Summary of U.S. Sanctions on Russia
In response to Russia’s recognition of the Donetsk (DNR) and Luhansk (LNR) regions of Ukraine, and its military aggression against Ukraine starting on February 23, 2022, the U.S. has so far adopted a far-reaching package of sanctions severely restricting economic relations with Russia, Russian entities and persons. The U.S. has also adopted sanctions against Belarus for enabling Russia’s invasion of Ukraine. A summary of the most relevant recent sanctions developments is provided below. It is essential to note that additional sanctions, actions, legislation and other enforcement operations are expected as the war progresses. The following information is only current through January 25, 2022.
B. Trade, Investment and Financial Sanctions on the DNR and LNR Regions of Ukraine
Executive Order (EO) 14065 of 21 February 2022 prohibits the following activities in the DNR and LNR regions of Ukraine:
- new investment in the DNR and LNR regions of Ukraine by a U.S. person wherever located;
- the importation into the U.S., directly or indirectly, of any goods, services or technology from these regions;
- the exportation, re-exportation, sale or supply, directly or indirectly, from the U.S., or by a U.S. person wherever located, of any goods, services or technology to these regions; and
- any approval, financing, facilitation or guarantee by a U.S. person wherever located of a transaction by a foreign person where the transaction by that foreign person would be prohibited if performed by a U.S. person or within the U.S.
Similar restrictions may be imposed on other regions of Ukraine as appropriate.
These prohibitions apply except to the extent provided by statutes, or in regulations, orders, directives or licenses that may be issued pursuant to this EO, and notwithstanding any contract entered into or license or permit granted prior to February 21, 2022.
EO 14065 also provides authority to impose sanctions on persons determined (1) to operate or have operated since February 21, 2022, in these regions; (2) to be or have been since February 21, 2022, a leader, official, senior executive officer or member of the board of directors of an entity operating in these regions; (3) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this EO; or (4) to have materially assisted, sponsored or provided financial, material or technological support for, or goods or services to or in support of, any person whose property and interests in property are blocked pursuant to this EO.
The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has issued nine general licenses to ensure that humanitarian and other related activity in these regions can continue. These licenses allow a short-term wind down of activities; exports to these regions of food, medicine and medical devices; and the continued operation of telecommunications, mail and Internet services. A list of all Ukraine related general licenses can be found on Treasury’s Ukraine-/Russia-related Sanctions page.
C. Trade Sanctions on Russia
Effective February 24, 2022, a final rule by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) imposes the following requirements and policies specific to Russia and Russian end-users.
1. Foreign Direct Product Rules
A new foreign direct product rule (Russia FDP rule) for all of Russia establishes a control over foreign-produced items that are (1) the direct product of certain US-origin software or technology subject to the Export Administration Regulations (EAR) or (2) produced by certain plants or major components thereof that are themselves the direct product of certain U.S.-origin software or technology subject to the EAR. This control applies when it is known that the foreign-produced item is destined to Russia or will be incorporated into or used in the production or development of any part, component or equipment produced in or destined to Russia. The Russia FDP rule does not apply to foreign-produced items that would be designated as EAR99, which includes many consumer items.
A separate FDP rule for Russian military end-users (Russia-FDP MEU rule) that is more extensive than the Russia FDP rule applies to foreign-produced items that are (1) the direct product of any software or technology subject to the EAR that is on the Commerce Control List (CCL) or (2) produced by certain plants or major components thereof that are themselves the direct product of any U.S.-origin software or technology on the CCL. Such items will be subject to the EAR and require a license if an entity with a footnote 3 designation on the Entity List (see below) is a party to the transaction, or if there is knowledge that the item will be incorporated into or used in the production or development of any part, component or equipment produced, purchased or ordered by any such entity. These restrictions apply to all items, including those designated as EAR99, with certain exceptions, and impose a license requirement for footnote 3-designated Russian military end-users.
