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VEPR: NYET! New Russia Sanctions lead to new Ban?

2K views 19 replies 17 participants last post by  hansellhd2 
#1 ·
#6 ·
I am quite irritated with the VEPR ban. Generally VEPRs are out of my price range but I got out of the last of my Mosin collecting last year and bought one in 762x54r with some of the proceeds. I have been lax on ordering extra mags, though.

I got lucky last week when I looked on Atlantic firearms website and they had the 7.62x54r factory 5 rd mags 2 for $64. I ordered two sets and they arrived today.
Glad I ordered when I did as this was a great price on them.

Beautifully finished rifle and a great shooter on top of it. I wish I had picked up a VEPR 12 before now but I will have to make due with my Saiga12 and my Catamount.
 
#8 ·
This may help explain these updated sanctions


News from Reeves & Dola, LLP​


*** R|D ALERT ***


U.S. GOVERNMENT EXPANDS UKRAINE SANCTIONS TO INCLUDE RUSSIAN FIREARMS MANUFACTURER,​
MOLOT-ORUZHIE, OOO​


On June 20, 2017, the Department of the Treasury's Office of Foreign Assets Control (OFAC) announced expansion of sanctions imposed on persons and entities in Russia pursuant to Executive Orders President Obama issued in 2014. The 2014 sanctions were imposed because the Obama Administration determined the designated persons were contributing to the situation in Ukraine. Readers may recall that the 2014 sanctions named Kalashnikov Concern as one of the Specially Designated Nationals subject to the sanctions. Now, OFAC has added Molot-Oruzhie, OOO, to the list of sanctioned entities, stating that Kalashnikov Concern used the company to falsify invoices in order to circumvent U.S. and European Union sanctions. Molot-Oruzhie is a manufacturer of firearms and accessories, including the VEPR rifle.

Subsequent to the OFAC announcement, the Department of Commerce's Bureau of Industry and Security (BIS) published a notice in the June 22, 2017 Federal Register adding ten entities to the Entity List, including Molot-Oruzhie, OOO. The BIS notice is consistent with the OFAC press release and indicates the sanctions imposed on Molot-Oruzhie are imposed in accordance with Executive Order 13661. E.O. 13661 authorizes sanctions on any individual or entity that has been determined by the Secretary of the Treasury, in consultation with the Secretary of State, to be owned or controlled by, or that has provided material or other support to, persons operating in the arms or related materiel section in the Russian Federation and officials of the Government of the Russian Federation.

The impact of naming Molot-Oruzhie, OOO as a sanctioned entity is the blocking of any property or interest in property of Molot-Oruzhie, OOO, in the possession or control of U.S. persons or within the U.S. Transactions by U.S. persons involving Molot-Oruzhie, OOO are generally prohibited.


DESIGNATION OF MOLOT-ORUZHIE, OOO

The Department of Commerce Federal Register notice of new companies on the Entity List includes the following entry:


(5) Molot-Oruzhie, OOO, a.k.a., the following one alias:
--Obshchestvo S Ogranichennoi Otvetstvennostyu 'Molot-Oruzhie' (f.k.a., Obshchestvo S Ogranichennoi Otvetstvennostu Proizvodstvenno Instrument Kachestvo), 135 ul. Lenina, Vyatskie Polyany, Kirov Obl. 612960, Russia;:


The OFAC list of Specially Designated Nationals includes the following entry:

MOLOT-ORUZHIE, OOO (a.k.a. OBSHCHESTVO S OGRANICHENNOI OTVETSTVENNOSTYU 'MOLOT-ORUZHIE'; f.k.a. OBSHCHESTVO S OGRANICHENNOI OTVETSTVENNOSTYU PROIZVODSTVENNO
INSTRUMENT KACHESTVO), 135 ul. Lenina, Vyatskie Polyany, Kirov Obl. 612960, Russia; Registration ID 1094307000633 (Russia); Tax ID No. 4307012765 (Russia); Government Gazette Number 60615883 (Russia) [UKRAINE-EO13661] (Linked To:
KALASHNIKOV CONCERN).


WHAT IS A SPECIALLY DESIGNATED NATIONAL (SDN)?
SDNs include individuals and entities located anywhere in the world that are owned or controlled by, or that act for or on behalf of the government of a sanctioned country. SDNs also include certain individuals and entities designated as terrorists and narcotics traffickers under sanctions programs that are not country-specific. All property and interests in property of a SDN that comes under U.S. jurisdiction is blocked or frozen. Blocking immediately imposes an across-the-board prohibition against transfers or transactions of any kind involving the property. When a corporation, including a bank, blocks a prohibited payment, it must report the action to OFAC within 10 days.


