Following "First Wave" Of Sanctions, US And Allies Impose Sweeping New Restrictions Targeting Russian Banks, Elites And Access To Goods And Technology

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Following initial sanctions measures in the US, EU, and UK in response to Russia's recognition of two regions of Ukraine, discussed in our previous Legal Update.
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Following initial sanctions measures in the US, EU, and UK in response to Russia's recognition of two regions of Ukraine, discussed in our previous Legal Update, we provide below an update on significant new measures adopted by the US and several allied countries on February 23 and February 24, 2022, to counter Russia's invasion of Ukraine.

These measures reflect a significant escalation and more expansive use of economic restrictions targeting important elements of the Russian economy in a coordinated effort by several allied governments. These include:

  • The US adopted (i) further sanctions against the largest Russian financial institutions, key state-owned enterprises, ruling elites and other key Russian interests; and (ii) the "most comprehensive" export control regulatory regime against any single nation, expanding the extra-territorial reach of US export controls against Russia and targeting its access to a wide range of goods, software and technology under an expansive new framework.
  • The EU adopted the first tranche of sanctions restrictions targeting financial institutions, other entities and individuals, and territorial restrictions on Donetsk and Luhansk; and consideration of a second package of sanctions tomorrow.
  • In the UK, Prime Minister Boris Johnson promised a "massive package of economic sanctions" that will be "designed in time to hobble the Russian economy."1
  • Meanwhile, Canada, Australia, and Japan imposed their own sanctions on Russia as well.
  • Finally, the Ukrainian government has called for even more sanctions, including as it regards Russia's access to financial messaging systems, which has found some public support in the US Congress, although reporting suggests that world leaders are divided on such a move.2 In response, the Russian Foreign Ministry has threatened a "strong response" to US sanctions.3

This continues to be a dynamic and quickly evolving environment, with additional sanctions from the US, EU, UK and other allies likely and the risk of countermeasures from Russia. Companies should continue to monitor and assess the impact on their operations.


A First EU Sanctions Package Against Russia Enters into Force, While a Second Sanctions Package Is Being Discussed

1.1 Scope of the First EU Sanctions Package Against Russia

Following the Russian government's recognition on February 21, 2022, of the independence of the Donetsk People's Republic ("DNR") and the Luhansk People's Republic ("LNR"), the EU announced the adoption of a new sanctions package against Russia on February 22, 2022.4

On February 23, 2022, the Council of the European Union ("Council") formally adopted the legal texts, which formalize these new sanctions.5 These texts entered into force as from their publication in the Official Journal in the very last minutes of February 23, 2022.

Pursuant to these texts, the following sanctions are now applicable:

  • Asset freeze measures, which prohibit virtually all transactions involving funds or economic resources of designated persons,6 have been imposed against individuals and entities in the political, military, business, banking, and media sectors.

    Targets of these asset freeze measures include (i) politicians, primarily members of the Russian State Duma who voted for the recognition of the DNR and LNR; (ii) high-ranking officials, including Russia's defense minister, the minister of economic development and deputy prime ministers; (iii) military commanders in the navy, air force, and ground forces; (iv) banking executives; (v) media personalities; (vi) business persons; (vii) three banks (Rossiya Bank, Promsvyazbank and VEB); and (viii) the Internet Research Agency.

    Of note, under EU practice, asset freeze measures not only apply to specifically designated individuals and entities but are also presumed to extend to the entities they own or control.7

    Derogations or authorizations may nonetheless be obtained to receive, deal with, or make available funds or economic resources that would otherwise be subject to an asset freeze measure, based on specific grounds listed in the relevant legal texts. In particular, a new ground for authorization has been introduced to allow transactions necessary for the termination by August 24, 2022, of operations, contracts, or other agreements, including correspondent banking relations, concluded with the three newly designated banks before February 23, 2022.
  • Travel ban measures against the individuals who have been designated as subject to asset freeze measures.
  • Restrictions on access to capital for Russia and its governments, as well as the Central Bank of Russia, which prohibit:

(i) The purchase, sale, provision of investments services for, assistance in the issuance, or otherwise dealing with certain transferable securities and money-market instruments issued by them after March 9, 2022; and

(ii) The making or being part of any arrangement to make new loans or credit to them after February 23, 2022.

