In today’s economic realitities factoring in U.S. restrictive measures (sanctions) is no longer an option but a key element in any compliance practice. U.S. sanctions are distinguished by their sweeping scale, deep embedment into the global financial infrastructure, and extraterritorial impact (i.a. secondary sanctions). Conversely, arising risks concern not only U.S. residents but also legal entities in other jurisdictions if they deal in U.S. dollars, use U.S. technologies and services, or engage with global banks, insurers, and suppliers.
U.S. restrictions are rooted first and foremost in the framework federal laws: National Emergencies Act, which sets the procedure for declaring and extending a state of emergency, and International Emergency Economic Powers Act (IEEPA) empowering U.S. President to impose economic restrictions on foreign states, individuals, and economic sectors. Sanctions are furthermore detailed in presidential orders, including Executive Order No. 13405 of June 16, 2006, and Executive Order No. 14038 of August 9, 2021, declaring a state of emergency vis-a-vis Belarus and laying down some basic restrictions.
These presidential orders are implemented through secondary legislation of the U.S. Department of the Treasury. OFAC issued specialized Belarus Sanctions Regulations: Title 31 CFR Part 548 (“Belarus Sanctions Regulations”) codifying sanctions and related procedures, as well as Title 15 CFR §746.8, “Sanctions against Russia and Belarus”.
Notably, CFR § 548.201 establishes a property block for persons falling under the criteria of Executive Orders 13405 and 14038: all property and interests in property of such persons located in the United States or under the control of U.S. persons are frozen, and U.S. persons are prohibited from directly or indirectly transferring any funds, goods, or services to them. The prohibition includes i.a. any contributions or provision of money, goods, or services to, or receipt of any funds or services from, blocked persons.
Personal restrictions comprise those applicable to individuals on the SDN List and falling under the “50% rule”. The latter means that any entity that is owned by 50% or more by individuals on the SDN List is automatically blocked.
OFAC's restrictions freeze any assets of these individuals/entities under American jurisdiction. U.S. and affiliated entities (including banks) are prohibited from doing business with them. Such a company is effectively cut off from U.S. dollars and the global financial system, as most international banks adhere to U.S. sanctions.
Currently, general U.S. restrictions and prohibitions on export-import and other trade transactions target the sale, supply, export, or transfer, directly or indirectly, of items listed on the U.S. Commerce Control List (CCL) and products originating in whole or in part in the U.S. The sanctions also apply in case of a suspicion that such operations may lead to the use of such products by a military end user or for military purposes.
At the same time, prohibitions and restrictions may target operations, financial, and other economic resources of an individual, legal entity, or other organization classified as:
• government agencies or organizations established in or outside Belarus, organizations in which more than 50% of the shares (interests) are directly or indirectly owned or controlled by the Republic of Belarus;
• acting (or intending to act) on behalf of or at the direction of such persons (in particular, if they are one of the final recipients of the goods (services);
• facilitating the circumvention of established prohibitions and restrictions.
In addition, pursuant to paragraph (iv) of section 1 of Executive Order 14038, all property and interests in property located in or within the United States, in the possession or control of any United States person, are blocked and may not be transferred, paid for, removed, recalled, or otherwise handled by any person who is or has been employed in the Belarusian economic security sector, as determined by the Secretary of the Treasury in consultation with the Secretary of State (31 CFR § 548.201).
Note: The Belarusian economic security sector in this case includes non-military persons who are engaged in the following activities in or with Belarus: <…> surveillance and cybersecurity; and any related activity, including the provision or receipt of goods, services, or technology to the Belarusian economic security sector from or with the participation of such persons (31 CFR § 548.317).
Enforcement of economic and trade restrictions, as well as the maintenance of lists of persons subject to personal (individual) restrictions, is the responsibility of the Office of Foreign Assets Control of the U.S. Department of the Treasury (OFAC). In cases determined by national law, transactions with, to, or for the benefit of sanctioned persons may be authorized under single-use and general licenses issued by OFAC.
