Sanctions on Russian financial institutions remain a major "area to watch," partner Caroline Brown said. Although Russian oil hasn't been subject to specific restrictions so far, companies are already backing away from orders because of the inability to interact with Russian banks, she said.