These restrictions in addition extend to any EU or non-EU legal entity acting on behalf of or at the direction of the Central Bank of Russia.

The legal texts nonetheless provide for certain exceptions to the prohibition on new loans and credits for:

(i) Trade finance loans, i.e., loans or credit that have a specific and documented objective to provide financing for non-prohibited imports or exports of goods and non-financial services between the Union and any third state; and

(ii) Drawdown or disbursements made under a contract concluded before February 23, 2022, subject to certain conditions regarding the terms and conditions of such drawdown or disbursements, as well as the existence of a contractual maturity date for repayment and for the cancellation of commitments, rights, and obligations under the contract.

The definition of "transferable securities" is also extended to any securities giving rise to a cash settlement determined by reference to transferable securities.8

The "no claims" and "anti-circumvention" provisions are also amended to cover these new restrictions.

  • Comprehensive prohibitions on trade with the non-government controlled areas of the Donetsk and Luhansk oblasts of Ukraine ("Specified Territories"), which consist of:

(i) A prohibition on importation of goods originating in the Specified Territories in the EU and related services (financing, financial assistance, insurance, and reinsurance).

(ii) A prohibition on investments and financing in the Specified Territories, including prohibitions on:

- The acquisition of a new, or the extension of an existing, participation in ownership or control of real estate in the Specified Territories or in entities in the Specified Territories (including the acquisition in full of such entities and the acquisition of shares and other securities of a participating nature);

- Granting or being part of an arrangement to grant loans, credits or financing to entities in the Specified Territories or for the documented purpose of financing entities in the Specified Territories;

- The creation of any joint venture in or with entities in the Specified Territories; and

- Investment services directly related to the above activities.

(iii) A prohibition on the export of goods and technologies suited for use in the transport, telecommunications, energy and oil, gas and mineral resources sectors ("Restricted Sectors") and a prohibition on the provision of services (technical assistance, brokering services, training, financing, or financial assistance) related to these goods to or for use in the Specified Territories;

(iv) A prohibition on the provision of technical assistance, brokering, construction, or engineering services directly related to infrastructure in Restricted Sectors in the Specified Territories; and9

(v) A prohibition on services directly related to tourism activities in the Specified Territories.

The relevant legal texts provide for limited derogations or authorization mechanisms to enter into transactions that would otherwise be prohibited under the above restrictive measures, based on specific grounds listed in the relevant legal texts.

In addition, while not formally part of the sanctions package, a notice has been published by the European Commission to importers regarding imports of products into the Union under the EU-Ukraine Association Agreement from the non-government controlled areas of the Donetsk and Luhansk oblasts of Ukraine.10 In accordance with this notice, goods produced in or exported from the non-government controlled areas of the Donetsk and Luhansk oblasts of Ukraine can no longer benefit from preferential (i.e., duty-free) access to the EU market under the terms of the EU-Ukraine Association Agreement.

1.2 A Second EU Sanctions Package Is Expected on February 25, 2022

Following the invasion of Ukraine by Russian troops in the early hours of February 24, 2022, the European Commission's president issued a press statement confirming that a package of "massive and targeted sanctions" would be submitted for adoption by the EU Member States. The sanctions contemplated are expected to (i) "target strategic sectors of the Russian economy by blocking their access to technologies and markets that are key for Russia" and (ii) "freeze Russian assets in the European Union and stop the access of Russian banks to European financial markets."11

Following technical meetings between Member States representatives in the morning of February 24, 2022, the European Council adopted conclusions in the evening of February 22, 2024, laying out, in general terms, the scope of this second sanctions package: "[t]hese sanctions cover the financial sector, the energy and transport sectors, dual-use goods, as well as export control and export financing, visa policy, additional listings of Russian individuals and new listing criteria."12

The following measures are reported as being under consideration:

- Additional asset freeze measures, targeting two Russian banks and five state-owned institutions;

- New listing criteria to facilitate the imposition of asset freeze measures against oligarchs;

- Extension of restrictions on access to capital (i.e., restrictions on transferable securities, money-market instruments, loans, and credits) to certain state-owned enterprises, notably in the aerospace, defense, shipping and shipbuilding sectors;

- Export control restrictions on dual-use goods, as well as strategic goods for the military sectors and advanced technologies, including aircraft and jet parts, equipment needed to upgrade Russian oil refineries, electronics, sensors, telecommunications, marine applications, and lasers;

- Restrictions on new large deposits by Russian nationals in EU financial institutions; and

- Restrictions on visa-free travel for Russian diplomatic passports.

