The U.S., UK, And EU Provide A Joint Response To Russian Aggression In Ukraine

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Over the past week, the Russian Federation has taken a number of aggressive steps toward Ukraine in furtherance of its ultimate invasion—steps that were immediately condemned by the international community
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Over the past week, the Russian Federation has taken a number of aggressive steps toward Ukraine in furtherance of its ultimate invasion-steps that were immediately condemned by the international community as a blatant violation of international law. In response, the United States and Ukraine's partners and allies implemented several packages of sanctions and other restrictive measures targeted against Russia and Belarus, with additional sanctions expected in the near term. 

On February 21, 2022, the Biden Administration issued Executive Order ("E.O.") 14065 in response to continued Russian efforts to undermine the sovereignty and territorial integrity of Ukraine. The E.O. prohibits U.S. persons from any dealings in the Donetsk and Luhansk territories of Ukraine that Russia recognized as "independent" and provides criteria for imposing blocking sanctions on certain foreign persons in or supporting these territories.

On February 22-24, 2022, the U.S., EU, UK, and other nations took additional actions following Russia's aggression and actions in Ukraine. Such measures are numerous and include blocking sanctions and asset freezes, travel bans, restrictions dealing in Russian sovereign debt, and halting certification and future operations of Nord Stream 2. Countries continue to warn of additional sanctions and restrictive measures in response to further Russian provocation in Ukraine.


  • The U.S., UK, and EU are coordinating on measures to counter the threat posed by Russian aggression in Ukraine. Multilateral efforts regarding sanctions policy are intended to deepen and reinforce the consequences of individual measures of economic coercion.
  • Key Ukrainian allies warn Russia that they are prepared for additional, sweeping restrictive measures in case of further provocation. In response to further Russian provocation, the Biden Administration will likely continue imposing sanctions to cut Russia off from the U.S. financial system. The rhetoric from U.S., UK, and EU leaders signals that anyone with an economic interest in Russia should carefully evaluate the associated risks, as further rounds of sanctions are imminent.
  • E.O. 14065 is limited in scope as it directly prohibits certain activities in targeted territories of Ukraine. The E.O. provides a 30-day winddown period for U.S. persons to exit most activities in identified territories. K2 Integrity anticipates that future actions will utilize E.O. 14024 of April 15, 2021,1 to directly target sectors of the Russian economy and individuals.

