Russian sanctions: US plans to remove Rusal from SDN list

The US Specially Designated Nationals And Blocked Persons List (SDN) is published by OFAC containing a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries or individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific. Collectively, such individuals and companies are called "Specially Designated Nationals" or SDNs and their assets are blocked and US persons 'are generally prohibited from dealing with them'.

The latest OFAC decision means that, once the removal occurs, ships will be able to trade freely with Rusal and will not be subject to the current wind-down provisions. However, the latest Client Alert from the West P&I Club's US attorneys Freehill Hogan & Mahar makes clear that the current partial shutdown of the US Government over budgetary disputes may be impacting OFAC's ability to actually implement the changes.

Namely, the OFAC letter to Congress states that “The agreement between OFAC and the Petitioners [the three companies which petitioned for removal from the SDN List] is subject to approval by a number of stakeholders.” As such, unless that approval is obtained, there could be a delay in the removals from the SDN List.

While there was some additional initial negative political reaction to OFAC’s announcement, on the basis that it sent the wrong message to Russia with regard to its malign activities, it seems unlikely that there will be sufficient opposition in Congress to prevent OFAC’s intended action. There is, however, another potential for delay, which is the current US government partial shutdown, now in its 13th day,

...Freehill Hogan & Mahar stresses.

The government shutdown has occurred because US Congress, or at least the opposition Democratic Party in Congress, has refused to approve a budget appropriation bill necessary to continue funding government operations, which appropriation President Trump has insisted include $5B for the commencement of the construction of a wall along the US southern border.

As of today [4 January], the Democratic Party assumes the majority in the House of Representatives, one of the two houses of Congress, and that sets the stage for renewed negotiations with President Trump over the appropriations bill and border security. However, at this point, no immediate solution is in sight.