The legal texts will now be reviewed by Member States' representatives and discussed during a technical meeting in the morning of February 25, 2022, before being formally adopted by the Member States in the afternoon. Publication of the new sanctions package in the Official Journal of the EU is expected to follow, with an immediate entry into force.

Furthermore, the European Council's conclusions of February 24, 2022, confirm that a new sanctions package against Belarus should be prepared, to be adopted at a later date.


UK Announces Next Waves of Sanctions Against Russia on February 24, 2022

On February 24, 2022, the prime minister announced plans for the "largest and most severe" package of economic sanctions that Russia "has ever seen." Among other things, he announced that the UK will:

  • Impose assets freeze restrictions on more than 100 entities and individuals, including VTB Bank and major Russian manufacturers;
  • Introduce powers to exclude Russian banks from the UK financial system, including preventing access by such banks to GBP and clearing services in the UK;
  • Limit the amount of money Russian nationals can deposit in UK bank accounts;
  • Introduce a ban on Aeroflot landing in the UK;
  • Ban the export of all dual use items to Russia, including items relating to the electronics, telecommunications and aerospace sectors; and
  • In parallel, introduce new sanctions against Belarus.

The prime minister stated that new legislation to introduce these measures will be laid before the UK Parliament next week.

At the same time, on February 24, 2022, the UK implemented comprehensive sanctions on six entities and five individuals. The targeted entities include VTB Bank, Russia's second largest bank by total assets, and certain aerospace and defense companies such as Rostec, United Aircraft Corporation and United Shipbuilding Corporation. These designations supplement the eight new assets freeze designations announced by the UK on February 22, 2022. The prime minister's announcement foreshadows further assets freeze designations in the coming days.

In addition to the above sanctions measures, the prime minister announced a number of other measures intended to provide additional tools for UK law enforcement to identify and target the wealth of Russian oligarchs based in the UK. These include plans to reinforce the UK's Unexplained Wealth Order regime before Easter, bring forward reforms to the Companies House register, and introduce a new dedicated "kleptocracy cell" within the National Crime Agency. In response to the question of banning Russian access to SWIFT, the prime minister said that "nothing is off the table."


1. OFAC Sanctions Targeting Key Russian Interests

On February 24, the US Treasury Department announced significant new sanctions on key Russian financial institutions, state-owned enterprises, high-net worth individuals, and other key Russian interests with substantial integration in the global economy. These includes the following:

  • Cutting off Russia's largest financial institution, Sberbank, from the US financial system through prohibitions on US financial institution correspondent banking and payable-through account relationships with Sberbank, 25 of its subsidiaries designated by name, and any of their majority-owned affiliates located around the world.13 These include banks, trusts, insurance companies, and other financial institutions;
  • Comprehensive sanctions against Russia's second largest financial institution, VTB, as well as Otkritie, Sovcombank, Novicombank, and 54 of their subsidiaries designated by name, as well as any of their majority-owned affiliates located around the world;14
  • Additional debt and equity restrictions against major state-owned and private entities, including Alfa Bank, OJSC Russian Railways, Credit Bank of Moscow, Russian Agricultural Bank, Transneft and several others;15
  • New sanctions on Russian government officials and heads of state-owned enterprises;16 and
  • Sanctions against the financial and defense sectors of a Russian ally for "facilitating" the invasion of Ukraine. In addition, the Treasury Department announced new sanctions on Belarusian entities in the defense and financial sectors "due to Belarus's support for, and facilitation of, the invasion [of Ukraine]." OFAC designated 24 Belarusian individuals and entities, focusing on the defense and financial sectors. This action blocks all property and interests in property of the designated entities that are in the US or in the possession or control of US persons.17

In addition to issuing these wide-ranging new sanctions, OFAC also issued a number of General Licenses. Notably, these include:

  • General License 2 (certain VEB transactions involving servicing of certain Russian sovereign debt through March 1, 2022)
  • General License 3 (certain short-term wind-down transactions during 30 days through March 24, 2022)
  • General License 9 (certain transactions involving certain debt or equity of VEB, Otkritie, Sovcombank, Sberbank, and VTB through May 25, 2022)
  • General License 10 (certain derivative contract transactions involving VTB, Sberbank, Sovcombank, and Otkirie through May 25, 2022)
  • General License 11 (certain wind-down transactions involving VTB, Otkritie, and Sovcombank through March 26, 2022)
  • General License 12 (certain rejections, rather than blocking, of certain VTB, Otkritie and Sovcombank transactions through March 26, 2022)

OFAC also issued additional conditional and time-limited authorizations for a range of other transactions, including certain energy sector, food, medicine, and medical device transactions. Notably, OFAC emphasized that the wind-down General Licenses were not issued for all designated banks. Moreover, caution is warranted in relying on any General License, as entities may be subject to multiple prohibitions, and the terms of the General License may authorize only certain aspects of a transaction.

The Biden administration has indicated that additional sanctions could come in short order-including on elites and their family members, additional Russian financial institutions, and additional Russian energy interests and firms.

2. Imposition of the "Most Comprehensive" US Export Controls Ever to Target a Single Nation. On February 24, the Department of Commerce's Bureau of Industry and Security ("BIS") imposed an unprecedented package of new export control restrictions to achieve this goal. The controls, which took effect upon publication today (here), include:

  • New Commerce Control List ("CCL")-based license requirements for Russia for a broad array of commercial and dual-use items not previously controlled for Russia and spanning a range of sectors, including microelectronics, telecommunications items, sensors, navigation equipment, avionics, marine equipment, and aircraft components.
  • A review policy of denial for license applications for exports to, reexports to, or transfers within Russia and limitations on the availability of license expectations.
  • An expansion of the existing Russia "military end use" and "military end user" control scope to all items subject to the Export Administration Regulations ("EAR"), excluding food and medicine subject to EAR99 and items classified as ECCN 5A992.c or 5D992.c.
  • Russia-specific "foreign direct product" ("FDP") rules that expand the reach of US export controls for exports, re-exports, and transfers (in-country) to Russia and/or to Russian military end users:

    • New FDP Rule for all of Russia ("Russia FDP Rule"), establishing controls over foreign-produced items that are: (i) the direct product of certain US-origin software or technology subject to the EAR; or (ii) produced by certain plants or major components thereof which are themselves the direct product of certain US-origin software or technology subject to the EAR. The rule applies where there is knowledge or reason to know that a foreign-produced item is destined for Russia or incorporated into a product destined for Russia. This excludes items designated as EAR99.
    • New FDP Rule for Russian military end users ("Russia-MEU FDP rule"), establishing more controls over foreign-produced items that are: (i) the direct product of any software or technology subject to the EAR that is on the CCL; or (ii) produced by certain plants or major components thereof which are themselves the direct product of any US-origin software or technology on the CCL. These items are subject to the EAR and require a license if an Entity List entity with a "footnote 3" designation is a party to the transaction or if there is knowledge or reason to know the item will be incorporated into or used in the production or development of any part, component or equipment produced, purchased, or ordered by such an entity. The notice provides an initial list of 49 entities, including the Russian Ministry of Defense. The restrictions apply to all items, including EAR99-designated items.

    Exports, re-exports, and transfers (in-country) from certain US partner countries that are adopting or have expressed the intent to adopt similar foreign direct product measures are not and will not be subject to these rules.

  • Notably, the new regulations also significantly limit the availability of license exceptions for Russia, including but not limited to certain limited and conditional exceptions relating to: (i) certain software updates for civil end-users that are subsidiaries or joint ventures with companies headquartered in the United States or partner countries (License Exception TSU); (ii) important limitations on License Exception ENC covering common encryption commodities, software, and technology to restrict usage for government end-users as well as Russian state-enterprises; and (iii) certain consumer communications devices (License Exception CCD) not for government end users or certain individuals associated with the government.


Australia, Canada, Japan, Switzerland, and South Korea have also announced sanctions on Russia in regards to Ukraine in recent days. These could also be simply initial rounds of sanctions and could evolve as the situation in Ukraine changes.


