United States: United States Imposes Cybersecurity Sanctions On Russia

Key Points

  • This action marks the first time sanctions have been imposed under the Cybersecurity Sanctions Program established on April 1, 2015, with the designation of nine entities and individuals.
  • President Obama expanded the scope of the executive order creating the Cybersecurity Sanctions Program to allow for designations against persons determined to have engaged in malicious cyber­-enabled activities directed at, interfering with or undermining election processes or institutions in the United States or abroad.
  • Five entities that are subject to the new sanctions are now also subject to export licensing requirements by the U.S. Department of Commerce.
  • Clients subject to U.S. jurisdiction should ensure that their screening software is updated to safeguard their compliance obligations against transactions involving the newly designated persons and entities.
  • Clients should review the technical information released to evaluate and assess potential cyber intrusion risks.

Overview of Actions Taken by the United States

On December 29, 2016, President Obama announced that he was sanctioning nine individuals and entities: the Main Intelligence Directorate (aka Glavnoe Razvedyvatel'noe Upravlenie) (GRU) and the Federal Security Service (aka Federalnaya Sluzhba Bezopasnosti) (FSB), two Russian intelligence services; four individual officers of the GRU; and three companies that were stated to have provided material support to the GRU's cyber operations. In addition, two Russian individuals were sanctioned for using cyber-enabled means to cause misappropriation of funds and personal identifying information. These actions mark the first expansion of the Specially Designated Nationals (SDN) List to include entities and individuals under the U.S. Department of Treasury's Office of Foreign Assets Control (OFAC) cybersecurity program since it was established on April 1, 2015. The 2015 client alert can be found here.

On January 4, 2017, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) added the five entities newly designated as SDNs to the Entity List. As a result of such designations, additional licensing requirements and restrictions apply to exports, re-exports, and transfers (in-country) to these entities under the Export Administration Regulations (EAR).

The State Department also announced that it is denying Russian access to two Russian government-­owned recreational compounds in Maryland and New York and is declaring "persona non grata" 35 officials from the Russian Embassy in Washington and the Russian Consulate in San Francisco. The State Department announced that these measures were part of a comprehensive response to Russia's interference in the U.S. election; a pattern of harassment of U.S. diplomats overseas (including arbitrary police stops, physical assault and the broadcast on Russian State TV of personal details about our personnel that put them at risk); and Russian government actions that the State Department maintained impeded U.S. diplomatic operations.

Finally, on December 29, the Department of Homeland Security and the Federal Bureau of Investigation (FBI) released declassified technical information on Russian civilian and military intelligence service cyber activity to allow for the public to be able to better identify, detect and disrupt "Russia's global campaign of malicious cyber activities." This Joint Analysis Report follows the October 7, 2016, joint statement by Secretary Johnson and Director Clapper that the intelligence community was confident that the Russian government directed recent compromises of emails from U.S. persons and institutions and that the disclosures of alleged hacked emails was consistent with the Russian­-directed efforts, both in the United States and to influence public opinion in Europe and Eurasia. The full Joint Analysis Report can be found here.

President Obama suggested that additional actions are already under way and forthcoming: "These actions are not the sum total of our response to Russia's aggressive activities. We will continue to take a variety of actions at a time and place of our choosing, some of which will not be publicized."

Congressional leaders have generally supported the December 29 actions by President Obama, with certain senior Republican members of Congress remarking that measures should have been taken earlier.

Russian President Vladimir Putin has indicated that he will not take retaliatory measures at this time and will await the inauguration of President-­elect Donald Trump. In response, President-­elect Trump praised President Putin's restrained response to these measures.

These and other sanctions involving Russia are subject to potential change by executive order. Although the U.S. Congress is considering legislation to codify existing sanctions and/or impose additional sanctions against Russia, President-­elect Trump may seek to roll back these executive actions after he takes office on January 20, 2017. An initial indication of what is to come will likely occur during the upcoming confirmation hearings for Rex Tillerson as the nominee for Secretary of State, who has extensive business experience in Russia.

Cybersecurity Executive Order Expanded to Cover Election Interference

As originally issued in April 2015, Executive Order 13694 created an authority for the U.S. government to respond more effectively to the most significant cyber threats and targeted persons who engage in malicious cyber­-enabled activities. The President amended Executive Order 13694 to authorize sanctions on those who engage in malicious cyber­-enabled activities that have the purpose or effect of "tampering with, altering, or causing a misappropriation of information with the purpose or effect of interfering with or undermining election processes or institutions."

