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General License for Commercial Authorizations from Sanctioned Russian Security Agency

OFAC has issued a new General License to address problems raised by the sanctioning of the Federal Security Services (FSB).  This adjustment serves to authorize permits by the FSB needed for certain commercial transactions and is a limited exception to the sanctions listing of the FSB on December 28, 2016 in connection with Russia’s alleged interference in the U.S. presidential election.

The details of General License No. 1, Authorizing Certain Transactions with the Federal Security Service, include:

  • U.S. persons are authorized to request, receive, utilize, pay for, and/or deal in licenses, permits, certifications, or notifications issued by the Federal Security Service for the importation, distribution, or use of information technology products in Russia.
  • Payment of any fees to the Federal Security Service for such licenses may not exceed $5,000 in one year.
  • All exports of goods or technology that are subject to the EAR must be licensed or otherwise authorized.

This general license corrects for unintended consequences deriving from the sanctions listing Executive Order 13694 (amended by Executive Order 13757). The Executive Order was meant to penalize FSB for its intelligence and spy-related activities, but because FSB has a regulatory function as well, the sanctions obstructed more trade than intended. The FSB regulates the importation of certain hardware and software containing cryptography, requiring companies to obtain import licenses in order to export technology products to Russia. The Executive Order prevented U.S. companies from transacting with FSB in order to obtain these licenses, creating the unintended side effect of blocking the export of goods such as cell phones, tablets, and printers.

Under this new General License No. 1, U.S. companies are now authorized communication with FSB for the narrow purpose of securing licenses to continue to export these goods to Russia.