We previously discussed sanctions measures that have been proposed in several jurisdictions as a response to the conflict in Ukraine on February 4, February 23, and February 25. This post provides an update regarding further Ukraine-related sanctions measures in the United States.

Designation of the Russian President and Minister of Foreign Affairs as SDNs

On February 25, 2022, the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") designated the President of the Russian Federation, Vladimir Putin, the Minister of Foreign Affairs, Sergei Lavrov, as well as 11 members of Russia's Security Council on its Specially Designated Nationals and Blocked Persons ("SDN") List. The OFAC press release is available here.

New Prohibitions on Certain Financial Transactions 

On February 28, 2022, OFAC took action to "effectively immobilizes any assets of the Central Bank of the Russian Federation held in the United States or by U.S. persons, wherever located." An OFAC press release is available here.

In particular, OFAC issued Directive 4, pursuant to Executive Order ("E.O.") 14024, which prohibits U.S. persons from engaging in "any transaction . . . including any transfer of assets . . . or any foreign exchange transaction for or on behalf of" the following banks: (i) the Central Bank of the Russian Federation; (ii) the National Wealth Fund of the Russian Federation; and (iii) the Ministry of Finance of the Russian Federation. Directive 4 also prohibits "any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions" of Directive 4; and "(2) any conspiracy formed to violate any of the prohibitions" of Directive 4.

Simultaneously, OFAC issued General License ("GL") 8A, which replaces and supersedes GL 8 in order to authorize certain transactions with Central Bank of the Russian Federation, and to clarify the scope of such authorizations. More specifically, GL 8A authorizes, until June 24, 2022, all transactions "that are related to energy" with the following entities: (i) State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank; (ii) Public Joint Stock Company Bank Financial Corporation Otkritie; (iii) Sovcombank Open Joint Stock Company; (iv) Public Joint Stock Company Sberbank of Russia; (v) VTB Bank Public Joint Stock Company; (vi) any entity owned, directly or indirectly, 50% or more by one of the aforementioned entities; or (vii) the Central Bank of the Russian Federation. Notably, GL 8A does not authorize:

  • Any transactions prohibited by Directive 1A;
  • The opening or maintaining of a correspondent account or payable-through account for or on behalf of any entity subject to Directive 2 restrictions;
  • Any debit to an account on the books of a U.S. financial institution of the Central Bank of the Russian Federation; or
  • Any transactions involving any other SDNs, unless separately authorized.

Designation of Three Major Russian Banks as SDNs

On the same day, OFAC designated the following entities on its SDN list, pursuant to E.O. 14024: (i) The Russian Direct Investment Fund ("RDIF"); (ii) the Joint Stock Company Management Company of the Russian Direct Investment Fund ("JSC RDIF"); and (iii) Limited Liability Company RVC Management Company ("LLC RVC"). According to OFAC, these entities are "critical to managing one of Russia's key sovereign wealth funds: Russian Direct Investment Fund . . ., its management company, and one of the managing company's subsidiaries."

OFAC also designated the CEO of RDIF, for "being or having been a leader, official, senior executive officer, or member of the board of directors" of the Government of Russia.

Issuance of New Russia-Related Regulations

Finally, OFAC issued a final rule, to implement an April 15, 2021 Russia-related E.O. OFAC noted that it "intends to supplement these regulations with a more comprehensive set of regulations, which may include additional interpretive guidance and definitions, general licenses, and other regulatory provisions."

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