Actions on February 24, 2022

  • The EU Council agreed on a variety of further restrictive measures and sanctions on Russia and Belarus. As of the date of publication, the sanctions have not been announced, but K2 Integrity anticipates the sanctions will target Russia's financial sector, energy and transport sectors, and restrictions on dual-use goods.
  • The United States took significant and unprecedented actions2 by imposing correspondent and payable-through account sanctions on Russia's largest bank. Specifically, Public Joint Stock Company Sberbank of Russia, ("Sberbank") along with 25 Sberbank foreign financial institution subsidiaries were targeted. In order to implement sanctions on Sberbank, OFAC issued Directive 2 under E.O. 14024, "Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions," which prohibits U.S. financial institutions from providing certain services. The prohibitions take effect on March 26, 2022. As of that date, all U.S. financial institutions are obligated to close any Sberbank correspondent or payable-through accounts and to reject any future transactions involving Sberbank or its foreign financial institution subsidiaries.
  • The U.S. Department of the Treasury also imposed full blocking measures on VTB Bank Public Joint Stock Company ("VTB Bank"), Russia's second largest bank. In addition, the United States imposed blocking sanctions on Public Joint Stock Company Bank Financial Corporation Otkritie ("Otkritie"), Open Joint Stock Company Sovcombank ("Sovcombank"), and Joint Stock Commercial Bank Novikombank ("Novikombank") and identified three Russian entities for operating in the financial services sector of the Russian economy. The Treasury Department assesses that actions targeting Sberbank and VTB Bank will disrupt a significant portion of Russia's foreign exchange activity globally. These actions signal that the United States is determined to engage and reinforce long-lasting negative effects on Russia's economy and financial system.
  • The U.S. Department of the Treasury also implemented additional prohibitions related to new debt longer than 14 days maturity and new equity of Russian state-owned enterprises. In order to implement this, OFAC issued Directive 33 under E.O. 14024 "Prohibitions Related to New Debt and Equity of Certain Russia-related Entities," which applies to 13 firms. These firms are now heavily restricted from raising funds through the U.S. market, a key source of revenue generation for the Russian Federation.
  • The Treasury Department sanctioned 24 Belarussian individuals and entities for support for and facilitation of Russia's invasion.4Targets include Belarussian Bank of Development and Reconstruction Belinvestbank Joint Stock Company ("Belinvestbank"), which is the fourth largest financial institution in Belarus, as well as two Minsk-based companies owned or controlled by Belinvestbank. The United States also targeted entities in the Belarusian defense industry, senior Government of Belarus security apparatus officials, and a member of Lukashenka's inner circle.
  • The Commerce Department expanded export controls on Russia.5Specifically, the U.S. Russia-specific export control measures administered by the Commerce Department impose a policy of denial on sensitive items Russia relies on for its defense, aerospace, and maritime industries, including semiconductors, computers, telecommunications, information security equipment, lasers, and sensors. Additionally, 49 Russian military end users have been added to the Entity List. The EU, Japan, Australia, UK, Canada, and New Zealand have announced plans to implement substantially similar restrictions and are exempted from new requirements for items produced in their countries. The United States demonstrated its willingness to pursue multiple methods of coercive economic action to counter Russia in conjunction with its allies.

Actions on February 23, 2022

  • The Treasury Department sanctioned Nord Stream 2 AG, the company constructing the Nord Stream 2 pipeline, and its chief executive officer under E.O. 14039 and issued General License 46 to allow a one-week winddown of activities involving the construction company. Nord Stream 2 is a key initiative for transporting natural gas from Russia to Germany. Nord Stream 2 AG is located in Switzerland and is owned by the Russian energy company Gazprom. Prior to the designation, German Chancellor Olaf Scholz announced that Germany would halt certification of the Nord Stream 2 pipeline.7 Germany had previously taken a position that the pipeline was apolitical and should be separate from discussions regarding Russia.
  • On February 23, 2022, the EU imposed asset freeze sanctions, travel bans, prohibitions on dealings in the Donetsk and Luhansk territories, and restrictions on dealing in Russian sovereign debt.8Specifically, the actions imposed asset freezes and travel bans on members of the Russian State Duma who voted to recognize the independence of the Donetsk and Luhansk territories and high-profile individuals and entities that played a role in undermining the territorial sovereignty of Ukraine. The EU also prohibited trade and economic dealings with non-government-controlled areas of Donetsk and Luhansk.
  • The EU implemented a prohibition on financing the Russian Federation, its government, and the Russian Central Bank, thus limiting access to EU capital and financial markets and services.

