The Treasury Department has announced that they are adding the Kalashnikov Concern to its Office of Foreign Assets Control list of sanctioned parties. This will effectively halt further importation of Kalashnikov Concern products to the U.S.
Existing firearms may be sold and traded normally, according to the Treasury’s FAQ page:
- 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]
- 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]
This decision follows a series of Executive Orders that permit the Treasury to control block trade with persons and corporations that they have determined “to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of … the actions and policies of the Government of the Russian Federation, including its purported annexation of Crimea and its use of force in Ukraine, continue to undermine democratic processes and institutions in Ukraine.”
The Kalashnikov Concern is a collection of Russian Arms manufacturers — including Izhmash and Baikal — named for Mikhail Kalashnikov. This move affects more than just Saiga rifles and shotguns, which are the most common brand of Kalashnikov Concern firearms sold in the U.S.
This announcement does not specifically target the importation of AK-pattern firearms, only Kalashnikov Concern products. Other prominent AK-pattern firearms made in other countries will not be affected.
As sanctions, this move to block Kalashnikov Concern products may be temporary. Time will tell how the market will respond to this, although it’s fair to say the street price on Saigas has just gone up.
In addition to the Kalashnikov Concern, the Treasury Department has expanded sanctions to the Rosneft, a major Russian oil company and two larger banks Gazprombank and Vnesheconombank. A full list of individuals and entities affected by these sanctions can be found in the public Treasury Resource Center.