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OFAC Announces New Ukraine-Related Designations, Includes Russian National Bank
On March 11, OFAC updated its Specially Designated Nationals (SDNs) list comprising of individuals and entities including a Russian national bank, Russian National Commercial Bank. The SDN list identifies persons and entities with which U.S. citizens and permanent residents are prohibited from doing business and whose assets or interests in assets that come within U.S. jurisdiction must be frozen.
President Obama Signs Law Allowing Authority To Implement Ukraine-Russian Sanctions
On December 18, President Obama signed into law H.R. 5859, the “Ukraine Freedom Support Act of 2014.” First introduced in the House on December 11, the bill gives the President the authority to impose sanctions against countries, entities, and individual persons that pose potential threats to financial stability through excessive risk-taking with the Russian market. The bill provides authority for sanctions against foreign persons, including executive officers of an entity, relating to (i) banking transactions; (ii) investing in or purchasing equity or debt instruments; (iii) U.S. property transactions; and (iv) Export-Import Bank of the United States assistance. Finally, the bill directs the President to “use U.S. influence to encourage the World Bank Group, the European Bank for Reconstruction and Development, and other international financial institutions to invest in and stimulate private investment in such projects.”
OFAC Publishes Initial Ukraine-Related Sanctions Regulations
On May 8, OFAC issued regulations to implement recent Executive Orders establishing sanctions against Russian individuals and entities related to the situation in Ukraine. The Ukraine-Related Sanctions Regulations, 31 C.F.R. Part 589, implement Executive Order 13660 of March 6, 2014, Executive Order 13661 of March 17, 2014, and Executive Order 13662 of March 20, 2014. Consistent with its prior practice, OFAC published the regulations in abbreviated form and plans to provide a more comprehensive set of regulations, which may include additional interpretive and definitional guidance and additional general licenses and statements of licensing policy.
Treasury Implements Additional Russia Sanctions
On April 28, the Treasury Department announced additional sanctions in response to developments in Ukraine by designating seven Russian government officials and 17 entities, including numerous financial institutions, pursuant to Executive Order 13661. That order authorizes sanctions on, among others, officials of the Russian Government and any individual or entity that is owned or controlled by, that has acted for or on behalf of, or that has provided material or other support to, a senior Russian government official. The designated individuals will be subject to an asset freeze and a U.S. visa ban, and the companies will be subject to an asset freeze. In addition, the Department of Commerce imposed additional restrictions on 13 of the companies by imposing a license requirement with a presumption of denial for the export, re-export or other foreign transfer of U.S.-origin items to the companies. Further, the Departments of Commerce and State tightened review of export license applications for any high-technology items that could contribute to Russia’s military capabilities, and plan to revoke any existing export licenses that meet the tightened conditions.
Obama Administration Sanctions Numerous Russian, Ukrainian Officials
This week, President Obama issued two new Executive Orders, one on March 17 and another on March 20, authorizing the Treasury Department to impose sanctions on (i) current and former Russian and Ukrainian officials; (ii) a Russian bank; (iii) any individual or entity that operates in the Russian arms industry; and (iv) any individual or entity determined to be owned or controlled by, to act on behalf of, or provide material or other support to, any senior Russian government official or blocked person. Concurrent with each executive order, OFAC added (on March 17 and March 20) numerous current and former Ukrainian and Russian officials to its list of Specially Designated Nationals and Blocked Persons. These latest actions expand on the President’s initial March 6 Executive Order authorizing sanctions in response to Russia’s recent actions related to Ukraine, which the Obama Administration has characterized as threatening Ukraine’s democratic processes and institutions, sovereignty, territorial integrity, and assets. Generally, the orders exclude the designated persons and entities from the U.S. financial system and block the designated persons’ and entities’ access to property and interests in property that are within the U.S. As a result, U.S. banking institutions are required to block the financial assets of the designated individuals and entities and report such blocked property to OFAC within 10 business days. The orders and sanctions are the beginning stages of a potential extended sanctions framework involving Russian officials and businesses.