On March 15, 2018, the Trump Administration imposed sanctions on five Russian organizations and 19 individuals for interference with the 2016 US elections and malicious cyber-attacks. Among those sanctioned were the Federal Security Service, the successor to the KGB, Russian military intelligence, known as GRU, and Russian individuals and organizations recently indicted by special counsel Robert Mueller.1 These sanctions represent both a continuity of past sanctions against Russian cyber activities and an increased intensity and direct invocation of the Countering America's Adversaries Through Sanctions Act of 2017 (CAATSA)2 by the Trump Administration to sanction Russian activities contrary to US interests.
The US Department of the Treasury's Office of Foreign Assets Control (OFAC) designated these persons and entities as Specially Designated Nationals (SDNs), under CAATSA and Executive Order 13694, "Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities," as amended, and codified pursuant to CAATSA. US persons, including US financial institutions, are prohibited generally from engaging in any transactions with SDNs and are required to block (i.e., freeze) any property or interests in property belonging to SDNs (or entities of which SDNs own 50 percent or more directly or indirectly). The Administration has sanctioned previously Russian entities under cyber-related and Ukraine and Russia-related sanctions authorities, but the Administration is now directly relying on the new CAATSA sanctions authorities to penalize Russian activity.3
These Russia sanctions coincided with the United States' joint statement with Britain, France, and Germany denouncing Russia for its apparent role in a nerve-gas attack on a former Russian spy and his daughter on British soil, calling it a "clear violation" of international law. The Administration directly attributed to the Russian government election interference and cyber-attacks when announcing these sanctions. "The Administration is confronting and countering malign Russian cyber activity, including their attempted interference in US elections, destructive cyber-attacks, and intrusions targeting critical infrastructure," said Treasury Secretary Steven T. Mnuchin.4 The press release states that since at least March 2016, Russian government cyber actors have targeted US government entities and multiple US critical infrastructure sectors.
The Trump Administration also announced its intent to impose additional sanctions on Russia for its ongoing efforts to destabilize Ukraine, occupy Crimea, and meddle in elections, as well as for its endemic corruption and human rights abuses. "These targeted sanctions are a part of a broader effort to address the ongoing nefarious attacks emanating from Russia," said Secretary Mnuchin. "Treasury intends to impose additional CAATSA sanctions, informed by our intelligence community, to hold Russian government officials and oligarchs accountable for their destabilizing activities by severing their access to the US financial system."5
Persons who engage in trade with Russia should expect further Russia-related sanctions. The Trump Administration has various sanctions tools available to impose additional punitive measures on Russian entities as well as US and non-US companies and persons that engage in sanctioned activities. The Administration can make additional designations to its SDN list or its Russian Sectoral Sanctions Identifications (SSI) list, which includes entities in Russia's energy, financial, and defense sectors.
CAATSA also requires the President to impose certain "secondary sanctions," including, among other things, on foreign persons or foreign financial institutions that are involved in significant investments in special Russian crude oil projects, facilitate certain significant transactions on behalf of Russian sanctioned persons, or conduct significant transactions with the Russian defense and intelligence sectors. Although mandatory under CAATSA, the Administration has not yet announced any such secondary sanctions. The Administration also may use sanctions to address other destabilizing activities emanating from Russia, including under its cyber-related sanctions program, Magnitsky sanctions program against human rights abusers, and North Korea sanctions program.
The US has not imposed an embargo on all trade with Russia, but has identified a broadened list of persons subject to US sanctions. Those who engage in trade with Russia or Russian entities and nationals wherever located should keep abreast of the government's sanctions activities and take proactive measures to ensure that they remain in compliance with the frequently evolving sanctions regimes.
4 Treasury Sanctions Russian Cyber Actors for Interference with the 2016 U.S. Elections and Malicious Cyber-Attacks, U.S. Dept. of the Treasury Press Release, Mar. 15, 2018.
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