US Sanctions relating to Russia – Ventspils and Latvian SDNs

13 December 2019

US law firm Freehill Hogan & Mahar (“Freehills”) advise that due to alleged serious human rights abuses and corruption, Aivars Lembergs, mayor of Ventspils, has been made a SDN by the US Department of Treasury’s Office of Foreign Assets Control (OFAC) under Executive Order 13818. OFAC has also designated as SDNs four Latvia-based entities that are owned or controlled by him:

  • Ventspils Freeport Authority
  • Attistibas Agentura (also known as Ventspils Development Agency),
  • Biznesa Attistibas Asociacija (also known as Business Development Association), and
  • Latvijas Tranzita Biznesa Asociacija (also known as Latvian Transit Business Association).

Members, either due to call or arranging calls to Ventspils, should particularly note that one of the designated entities is Ventspils Freeport Authority. This may result in calls at the Port and payments to the Port Authority being in breach of US sanctions.

Winding Down Period

Trade with Ventspils is currently permitted for a 30-day period (ie until 12:01 am US Eastern Standard Time on 8 January 2020) under an OFAC General License. Freehills advise that this is “generally understood” to apply to both US and non-US persons/entities. With regard to the winding down period, Members calling at Ventspils should be aware that:

  1. Any call at Ventspils must actually be pursuant to the winding down of a contract concluded prior to the imposition of sanctions;
  2. Payments made to the Port after the end of the winding down period (even if the call was prior to that) may also be a breach of sanctions.

After the End of the Winding Down Period

In relation to calls at the Port or payments to the Port Authority, Freehills advise that “U.S. persons will be prohibited as of January 8 from engaging in any transactions with Ventspils Freeport Authority absent authorization or exemption. Further, any person providing “material” assistance to, or goods or services in support of Ventspils Freeport Authority beyond the wind-down period risks the imposition of sanctions. “Material” is not defined, and it is not yet clear whether OFAC will consider routine port calls to Ventspils beyond the expiration of the wind-down period to be “material” assistance or goods or services to Ventspils within the meaning of the E.O. Without further clarity from the authorities, we cannot say that trade to Ventspils Freeport is without risk.”

To access a copy of the full Client Alert from Freehills, click here.