BIS Expands Russian Sanctions

The Commerce Department’s Bureau of Industry and Security (BIS) is taking action to further restrict the supply of both U.S.-origin and “U.S. branded” (i.e., labeled) items to Russia and Belarus for the Kremlin’s war efforts.

BIS has imposed controls on a range of items subject to the Export Administration Regulations (EAR) that did not previously require export licenses when destined for Russia.  Also imposed are similarly stringent controls on items subject to the EAR that are destined for Belarus.  Notably, both countries have been made subject to broad in-country transfer controls.

Key actions include:

1. Further tightening controls on Russia by expanding the scope of the Russia/Belarus Military End User (MEU) and Procurement Foreign Direct Product (FDP) rule and imposing additional license requirements on operation software for computer numerically controlled (CNC) machine tools;
2. Cutting off exports to foreign companies on the BIS Entity List; applying the expanded Russia/Belarus MEU and Procurement FDP rule to dozens of entities outside Russia;
3. Restricting trade to additional foreign addresses and issuing guidance to exporters on identifying suspicious transactions related to foreign corporate service providers and listed foreign addresses, strengthening recently implemented restrictions on shell company addresses; and
4. Providing guidance and recommendations on contractual language referencing export regulations (the Export Administration Regulations, or EAR), specifically, restrictions that target unlawful reexports to Russia and Belarus.

“BIS has taken aggressive actions, in concert with our allies and partners, to impose strict export controls in response to Russia’s illegal, unprovoked, and full-scale invasion of Ukraine. Today’s action is an extension of this critical and ongoing work,” said Undersecretary of Commerce for Industry and Security Alan Estevez. “We will continue our multilateral approach to attack this problem from all sides and use every tool in our arsenal to prevent Russia from gaining access to the advanced U.S. technology needed for its weapons.”

Tightening Controls on Russia

Expanding the scope of the existing FDP rule allows BIS export controls to capture entities outside Russia (and Belarus) that help procure not only U.S.-origin but also U.S.-branded items that support Russia’s illegal, unjustified, and unprovoked war in Ukraine.

This expansion is intended to target the transshipment of microelectronics and other items that bear the brand of a U.S.-headquartered company, even if manufactured outside the United States. 

Additionally, BIS is adding controls on certain software needed to operate CNC machine tools to prevent the provision of software updates to controlled tools in Russia and Belarus. This will have a delayed effective date of September 16, 2024.

Entity List Additions

BIS is also adding 123 entities under 131 entries to the Entity List-- 63 entities in Russia or the Crimea Region of Ukraine,  42 in the People’s Republic of China (PRC, including Hong Kong), and 14 entities  in Türkiye, Iran, and Cyprus-- for shipping U.S.-origin and U.S.-branded items to Russia in contravention of U.S. export controls or for engaging in other activities contrary to U.S. national security and foreign policy interests.  

Targeting Shell Companies

In addition, BIS is further targeting diversion through shell companies by adding four high-diversion risk addresses in Hong Kong and Türkiye to the Entity List, thereby requiring a license for transactions involving parties using those addresses.  BIS will continue to aggressively target entities around the world that ship U.S.-origin and U.S.-branded items to Russia.

Three addresses in Hong Kong and one address in Türkiye were added to the Entity List in connection with significant transshipment of sensitive items to Russia, building on changes made by a June 12, 2024 rule.

New Guidance for Exporters and Re-exporters

BIS is also issuing guidance and recommendations to U.S. exporters on language in sales contracts or other export documents involving items subject to the EAR to prevent diversion to Russia or Belarus. 

Guidance to exporters on contract clauses:  We are providing guidance to exporters regarding language they can include in their sales contracts or other export documents.  Language used in these instances should ensure that overseas customers understand that BIS export controls under the EAR continue to apply to the items after the initial sale and that most items cannot be reexported to Russia without a license from BIS.  This is similar to the European Union’s “No re-export to Russia” clause, which requires EU companies to include similar language in certain sales contracts. 

Guidance to foreign corporate service providers:  Corporate service providers in places like Hong Kong or Türkiye provide their clients with a registered place of business – i.e., an address they can use for billing or receiving goods.  Although corporate service providers have legitimate business purposes, some bad actors use them to mask their identities and divert items to embargoed destinations or restricted parties.  We are providing guidance to corporate service providers to help them avoid providing services to such bad actors – e.g., screening against U.S. Government restricted parties lists and scrutinizing their customers who ship to Russia or to Iran and other embargoed destinations. 

Assistant Secretary of Commerce for Export Enforcement Matthew S. Axelrod noted, "The fact that nearly half of these parties are located in countries outside Russia should serve as a stark reminder:  it doesn’t matter whether you’re in the People’s Republic of China or Türkiye -- if you send Common High Priority List items (or a range of other items) to Russia, you risk being added to the BIS Entity List.”

Today’s actions are taken in concert with similar actions by the Departments of State and the Treasury targeting Russian procurement networks in third countries around the world. 

Additional Sanctions:

Entity List