Sanctions scramble

Certain members of the shipping industry were reeling this week in the wake of escalating tensions between the US and Russia, according to Holland & Knight.
Vladimir Yakunin also heads Russian Railways.

Vladimir Yakunin also heads Russian Railways.

The law firm claims a growing number of US companies are scrambling to determine if their trade partners are tied to individuals targeted by the most recent round of sanctions aimed at President Vladimir Putin’s inner circle.

“The fluid situation and rapidly changing sanctions create significant risk management challenges for companies doing business in Russia and parts of Ukraine,” the firm, which has a practice dedicated to shipping, wrote in an email alert emailed issued Monday evening.

“Unlike typical individuals whose assets are blocked by the US Treasury Department's Office of Foreign Assets Control (OFAC) some of the Russian oligarchs targeted for sanctions may own and control a number of companies which would then be considered sanctioned entities.”

The firm urged companies to stay current on which individuals and entities are subject to sanctions issued by the Obama Administration that prohibit domestic companies from doing business with what are known as “specially designated nationals” or “SDNs”.

It also warned clients to check to ensure that their business partners in Russia and Ukraine are not affiliated with any of these SDNs, develop contingency plans in case specific sectors are targeted and consider the “real possibility” that Moscow will counter with sanctions of its own.

To date, Holland & Knight says OFAC and the Obama Administration have taken aim at more than two dozen SDNs. The list is comprised of Ukrainian officials, several Russian government officials, members of Putin’s inner circle and one Russian bank, Bank Rossiya.

The list, which identifies 30 individuals and entities in total, includes the likes of Vladimir Yakunin, a close confidant of the Russian President who has been active in variety of different transportation sectors and used to serve as chairman of Sovcomflot affiliate Novoship.

Some observers admit they were caught off guard when they first received Holland & Knight’s warning since so many market researchers are telling clients that the crisis in Crimea is unlikely to have a significant near-term impact on the shipping industry in general.

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