The U.S. imposed sanctions in response to Russia's invasion of Ukraine and recognition of two separatist regions.
President Joseph R. Biden signed Executive Order ("EO") 14065 blocking trade and most other dealings involving the so-called Donetsk People's Republic or Luhansk People's Republic regions of Ukraine. EO 14065 expands the scope of the national emergency declared in EO 13660 of March 6, 2014 (see previous coverage). In connection with EO 14065, OFAC issued Ukraine General Licenses 17, 18, 19, 20, 21 and 22, which provide a one-month period to wind down transactions involving the sanctioned regions, among other authorizations.
OFAC added two Russian banks and numerous related entities to its Specially Designated Nationals and Blocked Persons List (the "SDN List") pursuant to EO 14024. This action immediately blocks those banks and all entities of which they own 50 percent or more (whether or not such entities are specifically named on the SDN List), and U.S. persons are generally prohibited from engaging in any dealings with them. Relatedly, OFAC issued General License 3 under EO 14024 to authorize certain wind down transactions involving VEB until March 24, 2022.
OFAC also expanded existing prohibitions on dealings in Russia's sovereign debt. As of March 1, 2022, U.S. financial institutions will be prohibited from participating in the secondary market for bonds issued after that date by the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation or the Ministry of Finance of the Russian Federation. In connection with this prohibition, OFAC issued General License 2 under EO 14024, published new FAQs 964 and 965, and updated several other FAQs.
Commentary
No one expects that this modest initial round of sanctions will be the last, absent an unexpected halt to the roll of Russian tanks. Already, questions abound, for example, as to the reach of sanctions on the two separatist regions - the claimed territory of which remains, in large part, under the control of the Ukrainian government. If the conflict continues to escalate, bigger sanctions targets are sure to be identified in Russia's financial and energy sectors, the ramifications of which will be felt globally.
Primary Sources
- President Joseph R. Biden: Executive Order 14065 on Imposing Blocking Property of Certain Persons and Prohibiting Certain Transactions with Respect to Continued Russian Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine
- Treasury Bulletin: Issuance of Executive Order Blocking Property of Certain Persons and Prohibiting Certain Transactions with Respect to Continued Russian Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine
- Treasury Press Release: U.S. Treasury Imposes Immediate Economic Costs in Response to Actions in the Donetsk and Luhansk Regions
- OFAC: Ukraine General License Number 17
- OFAC: Ukraine General License Number 18
- OFAC: Ukraine General License Number 19
- OFAC: Ukraine General License Number 20
- OFAC: Ukraine General License Number 21
- OFAC: Ukraine General License Number 22
- Treasury Bulletin: OFAC SDN, Consolidated, NS-MBS and SSI List Updates - Russia-Related Designations; Issuance of Russia-Related Directive 1A and General Licenses; Publication of New and Updated Frequently Asked Questions
- OFAC: Russia General License 2
- OFAC: Russia General License 3
- Treasury FAQ 964
- Treasury FAQ 965
- Treasury: Recently Updated FAQs
- Federal Register: Executive Order 13660 Blocking Property of Certain Persons Contributing to the Situation in Ukraine
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