Actions on February 22, 2022

  • The United States imposed limited blocking sanctions on two Russian banks and companies they own. The U.S. Department of the Treasury announced blocking sanctions9 on two major Russian banks and 42 of their subsidiaries, some of which include mid-size Russian companies but are not key players in the Russian economy. The two targeted banks are Vnesheconombank ("VEB"), a key arm of the Russian government for raising funds and conducting business abroad, and Promsvyazbank ("PSB"), a bank critical to Russia's defense sector.
  • The U.S. Treasury Secretary made a determination that the financial services sector of the Russian Federation can be subject to sanctions pursuant to E.O. 14024. This signals that OFAC will continue to target major and medium-sized Russian financial institutions. Depending on the significance and number of banks targeted in future designations, the U.S. government may cut off Russia from most correspondent access to U.S. financial institutions.
  • Continued targeting of individuals close to Putin. On February 24 and 22, OFAC designated 10 Russian elites and five Russian oligarchs, respectively, who are members of the Russian elite closely connected to President Putin or family members of previously designated government officials, and has made it clear that they will continue to identify and target individuals close to the Russian President. These actions also indicate that OFAC may continue to target adult family members of Russian Specially Designated Nationals ("SDNs") that have been known to amass family wealth after their parent's or spouse's designation or to engage in sanctions evasion activities.
  • The Treasury Department expanded the restrictions for U.S. financial institutions to participate in the secondary market for ruble and non-ruble denominated bonds issued after March 1, 2022, by certain Russian financial institutions. This prohibition builds on existing prohibitions, such as Directive 110 of E.O. 14024, and the Chemical and Biological Weapons ("CBW") Directive issued in August 2019. Directive 1A11 expands Directive 1 to increase restrictions on dealings in Russian sovereign debt by extending sovereign debt prohibitions to cover participation in the secondary market by certain Russian Federation financial institutions. This action sends a clear message from the President that U.S. persons should not hold Russian assets.
  • The UK imposed asset freeze sanctions and travel bans on three Russian oligarchs and five Russian banks utilizing newly amended Russia sanctions authorities.12 The five banks affected are Bank Rossiya (already designated by the United States as an SDN), PBS (designated by the United States on February 22), and three Russian banks known to operate in Crimea. Additionally, the UK announced its intention over the next several weeks to extend territorial sanctions imposed in Crimea to Donetsk and Luhansk. No UK individual or business will be permitted to deal with these territories until they are returned to Ukrainian control. The UK will also impose sanctions upon the members of the Russian Duma and Federation Council who voted to recognize Donetsk and Luhansk.

The New Executive Order

  • E.O. 14065, "Blocking Property of Certain Persons and Prohibiting Certain Transactions With Respect to Continued Russian Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine," prohibits U.S. persons from any dealings in Donetsk People's Republic ("DNR") and Luhansk People's Republic ("LNR"), or other territories of Ukraine as identified by the U.S. government ("covered territories"). The E.O. also authorizes the imposition of sanctions on any foreign person who operates in the covered territories or provides material support to anyone designated under this E.O. This executive order has a limited scope and directly targets those operating in the covered territories. Given the likely diminishment of U.S. and EU business relationships in this region following Russia's initial incursion in 2014, the prohibitions will likely have a limited impact on international or U.S. businesses.
  • OFAC issued a 30-day winddown13 for transactions involving covered territories. Concurrent with the Biden Administration's message that these sanctions are not meant to hurt Ukrainian citizens, many of the restrictions and designations implemented include a short winddown period.