Exports, re-exports and transfers (in-country) from the following countries are not subject to these FDP rules: Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, New Zealand, Poland, Portugal, Romania, Slovakia, Slovenia, South Korea, Spain, Sweden and the United Kingdom.
2. License Requirements, Review Policy and Exceptions
The final rule adds new license requirements for all export control classification numbers in categories 3-9 of the CCL. Some of these items, in 58 ECCNs with unilateral controls, were not previously controlled to Russia and include microelectronics, telecommunications items, sensors, navigation equipment, avionics, marine equipment and aircraft components.
Applications for the export, re-export or transfer (in-country) of items that require a license for Russia will be reviewed, with certain limited exceptions, under a policy of denial. Applications to be reviewed on a case-by-case basis are those related to safety of flight, maritime safety, humanitarian needs, government space co-operation, civil telecommunications infrastructure, government-to-government activities and support of limited operations of partner country companies in Russia. Only certain sections of the following license exceptions are available for exports to Russia:
- TMP (temporary imports, exports, re-exports and transfers in country): items for use by the news media;
- GOV: certain government activities;
- TSU (technology and software unrestricted): software updates to civil end-users that are subsidiaries of, or joint ventures with, companies headquartered in the U.S. or partner countries;
- BAG (baggage): baggage, excluding firearms and ammunition;
- AVS (aircraft, vessels and spacecraft): aircraft flying into and out of Russia;
- ENC (encryption commodities, software and technology): encryption items, but not if they are destined for Russian government end-users and Russian state-owned enterprises; and
- CCD (consumer communication devices): consumer communication devices, but not if they are destined for government end-users or certain individuals associated with the government.
Effective April 08, 2022, BIS issued a final rule expanding license requirements for Russia and Belarus under the EAR to all items on the CCL. It also removed license exception eligibility for aircraft registered in, owned or controlled by, or under charter or lease by Belarus or a national of Belarus.
On March 18, 2022, BIS publicly identified 100 aircraft that violated US export control laws by flying into Russia since March 2, 2022. Aircraft manufactured in the US or in a foreign country with more than 25% U.S. content is subject to licensing if destined for Russia. BIS put on notice that any service provided to these aircraft requires authorization. As of August 02, 2022, there are a total of 183 aircraft identified on the BIS list for apparent violations of U.S. export controls.
3. Entity List and Military End-Use Controls
Entity List footnote 3 indicates that the Russia-MEU FDP rule applies to that entity; as a result, a license is required to export, re-export or transfer (in-country) all items subject to the EAR (including foreign-produced items under the Russia-MEU FDP rule) to these entities, with limited exceptions. Footnote 3 also applies to the Russian Ministry of Defense, including the armed forces of Russia, wherever located. License applications for footnote 3-designated entities will be reviewed under a policy of denial in all cases.
A total of 47 entities have been transferred from the MEU List to the Entity List and have been designated with footnote 3. In addition, BIS has added two new Russian MEUs to the Entity List with a footnote designation. Additional entities may be added in the future.
Restrictions on Russian military end-users and military end-uses now cover all items subject to the EAR with exceptions for (1) food and medicine designated as EAR99 and (2) items classified as ECCN 5A992.c or 5D992.c, so long as they are not for Russian government end-users or Russian state-owned enterprises.
4. More Stringent Export Restrictions Against Russian Oil and Other Sectors
Effective March 3, 2022, BIS is expanding the scope of the current sanctions against the Russian industry sector that were originally added to the EAR in August 2014 by restricting the export, re-export and transfer (in-country) of additional items needed for oil refining.
Previously, this general prohibition applied to the export, re-export or transfer (in-country) of certain items in situations where a person had “knowledge,” for purposes of the EAR, that the item would be used directly or indirectly in Russia's energy sector for exploration or production from deep-water, Arctic offshore or shale projects in Russia that have the potential to produce oil or gas, or where a person was unable to determine whether the item would be used in such projects in Russia. The new rule expands the scope of the general prohibition by imposing an additional license requirement for exports, re-exports or transfers (in-country) of any item subject to the EAR listed in new supplement no. 4 to part 746 to and within Russia. Unlike the previous prohibition, the new prohibition does not include a “knowledge” requirement.
