UPDATES ON U.S.-IMPOSED RUSSIAN SANCTIONS IN RESPONSE TO THE CONTINUING CRISIS IN UKRAINE
March 30, 2022
In recent days, the U.S. government, via the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), announced additional full blocking sanctions targeting over 400 Russian elites, Russian State Duma (one of the chambers of the Russian parliament) members, and Russian defense companies in further response to Russia’s invasion of and ongoing war in Ukraine. This was done in combination with OFAC’s issuance of Russia-related General Licenses 6A, 17A, 20 and 25, all available here, which authorize the following transactions despite the current full blocking sanctions: (1) transactions related to (a) the exportation or reexportation of agricultural commodities, medicine, medical devices, replacement parts and components, or software updates, and (b) the prevention, diagnosis or treatment of COVID-19 (including research or clinical studies), or ongoing clinical trials and other medical research activities that were in effect prior to March 24, 2022; (2) transactions related to certain imports that are ordinarily incident and necessary to the importation into the U.S. of alcoholic beverages, non-industrial diamonds of Russian origin, and fish, seafood and preparations thereof of Russian origin pursuant to written contracts or written agreements entered into prior to March 11, 2022; (3) transactions ordinarily incident and necessary to the official business of third-country diplomatic or consular missions located in Russia; and (4) transactions of news reporting organizations that are U.S. persons and U.S. persons who are regularly employed by a news reporting organization as journalists or as supporting broadcast or technical personnel in the Crimea region of Ukraine, the so-called Donetsk People’s Republic (DNR) or Luhansk People’s Republic (LNR) regions of Ukraine, or such other regions of Ukraine as may be determined by the U.S. Secretary of the Treasury, in consultation with the U.S. Secretary of State (collectively, the “Covered Regions”), to the extent such transactions are ordinarily incident and necessary to their journalistic activities in the Covered Regions. In addition, President Biden’s administration announced further sanctions including a ban on the import of Russian oil and gas, restrictions to forbid U.S. citizens and companies from doing business with the central bank of Russia, and sanctions on seven Russian entities that control media outlets as well as 26 individuals who work at these media outlets in response to Russian disinformation campaigns related to the invasion of Ukraine. Many of these new sanctions were coordinated with the European Union and the G7 and now bring the total number of individuals and entities sanctioned by the U.S. to over 600.
As background, the U.S., in coordination with allies including the U.K., Canada and the European Union, has imposed sanctions against Russia since 2014 in response to the Russian annexation of Crimea; however, the latest rounds of sanctions have been the most significant to date with an aim towards penalizing Russia economically and weakening its power in response to the Russian invasion of Ukraine, which began on February 24, 2022. For example, on the day the invasion began, OFAC imposed its first round of “full blocking” sanctions to target Russia’s largest financial institutions with the intention of affecting those entities’ ability to raise capital and participate in the global financial system. Specifically, the sanctions targeted nearly 80% of all banking assets in Russia, Russia’s Central Bank, Russia’s two largest banks, several other major Russian financial institutions, and almost 90 financial institution subsidiaries around the world. The U.S. and allies also moved to remove several Russian banks from the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”), which is a Belgium-based interbank messaging service used to facilitate most financial transactions. According to OFAC, Russia’s financial system is heavily dominated by state-owned actors who rely on the U.S. financial system to conduct their business activities both in Russia and internationally, and therefore, the intended effect of sanctioning these entities was to cut off the Russian financial system and economy from critical financial infrastructure, the U.S. dollar, and participating in the world financial system.
Further, on March 3, 2022, the U.S. Department of the Treasury announced that the U.S. Department of State would impose additional and substantial sanctions on Russia’s defense enterprises including sanctioning 22 defense-related firms. These sanctions were meant to target a wide range of Russian defense enterprises, including entities that develop and produce fighter aircraft, infantry fighting vehicles, electronic warfare systems, missiles, and unmanned aerial vehicles for Russia’s military. The U.S. Commerce Department also previously restricted exports of high-tech products such as computers, computer chips, and semiconductors to Russia with the goal of restricting its military capabilities. The export restrictions extend to goods produced in other countries using American technology. In addition, the U.S. also imposed sanctions against many Russian oligarchs, elites, and their families, and continues to add individuals to its sanctions list as needed. For example, several Russian politicians, oligarchs, and officials, including President Vladimir Putin, Russian Foreign Minister, Sergei Lavrov, and Dmitry Peskov, Putin’s press secretary, have had their foreign-held assets frozen by the U.S. as well as the EU, U.K., Switzerland, Canada, and Japan. Some have even been banned from traveling to and from these countries as well. OFAC’s press releases announcing new sanctions against Russian financial institutions and individuals, which includes the full list of companies and Russian politicians, oligarchs, and elites sanctioned can be found here, here and here. Additionally, OFAC’s full updated Specially Designated Nationals list is available here.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com 202-659-6622) or Drew Derco (dderco@eckertseamans.com 202-659-6665).
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