Yesterday, the United States imposed secondary sanctions on Turkey’s Presidency of Defense Industries (SSB), the country’s main defense procurement entity, for purchasing the Russian S-400 missile system.  The sanctions were imposed pursuant to Section 231 of the Countering America’s Adversaries Through Sanctions Act (CAATSA), which authorize secondary sanctions against non-U.S. parties that conduct a “significant transaction” with the Russian defense or intelligence sectors.  The action marks the first time such sanctions have been imposed on a NATO country.

The U.S. State Department imposed the following five sanctions on SSB, out of a menu of 12 possible options:

  • Prohibiting issuance of specific U.S. export licenses/authorizations for any goods or technology transferred to SSB;
  • Prohibiting loans or credits by U.S. financial institutions to SSB totaling more than $10 million in any 12-month period;
  • Banning U.S. Export-Import Bank assistance for exports to SSB;
  • Requiring the U.S. to oppose loans benefitting SSB by international financial institutions; and
  • Imposing full blocking sanctions and visa restrictions on SSB’s Chairman and three other employees.

While not a complete blocking of SSB, the sanctions will likely limit the ability of the SSB to purchase defense-related goods and services from the United States and limit the company’s ability to partner with U.S. companies in the defense sector.

New “NS-MBS” (Non-Sanctions – Menu Based Sanctions) List

Yesterday, OFAC and the State Department also announced a new non-SDN list to identify parties subject to menu-based sanctions authorities, such as CAATSA.  The new “NS-MBS List” appears on OFAC’s Consolidated Screening List and will be used to identify parties subject to non-blocking sanctions only.  Parties subject to blocking requirements will continue to be identified on the Specially Designated Nationals (SDN) List.