Effective May 9, 2022, BIS issued a final rule further expanding the scope of the current sanctions against Russian industry sectors by imposing a license requirement for exports, reexports, or transfers (in-country) to and within Russia for additional items subject to the EAR identified under specific Schedule B numbers or Harmonized Tariff Schedule codes.
In this new rule, BIS is adding 205 HTS codes at the 6-digit level and 478 corresponding 10-digit Schedule B numbers to better align with the European Union’s controls, targeting a wide range of inputs and products including wood products, industrial engines, boilers, motors, fans, and ventilation equipment, bulldozers, and many other items that support Russia’s military industrial complex.
Effective September 15, 2022, BIS is expanding the existing sanctions against Russia and Belarus by imposing several new export controls. The new rule adds items that may be useful for Russia's chemical and biological weapons production and development capabilities and items needed for advanced production and development capabilities to enable advanced manufacturing across a number of industries. The rule also adds Belarus to the scope of the EAR’s industry sector sanctions that currently apply only to Russia, to prevent diversion of items subject to the industry sector sanctions from Belarus to Russia.
In addition, this rule broadens the military end user and military-intelligence end user controls and designates six entities on the Entity List under ten entries as Russian ‘military end users’ for producing items needed by the Russian and Belarusian military and industrial sectors. Finally, this rule revises BIS's `luxury goods' controls to align with allies' corresponding controls by adding additional dollar value exclusion thresholds for luxury goods.
5. Additions to Entity List
Effective March 3, 2022, BIS has added 91 entities to the Entity List under the designations of Belize, Estonia, Kazakhstan, Latvia, Malta, Russia, Singapore, Slovakia, Spain and United Kingdom. BIS states that these entities have been involved in, contributed to, or otherwise supported the Russian security services, military and defense sectors, and military and/or defense research and development efforts.
On April 01, 2022, BIS issued a final rule adding a further 120 entities to the Entity List under the designations of Russia and Belarus for acquiring and attempting to acquire items subject to the Export Administration Regulations (EAR) in support of Belarus’s and Russia’s militaries
Effective June 02, 2022, BIS added 71 entities to the Entity List under the designations of Russia and Belarus. The entities were added for acquiring and attempting to acquire U.S.-origin items in support of Russia's military. On June 28, 2022, BIS added an additional 36 entities in nine countries to the Entity List, including six specifically for their continued support of Russia’s military efforts. The six entities are based in China, Lithuania, Russia, the United Kingdom, Uzbekistan, and Vietnam.
The Entity List is a list of entities which BIS has reasonable cause to believe have been involved, are involved or pose a significant risk of being or becoming involved in activities that are contrary to the national security or foreign policy interests of the U.S. It specifies the license requirements on each listed person and those license requirements are independent of, and in addition to, license requirements imposed elsewhere in the EAR. Depending on the item, a company may be required to obtain a license to export to an organization on the Entity List even if one is not otherwise required.
Additional entities across the globe could potentially be added in the future to the Entity List for Russia-related reasons.
6. Trade Sanctions on Belarus
Effective March 2, 2022, BIS has imposed a policy of denial on sensitive items that support Belarus’s defense, aerospace and maritime industries and has added Belarus to the two new FDP rules on Russia, which has resulted in a near total ban on exports of items to both Russian and Belarusian military end users. Moreover, two Belarussian entities (including the Ministry of Defense of the Republic of Belarus) have been added to the Entity List with a footnote 3 designation.
7. PNTR Treatment Removal, Ban on Imports of Oil and Other Products, and Other Actions
The U.S. and other economies announced on March 11, 2022, their intention to revoke Russia’s permanent normal trade relations (PNTR)/most favored nation (MFN) treatment. The withdrawal of PNTR treatment, subjects U.S. imports from Russia with substantially higher import duties, effectively closing off the U.S. market to many of those products.