President Justin Trudeau announced that Canada will impose the following sanctions:

  • Restrictions on members of the Russian State Duma who voted for the decision to recognize the independence of the DNR and LNR;
  • A ban on dealings by Canadians in the DNR and LNR;
  • New prohibitions on direct and indirect dealings in Russian sovereign debt; and
  • Sanctions on two significant Russian financial institutions.18


The Japanese government also announced that it would impose the following:

  • Prohibitions on trade with the DNR and LNR;
  • Prohibitions on transactions in both the primary and secondary markets for Russian sovereign debt in Japan;
  • Expansion of coverage of maturity regarding existing prohibitions of bond issuances by designated Russian banks; and
  • Asset freeze and travel bans on individuals determined to be involved in destabilizing Ukrainian territories.

Japanese officials also suggested that the Japanese government is assessing potential Russian retaliation and contingency plans for supply chain disruption in key sectors, including chipmaking and energy.19


In Australia, Prime Minister Scott Morrison announced measures including:

  • Sanctions against members of Russia's Security Council and several banks, including Rossiya, Promsvyazbank, IS Bank, Genbank and Black Sea Bank for Development and Reconstruction (in addition to an investment ban on VEB);
  • An extension of existing sanctions on Crimea and Sevastopol to include Donetsk and Luhansk prohibiting trade in transport; energy; telecommunications; and oil, gas and minerals sectors; and
  • A planned expansion of designation criteria to include those of "strategic and economic significance to Russia."20


In Switzerland, President Ignazio Cassis stated that he would expand on sanctions imposed on Russia after the country annexed Crimea.

  • The country will impose reporting requirements for people on the EU's sanctions list to prevent them from using the Swiss territory to circumvent penalties. The individuals sanctioned by the EU on February 23 will be subject to these reporting requirements.
  • However, the individuals on the EU sanctions list will still be able to access Swiss bank accounts and withdraw money. The Swiss government has not yet made a decision on further measures, including asset freezes.

The announced measures still need to be approved by the Swiss Federal Council, which should take several days.21

South Korea

Finally, the South Korean Foreign Ministry confirmed that it would join international export control efforts against Russia on February 24. However, the country is not considering imposing its own sanctions against Russia.22





4 For more details, see our Legal Update "New US, UK and EU Sanctions Against Russia," February 22, 2022, available at:

5 The legal texts consist in four Decisions and five Regulations, which amend two of the existing sanctions regimes against Russia and introduce a new one in respect of the non-government controlled areas of the Donetsk and Luhansk oblasts of Ukraine.

6 As per the European Commission's interpretation, "economic resources" can also cover the provision of services to or working for a designated person, insofar as it enables the latter to obtain funds, goods, or services.
See Commission Opinion on Article 2 of Council Regulation (EU) No 269/2014, C(2020) 4117 final, June 19, 2020.

7 See, for instance, Commission Guidance Note on the Implementation of Certain Provisions of Council Regulation (EU) 2020/1998, C(2020) 9432 final, December 17, 2020.

8 This equally applies to entities that were previously subject to EU restrictions on access to capital under the EU sanctions in relation to Russia, i.e., Sberbank, VTB Bank, Gazprombank, Vnesheconombank, Rosselkhozbank, OPK OBORONPROM, United Aircraft Corporation, Uralvagonzavod, Rosneft, Transneft and Gazprom Neft.

9 The goods and technologies covered by these restrictions are listed in Annex II of Council Regulation (EU) 2022/263 of 23 February 2022.
Of note, as per the Commission Opinion on the export ban established by Council Regulation (EU) No 692/2014, C(2019) 5019 final, July 4, 2019, the restrictions apply to all goods listed in Annex II, regardless of whether they are actually for use in Restricted Sectors.

10 Notice to importers, Imports of products into the Union under the EU-Ukraine Association Agreement from the non-government controlled areas of the Donetsk and Lugansk oblasts of Ukraine, OJ C 87I, February 23, 2022, available at:

11 European Commission, Press statement by President von der Leyen on Russia's aggression against Ukraine, February 24, 2022, available at: en/statement_22_1322.

12 European Council conclusions on Russia's unprovoked and unjustified military aggression against Ukraine, February 24, 2022.











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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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