Implications for the Private Sector

  • The U.S., UK, and EU have stated that they plan to impose additional sanctions in the wake of the Russian invasion of Ukraine. While there were some notable parties such as Sberbank and VTB Bank that were targeted this week, there are additional opportunities for further expansion of sanctions on Russia. This could include imposing blocking sanctions against banks currently subject to sectoral sanctions or correspondent account or payable-through account sanctions. Additional measures may also target key players in the major sectors of the Russian economy, such as oil and gas, extractive industries, tech, and defense, government officials, oligarchs, and their family members, and more. There will also likely be a focus on targeting Putin's assets and those of his closest oligarch allies.
  • In light of a rapidly developing regulatory landscape, financial institutions, corporations, and other entities with global exposure to Russia will need to be flexible and adapt controls or implement exit strategies quickly. The sanctions imposed this week will require additional scrutiny and resources tied to exposure to designated partners, subregions, and related, suspect transactions. This is especially true for parties balancing obligations under both export control and sanctions measures. This will place additional demand on resources to implement controls and administer compliance programs. As the situation progresses, there may also be new uses of sectoral sanctions, export controls, and other novel prohibitions on types of transactions and financial and commercial exposure that will require expertise in sanctions policy and compliance program design to navigate.
  • There are many options for future U.S. actions targeting Russia. Potential measures range from the more routine implementation of additional blocking sanctions to more aggressive, systemic measures, such as influencing SWIFT to remove Russia from its services. The United States already has several existing authorities it could leverage to impose additional sanctions on Russia, including programs targeting Russian aggression in Ukraine and the Russian defense or technology sectors, as well as export controls prohibiting the sale of certain technologies manufactured or designed in the United States. U.S. allies similarly have broad designation authorities, including newly expanded UK sanctions regulations.14
  • Compliance with Ukraine/Russia-related sanctions goes beyond list screening and requires an understanding of your customers, their owners, and, in some cases, counterparties. U.S. sanctions extend to entities that are 50% or more, directly or indirectly, owned by one or more parties on the SDN list. The UK and EU also prohibit dealings with entities owned or controlled, directly or indirectly, by designated persons. Historically, the designation of Russian companies, as well as oligarchs, resulted in the need to identify and block property for parties not otherwise listed. It is likely that new sanctions would similarly result in entities being blocked by operation of law. The sanctions extend beyond the borders of Russia and Ukraine considering that entities with locations worldwide are the subject of sanctions. Understanding your customers, ultimate beneficial owners, ultimate end-users, and operational jurisdiction helps anticipate potential exposure to current or future sanctions.
  • To the extent Russia recognizes additional Ukrainian independent territories or seizes additional territories, the United States will likely extend E.O. 14065 to include those territories as covered territories. It is possible that OFAC would issue contemporaneous general licenses as it did in connection with Donetsk and Luhansk that would allow for U.S. persons to wind down activity and limit exposure.
  • Multinational companies cannot rely upon complying with U.S. sanctions administered by OFAC alone. While the U.S., UK, and EU have been closely coordinating potential sanctions actions, the scope and timing of the actions will vary. Carrying out an effective sanctions compliance program requires a detailed understanding of all applicable regimes to ensure compliance. Asian economies, like Japan and South Korea, have also imposed sanctions on Russia, which adds to the layers of the sanctions regime and regional complexity.


1 The U.S. Department of the Treasury, Office of Foreign Assets Control, (February 21, 2021),

2 The U.S. Department of the Treasury, Office of Foreign Assets Control, U.S. Treasury Announces Unprecedent &B Expansive Sanctions Against Russia, Imposing Swift and Severe Economic Costs, (February 24, 2022)

3 The U.S. Department of Treasury, Office of Foreign Assets Control, Directive 3 Under Executive Order 14024,

4 U.S. Treasury Targets Belarusian Support for Russian Invasion of Ukraine, (February 24, 2022)

5 Commerce Implements Sweeping Restrictions on Exports to Russia in Response to Further Invasion of Ukraine (February 24, 2022)

6 The U.S. Department of Treasury, Office of Foreign Assets Control, Executive Order 14039 of August 20, 2021, General License No. 4, (February 23, 2022), peesa_gl4.pdf (

7 "Germany puts a stop to Nord Stream 2, a key Russian natural gas pipeline." The New York Times. 22 February 2022.

8 European Council, EU adopts package of sanctions in response to Russian recognition of the non-government controlled areas of the Donetsk and Luhansk oblasts of Ukraine and sending of troops into the Region, (February 23, 2022),

9 U.S. Treasury Imposes Immediate Economic Costs in Response to Actions in the Donetsk and Luhansk Regions, (February 22, 2022)

10 The U.S. Department of Treasury, Office of Foreign Assets Control, Directive 1 Under Executive Order 14024, (April 15, 2021), 

11 The U.S. Department of the Treasury, Office of Foreign Assets Control, Directive 1A Under Executive Order 14024 (February 22, 2022), available at peesa_gl4.pdf (

12 UK hits Russian oligarchs and banks with targeted sanctions: Foreign Secretary's statement, (February 22, 2022),

13 The U.S. Department of the Treasury, Office of Foreign Assets Control, General License No. 17, (February 21, 2022) 

14 Russia (Sanctions) (EU Exit) (Amendment) Regulations 2022. (February 10, 2022),

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.

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