On April 8, 2022, President Biden signed legislation into law revoking Russia’s PNTR status. H.R. 7108, “Suspending Normal Trade Relations with Russia and Belarus Act.” was approved by the U.S. House of Representatives on 17 March 2022 and later by the Senate on April 7, 2022. The legislation would (1) suspend effective immediately upon enactment PNTR treatment for products of Russia and Belarus; (2) provide the president with authority to increase tariffs above the non-NTR rates on products of Russia and Belarus until January 1, 2024; (3) require USTR to use the voice and influence of the U.S. to seek the suspension of Russia’s participation in the WTO and to halt Belarus’ WTO accession and accession-related work; and (4) provide the president with the authority to restore NTR with Russia and Belarus if these countries have ceased their acts of aggression against Ukraine and other certain conditions are met (the U.S. Congress would have the authority to overrule such a decision through a congressional disapproval process).
On June 27, 2022, in accordance with section 3(b)(1) of the Suspending NTR Act, President Biden issued a proclamation on increasing column 2 duties on certain articles from Russia to 35 percent. The increase in duties is effective 30 days after the date of this proclamation and covers a list of products including steel and aluminum; minerals, ores, and metals; chemicals; arms and ammunition; wood and paper products; aircraft & parts; and automotive parts. A full list of products covered by the duty increase can be found here.
In addition, President Biden signed on March 8, 2022, an EO to ban the import of Russian oil, liquefied natural gas and coal to the U.S., prohibiting:
- the importation into the U.S. of Russian crude oil, petroleum, petroleum fuels, oils and products of their distillation, liquefied natural gas, coal and coal products;
- new U.S. investment in Russia’s energy sector by a U.S. person, wherever located; and
- U.S. persons, wherever located, from approving, financing, facilitating or guaranteeing foreign persons that are making investment to produce energy in Russia.
The EO applies from March 8, 2022, but OFAC has issued a general license authorizing through 12:01 EDT on April 22, 2022, all transactions prohibited by the EO that are ordinarily incident and necessary to the importation of crude oil; petroleum; petroleum fuels, oils and products of their distillation; liquefied natural gas; coal; and coal products of Russian origin pursuant to written contracts or written agreements entered prior to March 8, 2022. This general license does not authorize entry into new contracts.
OFAC has also clarified that the EO does not prohibit transactions such as the unwinding of contracts or other business-related activities by U.S. persons to comply with the import ban imposed under the EO. Likewise, the EO does not prohibit U.S. persons from engaging in transactions to sell or re-direct shipments that were laden on or after March 8, 2022, and previously destined for the U.S. Additional information on EO of March 8, 2022, is available here.
Moreover, in a separate EO issued on March 11, 2022, the U.S. is banning:
- the importation into the U.S. of Russian alcoholic beverages, non-industrial diamonds, and fish, seafood and preparations thereof, as well as any other products of Russian origin as may be determined by the U.S. Treasury Department in consultation with the U.S. State Department and the DOC;
- the exportation, re-exportation, sale or supply to Russia, directly or indirectly, from the U.S. or by a U.S. person wherever located, of a broad range of luxury goods and any other items as may be determined by the DOC in consultation with Treasury and State;
- new investment in any sector of the Russian economy by a U.S. person wherever located, as may be determined by Treasury in consultation with State;
- the exportation, re-exportation, sale or supply, directly or indirectly, from the U.S. or by a U.S. person wherever located, of U.S. dollar-denominated banknotes to the Russian government or any person located in Russia; and
- any approval, financing, facilitation or guarantee by a U.S. person wherever located of a transaction by a foreign person, where the transaction by that foreign person would be prohibited by the EO if performed by a U.S. person or within the U.S.