Specific Additions to the SDN List

Under this new authority, President Obama added five entities and four individuals to the SDN List. The Fact Sheet issued by the White House explained the basis for each of these additions, indicating that each of these entities and individuals had tampered, altered or caused a misappropriation of information with the purpose or effect of interfering with the 2016 U.S. election processes, as explained below:

  • Two Russian intelligence services: the Main Intelligence Directorate (aka Glavnoe Razvedyvatel'noe Upravlenie) (GRU), which was involved in external collection using human intelligence officers and a variety of technical tools; and the Federal Security Service (aka Federalnaya Sluzhba Bezopasnosti) (FSB), which assisted the GRU in conducting the activities described above
  • Three companies that provided material support to the GRU's cyber operations: the Special Technology Center (aka STLC, Ltd. Special Technology Center St. Petersburg), which assisted the GRU in conducting signals intelligence operations; Zorsecurity (aka Esage Lab), which provided the GRU with technical research and development; and Autonomous Noncommercial Organization "Professional Association of Designers of Data Processing Systems" (ANO PO KSI), which provided specialized training to the GRU
  • Four individual officers of the GRU: Igor Valentinovich Korobov, the current Chief of the GRU; Sergey Aleksandrovich Gizunov, Deputy Chief of the GRU; Igor Olegovich Kostyukov, a First Deputy Chief of the GRU; and Vladimir Stepanovich Alexseyev, also a First Deputy Chief of the GRU.

In addition, OFAC designated two Russian individuals under a pre­existing portion of Executive Order 13694 for using cyber­-enabled means to cause misappropriation of funds and personal identifying information, explaining the bases for such designations as indicated below:

  • Evgeniy Mikhailovich Bogachev, who engaged in significant malicious cyber­-enabled misappropriation of financial information for private financial gain; Bogachev and his associates were responsible for the theft of more than $100 million from U.S. financial institutions, Fortune 500 firms, universities and government agencies
  • Aleksey Alekseyevich Belan, who engaged in significant malicious cyber-enabled misappropriation of personal identifiers for private financial gain; Belan compromised the computer networks of at least three major United States­-based e­commerce companies, and he used his unauthorized access to steal user data belonging to approximately 200 million accounts worldwide and then actively engaged in successful efforts to sell the stolen information for private financial gain.

Both men have multiple arrest warrants pending in the United States for various computer­-related crimes and remain on the FBI's Most Wanted List.

U.S. persons are prohibited from dealing with SDNs, and all assets of SDNs that are currently in, or come within, the United States or the possession or control of a U.S. person are blocked, and U.S. persons are generally prohibited from engaging in transactions with them. Any entities that these SDNs own (defined as a direct or indirect ownership interest of 50 percent or more) are also blocked, regardless of whether those entities are separately named on the SDN List, and U.S. persons are generally prohibited from engaging in transactions with such entities as well. The individuals designated as SDNs will also be denied entry into the United States.

Corresponding Additions to the Entity List

Following OFAC's designations, BIS added the two Russian intelligence agencies (GRU and FSB) and the three companies (Special Technology Center, Zorsecurity and ANO PO KSI) to the Entity List.

As a result of such designations, additional licensing requirements and restrictions apply to exports, re-exports and transfers (in-country) under the Export Administration Regulations (EAR) to such entities. Specifically, a license is required where items subject to the EAR are to be exported, re-exported, or transferred (in-country) to any of the entities added to the Entity List or in which such entities act as purchaser, intermediate consignee, ultimate consignee, or end-user. No license exceptions are available and BIS has imposed a presumption of denial policy to any license applications for the export, re-export or transfer of items subject to the EAR to these entities.

Practical Implications

Entities and individuals subject to U.S. jurisdiction should ensure that they do not engage in impermissible transactions with persons named on OFAC's SDN List or any entity owned by such persons. Exporters should also ensure that their export compliance programs have adequate measures in place to address the export, re-export and transfer restrictions imposed by BIS. Additionally, U.S. officials are encouraging the public to review the declassified technical information relating to the cyber activities by Russia to help identify, detect and disrupt cyber activities that may have occurred or remain ongoing.

Additional Information

The White House: Amended Executive Order , President Obama's Statement on the Executive Order and Fact Sheet

The White House Blog: The Administration's Response to Russia: What You Need to Know

Bureau of Industry and Security: Addition of Certain Entities to the Entity List

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions