Commentary: Don’t play Russian roulette with rules

U.S. exporters may be tempted to prematurely re-engage with three Russian industrial giants reportedly relieved from Treasury sanctions before knowing all the facts.    As tempting as it might be to start conducting unfettered export business with three of Russia’s largest industrial firms — EN+ Group, UC Rusal and JSC EuroSibEnergo — now that the Treasury Department sanctions were reportedly lifted against them on Friday, U.S. exporters should hold off until official clarity comes from the Office of Foreign Assets Control (OFAC).
   So far, it’s been radio silence from OFAC as to whether the end to the sanctions is actually “official” and what exporters should do to ensure compliance when interacting with these Russian firms in the future.
   The news in Washington continues to swirl around just how Russian oligarch Oleg Deripaska, a political associate of Russian President Vladimir Putin, financially qualified to have the three Russian companies removed from OFAC’s Specially Designated Nationals and Blocked Persons (SDN) List.
   While Deripaska and his property remain blocked by the sanctions, Treasury Secretary Steven T. Mnuchin affirmed to Capitol Hill lawmakers when announcing the three Russian companies’ delisting from the sanctions on Dec. 19 that they “have committed to significantly diminish Deripaska’s ownership and sever his control.”
   Documents related to deal, however, reportedly reveal that the oligarch simply moved a small percentage of his shares in these companies to relatives in order to reduce his 50 percent ownership threshold, which originally ensnared him and the companies under the Countering America’s Adversaries Through Sanctions Act (CAATSA) and secured their place among the SDN List on April 6, 2018.
   Senate and House lawmakers last week made a last-ditch effort to prevent the Russian companies, particularly aluminum giant Rusal, from being relieved of the U.S. sanctions, but failed as the 30-day clock for their removal ran out at midnight on Friday.
   Meanwhile, OFAC last week also announced the continued extension of the expiration dates of the pre-existing general licenses deadlines for U.S. companies to wind down business dealings with En+, Rusal and ESE from this week to next Monday. When the three companies were placed on the SDN List on April 6, 2018, OFAC initially set the deadline for ending business relationships with the Russian entities by June 5, 2018. About a half dozen additional extensions have since been issued by the agency. 
   Undoubtedly, there are still many U.S. exporters that supplied technology, parts and materials to the three Russian enterprises prior to their addition last year to the SDN List, and those firms may be tempted by the rash of news reports to rekindle those business relationships.
   It would be a dangerous game of Russian roulette for U.S. exporters and their corporate export compliance by prematurely re-engaging with the Russian companies before official guidelines are published by OFAC. 
   In addition, U.S. exporters shouldn’t be surprised if Capitol Hill lawmakers introduce legislation in the coming weeks that result in the reaffirmation of sanctions against EN+, Rusal and JSC or other businesses associated with Deripaska.