The ban on luxury goods applies to (1) the export, re-export or transfer (in-country) to or within Russia or Belarus of luxury goods, and (2) the export, re-export and transfer (in-country) of luxury goods worldwide to certain Russian or Belarusian oligarchs and other malign actors supporting the Russian or Belarusian governments. The term “luxury good” refers to any item identified in new supplement no. 5 to part 746 of the EAR. Most items in that supplement are not subject to a value threshold. In the case of covered apparel of HS Chapters 61 and 62, footwear of HS Chapter 64 and headgear of HS Chapter 65, the prohibition does apply to articles valued at US$1,000 or more per unit in the U.S. (wholesale price). A final rule implementing this ban is available here.
On June 28, 2022, OFAC issued a determination that the prohibitions of section 1(a)(i) of E.O. 14068 of March 11, 2022, shall apply to gold from Russia, therefore prohibiting imports of Russian gold into the U.S. effective immediately. The prohibition excludes Russian gold that was located outside of Russia prior to June 28, 2022.
On April 6, 2022, Biden announced E.O. “Prohibiting New Investment in and Certain Services to the Russian Federation in Response to Continued Russian Federation Aggression,”, prohibiting (1) new investment in Russia by U.S. persons wherever located, (2) the exportation, reexportation, sale, or supply, directly or indirectly, from the U.S., or by a U.S. person, wherever located, of any category of services as may be determined by Treasury in consultation with State, to any person located in the Russia, and (3) any approval, financing, facilitation, or guarantee by a U.S. person, wherever located, of a transaction by a foreign person where the transaction by that foreign person would be prohibited by this section if performed by a U.S. person or within the U.S.
On September 15, 2022, OFAC issued a determination pursuant to E.O. 14071 that the prohibition on the exportation, reexportation, sale, or supply of services from a U.S. person to a person located in Russia, shall apply to quantum computing services, effective October 15, 2022. The determination excludes (1) any service to an entity located in the Russian Federation that is owned or controlled, directly or indirectly, by a U.S. person, and (2) any service in connection with the wind down or divestiture of an entity located in the Russian Federation that is not owned or controlled, directly or indirectly, by a Russian person.
On April 21, 2022, Biden issued a proclamation prohibiting Russian-affiliated vessels from entering US ports, effective April 28, 2022. The prohibition applies to all such vessels except (1) those used in the transport of source material, special nuclear material, and nuclear byproduct material for which the Department of Energy, in consultation with State and Commerce, determines that no viable source of supply is available that would not require transport by Russian-affiliated vessels; and (2) those requesting only to enter US ports due to force majeure, solely to allow seafarers of any nationality to disembark or embark for purposes of conducting crew changes, emergency medical care, or for other humanitarian need.
D. Financial Sanctions on Russia
1. Sanctions on Russia’s Central Bank and Russian Financial Institutions
Russia-Related Sovereign Debt Directive. OFAC Directive 1A under EO 14024 (the Russia-related Sovereign Debt Directive) amends and supersedes OFAC Directive 1 to extend existing sovereign debt prohibitions to cover participation in the secondary market for bonds issued after March 1, 2022, 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.
Russia-Related CAPTA Directive. Directive 2 under EO 14024 (the Russia-Related CAPTA Directive) imposes correspondent and payable-through account sanctions on Public Joint Stock Company Sberbank of Russia, which holds about a third of all bank assets in Russia. Beginning on March 26, 2022, all U.S. financial institutions must close any Sberbank correspondent or payable-through accounts to reject any future transactions involving Sberbank or its foreign financial institution subsidiaries. These sanctions apply to Sberbank and any foreign financial institutions that are 50 percent or more owned, directly or indirectly, by Sberbank. These entities have been added to OFAC’s List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions (CAPTA List). On April 6, 2022, Treasury announced expanded sanctions on Sberbank, imposing full blocking sanctions on the bank.
Russia-Related Entities Directive. OFAC Directive 3 under EO 14024 (the Russia-related Entities Directive) prohibits beginning on March 26, 2022, transactions and dealings by U.S. persons or within the U.S. in new debt longer than 14 days maturity and new equity of Russian state-owned enterprises, entities that operate in the financial services sector of the Russian economy and other entities determined to be subject to the prohibitions. This prohibition will initially apply to 13 entities, including on Russia’s largest private bank (Alfa-Bank). On April 6, 2022, Treasury further sanctioned Alfa-Bank, imposing full blocking restrictions on the bank.