OFAC JURISDICTION AND PENALTIES


OFAC has sweeping jurisdiction over U.S. persons and other persons subject to U.S. jurisdiction. This includes U.S. citizens and permanent resident aliens ("green card" holders) whether in the U.S. or abroad, companies organized and formed under U.S. law, and any individual or organization physically located in the U.S. at the time of the activity, regardless of nationality. In addition to these controls, OFAC sanctions also prohibit facilitation of foreign trade with targets of U.S. sanctions. This prevents U.S. persons from undermining sanctions through indirect support and applies to approving, financing, guaranteeing, or otherwise assisting foreign trade with a sanctioned target, changing policies or procedures to permit foreign affiliates to engage in activities with a sanctioned target that previously required U.S. approval, and referring declined business opportunities to a foreign party.

Penalties for violating OFAC sanctions are substantial. Pursuant to the International Emergency Economic Powers Act (IEEPA), the statute authorizing the Ukraine sanctions, any person who causes a violation of the sanctions may be held liable for civil and criminal penalties. Civil penalties may be up to $250,000 per violation or twice the transaction value, whichever is greater. Criminal penalties may be up to $1 million per violation or twice the transaction value, which is greater, in addition to up to 20 years imprisonment. OFAC violations may also lead to denial or debarment of export privileges under the International Traffic in Arms Regulations.

It is also important to note that OFAC violations are subject to strict liability. This means that OFAC must prove only that a violation occurred to impose a penalty. There is no requirement that OFAC prove the U.S. person intentionally or knowingly violated the sanctions.



ADDITIONAL GUIDANCE FROM OFAC

OFAC defines property in broad terms to include anything of value. This includes money, checks, drafts, debts, obligations, notes, warehouse receipts, bills of sale, evidence of title, negotiable instruments, trade acceptance, goods, wares, merchandise, and anything else real, personal or mixed, intellectual property and intangible assets. The term "property interest" is defined as any interest whatsoever, direct or indirect. OFAC publishes an industry brochure titled "OFAC Regulations for Exporters and Importers" with additional guidance.


IMPACT OF MOLOT-ORUZHIE SANCTIONS



Neither OFAC nor the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) have provided specific guidance on the designation of Molot-Oruzhie, OOO as a SDN. We have requested guidance and will supplement this Alert when it is received.

Given OFAC's linking of Molot-Oruzhie with Kalashnikov Concern, it is likely the sanctions will be consistent with those imposed on Kalashnikov in 2014. In this regard, OFAC published two questions and answers providing guidance on the Kalashnikov sanctions which we reprint below:



374. If I own a Kalashnikov product, is that product blocked by sanctions? Am I able to resell a Kalashnikov product at a gun show or other secondary market?

If a U.S. person is in possession of a Kalashnikov Concern product that was bought and fully paid for prior to the date of designation (i.e., no payment remains due to Kalashnikov Concern), then that product is not blocked and OFAC sanctions would not prohibit the U.S. person from keeping or selling the product in the secondary market, so long as Kalashnikov Concern has no interest in the transaction. New transactions by U.S. persons with Kalashnikov Concern are prohibited, however, and any property in which Kalashnikov Concern has an interest is blocked pursuant to OFAC's designation of Kalashnikov Concern on July 16, 2014. If a U.S. person has an inventory of Kalashnikov Concern products in which Kalashnikov Concern has an interest (for example, the products are not fully paid for or are being sold on consignment), we advise that U.S. person to contact OFAC for further guidance on handling of the inventory. [7-16-2014]

375. If I have Kalashnikov products in my inventory, can I sell them?

If a U.S. person has an inventory of Kalashnikov Concern products in which Kalashnikov Concern has an interest (for example, the products are not fully paid for or are being sold on consignment), we advise that U.S. person to contact OFAC for further guidance on handling of the inventory. [7-16-2014]



Based on this OFAC guidance, the impact of the sanctions on firearms importers and dealers should be consistent with that of the Kalashnikov sanctions:

  1. Firearms in inventory. According to the OFAC guidance above, if Molot-Oruzhie has no interest in the firearms, then importers and dealers with Molot-Oruzhie firearms in inventory may continue to dispose of them. In other words, if there is no payment due to Molot-Oruzhie for the firearm, then the product is not blocked and U.S. persons may lawfully sell the product. Conversely, firearms for which importers and dealers owe Molot-Oruzhie money are blocked and may not lawfully be transferred. Importers and dealers in this situation should contact OFAC and legal counsel for guidance.
  2. New contracts for purchase of Molot-Oruzhie firearms. Question #374 makes it clear that U.S. persons are prohibited from negotiating new contracts for the purchase of Molot-Oruzhie firearms after the sanctions were announced on June 20, 2017. Importers or dealers who have already entered into such contracts should contact OFAC and legal counsel for guidance.
  3. Firearms on order or in the process of shipment or delivery. OFAC guidance is unclear on the impact of the sanctions on firearms ordered from Molot-Oruzhie or a third party not yet within the U.S. Potential impact likely will depend on whether Molot-Oruzhie has an interest in the firearms (e.g., whether any payment is still due to Molot-Oruzhie). Importers or dealers in this situation should contact OFAC and legal counsel for guidance.

AUTHORITY UNDER THE ARMS EXPORT CONTROL ACT

The President has broad authority under the Arms Export Control Act (AECA) to impose restrictions, including embargoes, on the importation of firearms into the United States. Although VEPR rifles manufactured by Molot-Oruzhie are specifically authorized for importation from Russia (see 27 C.F.R. § 447.52(b)(1)(i)(BB)), the President could impose an embargo on the importation of firearms manufactured by Molot-Oruzhie to implement the OFAC sanctions. This was the course of action taken by the Administration in 2014 to implement the sanctions on Kalashnikov Concern. On August 13, 2014, ATF announced suspension of import permits involving Kalashnikov Concern based on guidance the agency received from the Department of State. ATF posted questions and answers on the suspension on its website, which can be accessed here.

We will keep you apprised as we obtain additional information on the issues addressed in this Alert, including ATF's implementation of the sanctions.






[HR][/HR] The above alert is for informational purposes only and is not intended to be construed or used as legal advice. Receipt of this alert does not establish, in and of itself, an attorney-client relationship.

Questions about this alert can be directed to:


Johanna Reeves: 202.715.9941 | jreeves@reevesdola.com

Teresa Ficaretta: 202.715.9183 | tficaretta@reevesdola.com

About Reeves & Dola


Reeves & Dola is a Washington, DC law firm that specializes in helping clients navigate the highly regulated and complex world of manufacturing, sales and international trade of defense and commercial products. We have a deep understanding of the Federal regulatory process, and use our expertise in working with a variety of Federal agencies to assist our clients with their transactional and regulatory needs.



 
#9 ·
Molot is bankrupt and supposedly got caught selling (lending?) their name to Kalashnikov to get around the ban already in place. Now no company can do business directly with Molot as well although whether or not Molot can go around that ban by using other companies to continue selling their rifles might be an option (although Russian companies are notorious for not working well with others so that is a long shot).

My guess is there has been a deal on some level linking Molot and Kalashnikov for some time.
 
#10 ·
Not sure how bankruptcy works in Russia-- but if it's anything like here in the US, Molot could be up and running the almost exact same operation in no time under a different name. But it seems as if the BATF would be on the alert, and that the sanction guidelines would be arranged to exclued business dealings with any future entities that might get propped up to fill the Molot void.
 
#12 ·
As I understand the rifles are not banned as much as doing direct business with Molot. If Molot was to sell out or find an intermediary to deal through I think they could probably start imports again but historically Russian businesses are very hesitant to do things like that.
 
#16 ·
I think its the right thing to do in the face of what the Russians are doing around the globe. I personally would have no use for any Vepr to me its not a Military grade rifle for collecting purpose. I know it hurts all of us when we loose ability to get the various guns we want here from outside the country. But realistically we need to try somehow to stop the Russians from trying to rebuild their former country as It once was by terrorizing those who want nothing to do with them. We did nothing during the obama reign and now have a president who will actually do something . Time to think about that and not our personal interest. Just my thought on it.
 
#17 ·
Actually the Russian sanctions were instituted by Obama Executive Orders in 2014. Banking, oil, technology restrictions.

As we know the Trump stance on US/Russia relations and Vladimir Putin seems quite different.
This recent sanction is interesting and what the future may hold on our relations etc., with Russia.

The Syria rhetoric, Crimea and Ukraine are the touchy areas as well as the Senate and Special Prosecutor investigations into Russian hacking and Trump team interaction..
 
#18 ·
Hello All,

I took delivery of my Molot VEPR 5.45 folding stock AK-74 and it FAR exceeded my expectations. It is better than the pictures, a very solid, heavy barreled rifle.
There are many rifles that are selling now that won't always be available, I am buying a few more this year like the Yugo AK and the G3 type PTR clones.
 
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