Restrictive measures regarding HTS codes (HS Codes) are established by:
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Parts 730-774 of Title 15 CFR (Export Administration Regulations)*. 15 CFR §746.8 establishes i.a. mandatory licenses from the Bureau of Industry and Security (BIS) for the export to Belarus of all commodities with ECCNs (codes assigned to commodities based on their characteristics) from the Commodity Control List (CCL), as well as commodities listed under HTS codes in Supplement 4 (industrial commodities), commodities from Supplement 6 (specialty commodities), “luxury commodities” (Supplement 5), and EAR99 software (commodities that cannot be classified by ECCN) of certain categories (e.g., software);
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31 CFR Part 548 (Sanctions Provisions with Respect to Belarus), which establishes personal restrictions.
*Pursuant to paragraph (a) of 744 CFR §744.21, in addition to the licensing requirements for items specified on the Commerce Control List (CCL) (Supplement No. 1 to part 774 of the EAR), you may not export, re-export, or transfer (in-country) any item subject to subchapter C of the CFR without a license if, at the time of export, re-export, or transfer (in-country), you “know,” as defined in subchapter C of the CFR §772.1, that the item is intended, in whole or in part, for “military end use” in Belarus or Russia, or for a Belarusian or Russian “military end user,” wherever located.
Under paragraph (f) of §744.21 of part 744 CFR, "military end use" means inclusion in military items described on the United States Munitions List (USML) (part 121 CFR, the International Traffic in Arms Regulations); inclusion in items classified under Export Control Classification Numbers (ECCNs) ending in "A018" or under ECCNs in the "600" series; or any item that supports or facilitates the operation, installation, maintenance, repair, overhaul, refurbishment, "development," or "production" of military items described on the USML or items classified under ECCNs ending in "A018" or under ECCNs in the "600" series.
An ECCN is an alphanumeric code, such as 3A001, that describes the item and indicates licensing requirements. All ECCNs are listed on the Commerce Control List (CCL) (Supplement No. 1 to EAR Part 774).
Note: the "600" series indicates that the third character of the ECCN is the number "6."
Under paragraph (g) of §744.21 of Part 744 CFR, "military end user" means a national armed forces (Army, Navy, Marine Corps, Air Force, or Coast Guard), as well as the National Guard and National Police, national intelligence or reconnaissance organizations (except the Main Intelligence Directorate of the General Staff of the Armed Forces of the Republic of Belarus), or any person or organization whose activities or functions are designed to support a "military end use."
A distinctive feature of U.S. restrictive measures is their secondary impact, based on US extraterritorial jurisdiction, primarily through Executive Order 14024 and the Foreign Direct Product Rule (FDPR) (§734.9(f) and (g)), which interact with the IEEPA. Section 14024 of Executive Order 14024 allows for the imposition of sanctions on foreign persons for “significant participation” (operating in the technology, financial, or manufacturing sector) or for “ownership or control of entities” subject to the sanctions regime. Regardless of the manufacturer's status, if the final product is shipped to Belarus and contains U.S. components, it is subject to licensing.
In many ways, these restrictive measures affect not only the economic sector but also the implementation of international investment and environmental projects, as well as sustainable development goals and the UN Framework Convention on Climate Change. U.S. restrictive measures against Belarus constitute a robust, multi-layered regime (NEA, IEEPA, E.O. 13405 and 14038, 31 CFR Part 548, the SDN blocking lists, and the EAR) that extraterritorially targets access to dollar liquidity, technology, and global payments infrastructure. The main idea for transaction participants outside the US is not to “circumvent” risks but correctly identify them and put in place a reproducible compliance framework. It should include:
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Systematic screening of counterparts/beneficiaries, taking into account the 50% rule;
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Export commodity classification (ECCN/HTS, EAR99), end-user/destination verification (including under § 744.21), assessment of the FDPR applicability; analysis of “connections to the U.S.” (payments in U.S. dollars, U.S. persons/technology/software);
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Licensing checks (OFAC/BIS general and individual licenses);
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Incorporation of sanctions clauses into contracts, continuous monitoring of OFAC/BIS updates.
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