Russia-Related Sovereign Transactions Directive. Effective from February 28, 2022, OFAC Directive 4 under EO 14024 (the Russia-related Sovereign Transactions Directive) prohibits U.S. persons from engaging in transactions with the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation and the Ministry of Finance of the Russian Federation. This action immediately froze any assets of Russia’s Central Bank held in the U.S. or by U.S. persons wherever located.
Guidance to Avoid Sanctions Evasion. OFAC issued on March 2, 2022, new public guidance to “cut off avenues for potential sanctions evasion” by Russia’s Central Bank. The guidance makes clear that actions pursued on behalf of Russia’s Central Bank to act as the Central Bank’s agent and help raise resources are prohibited. OFAC also advises that General License 8A (Superseded by General License 8E) does permit what are commonly known as “U-turn transactions,” where payments related to energy are processed through non-sanctioned, third-country financial institutions, enabling the continuation of transactions that support the flow of energy to the market.
2. Russian Harmful Foreign Activities Sanctions Regulations
OFAC has issued the Russian Harmful Foreign Activities Sanctions Regulations to implement EO 14024 of April 15, 2021. These regulations, which are effective as of March 1, 2022, include provisions on prohibited transactions, licenses, authorizations, licensing policy, penalties, reports and procedures.
EO 14024 cited the following as harmful foreign activities by the Russian government: efforts to undermine the conduct of free and fair democratic elections and democratic institutions in the U.S. and its allies and partners, engaging in and facilitating malicious cyber-enabled activities against the U.S. and its allies and partners, fostering and using transnational corruption to influence foreign governments, pursuing extraterritorial activities targeting dissidents or journalists, undermining security in countries and regions important to U.S. national security and violating well-established principles of international law, including respect for the territorial integrity of states.
According to OFAC, these regulations are being published in abbreviated form to provide immediate guidance to the public. OFAC intends to supplement this rule with a more comprehensive set of regulations that may include additional interpretive guidance and definitions, general licenses and other regulatory provisions.
E. Sanctions Targeting Businesses and Individuals
A number of Russian entities and individuals have been added to the Specially Designated Nationals and Blocked Persons List (SDN List). Generally speaking, entities and individuals included in the SDN List face comprehensive bans, blocking of assets, and restrictions on trade and financial transactions. Typical sanctions entail the blocking of all property and interests in property of the sanctioned entities/individuals as well as of any entities that are owned, directly or indirectly, 50 percent or more, individually or with other blocked persons, that are in the U.S. or in the possession or control of U.S. persons.
Unless authorized by a general or specific license issued by OFAC or otherwise exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the U.S. that involve any property or interests in property of designated or otherwise blocked persons. The prohibitions include the making of any contribution or provision of funds, goods or services by, to or for the benefit of any blocked person, or the receipt of any contribution or provision of funds, goods or services from any such person.
Russian entities added to the SDN List include, among others: (1) VTB Bank Public Joint Stock Company, which holds nearly 20 percent of banking assets in Russia, as well as 20 of its subsidiaries; (2) State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB); (3) Promsvyazbank Public Joint Stock Company (PSB); (4) Public Joint Stock Company Bank Financial Corporation Otkritie; (4) Open Joint Stock Company Sovcombank; (5) Joint Stock Commercial Bank Novikombank; and (6) Russian Direct Investment Fund.
The U.S. has also imposed comprehensive sanctions targeting “powerful Russians in Putin’s inner circle” and financial sector elites. Russian persons added to the SDN List include Russian President Putin, Russian Foreign Affairs Minister Lavrov, as well as their family members, members of Russia’s Security Council, various other Russian government officials and lawmakers and other individuals. As of January 25, 2023, 1729 entities and individuals had been included in the SDN List pursuant to EO 14024. An additional 69 entities had been targeted for non-SDN sanctions pursuant to EO 14024. In all, around 2500 Russia-based entities and individuals had been targeted by OFAC as of January 25, 2023, under all available legal authorities.
F. Other Sanctions and Actions on Russia
On March 2, 2022, the U.S. Department of Transportation issued a directive suspending until further notice, existing, proposed and prospective scheduled passenger and all-cargo operations of all foreign air carriers of the Russian Federation to and/or from the U.S. This suspension extends to all Russian foreign civil aircraft operators to navigate aircraft in the U.S. Any pre-approved charter operations were all deemed disapproved effective March 2, 2022.
2. New Interagency Enforcement Group
The U.S. Department of Justice launched on March 2, 2022, the Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions and economic countermeasures that the U.S. has imposed along with allies and partners. The Task Force will ensure full enforcement of the sanctions so that Russia is effectively isolated from global markets and serious costs are imposed for the act of war, by targeting the crimes of Russian officials, government-aligned elites and those who aid or conceal their unlawful conduct.
The Task Force will use cutting-edge investigative techniques – including data analytics, cryptocurrency tracing, foreign intelligence sources and information from financial regulators and private sector partners – to identify sanctions evasion and related criminal misconduct. The group will be run out of the Office of the Deputy Attorney General and will make arrests and prosecutions when supported by facts.
In addition, the US and its allies issued a joint statement on March 17 launching the Russian Elites, Proxies, and Oligarch (REPO), a multilateral task force dedicated to aligning actions for sanctioning individuals who have illegally profited off their ties to the Russian state. The US Department of Treasury will reward information leading to the seizure of assets linked with foreign government corruption through the Kleptocracy Asset Recovery Rewards Program. A list of targeted individuals who are priorities for the US can be found here.
The Justice Department issued a press release on June 29, 2022, stating that REPO members have: (1) Blocked or frozen more than $30 billion worth of sanctioned Russians’ assets in financial accounts and economic resources (2) Immobilized about $300 billion worth of Russian Central Bank assets. (3) Seized, frozen, or detained yachts and other vessels owned, held, or controlled by sanctioned Russians (4) Seized or frozen luxury real estate owned, held, or controlled by sanctioned Russians, and (5) Restricted Russia’s access to the global financial system.
On March 17, Senator Elizabeth Warren and colleagues introduced the Digital Asset Sanctions Compliance Enhancement Act, a bill that aims to limit the role of crypto exchanges in sanctions evasion. The bill would authorize the President to sanction foreign crypto firms that are doing business with sanctioned Russian entities, authorize the Treasury Secretary to prohibit U.S.-based digital asset actors from transacting with Russia-linked crypto addresses; and impose reporting requirements on US taxpayers engaged in a transaction greater than $10K of cryptocurrency offshore.
On March 24, 2022, the leadership of the House Financial Services Committee, Reps. Maxine Waters (D-CA) and Patrick McHenry (R-NC) sent a letter to 30 financial services associations requesting information on which member companies have exited or continue to operate in Russia, citing the Committee’s lack of a clear picture of the extent of these divestments.
On December 23, 2022, President Biden signed into law H.R.7776 - James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 (NDAA) which includes several provisions focused on Russia’s invasion of Ukraine.
- Section 1243: Modifies the requirements of the “Annual Report on Military and Security Developments Involving the Russian Federation” to include a new section on the impact of US sanctions on improvements to the Russian military and its proxies, including an assessment of the impacts of the maintenance or revocation of such sanctions. It also requires a detailed description on how Russian private military companies are being utilized to advance Russian interests, the threat they pose to US security interests, and the impact of current sanctions on their behaviour.
- Section 5590: Requires the President to submit a periodic report to Congress identifying foreign persons that knowingly participated in a significant transaction for the sale, supply, or transfer (including transportation) of gold from Russia, and to impose blocking and visa sanctions against identified persons.
- Section 6525: Requires regular (every 6 months) unclassified reports to Congress on how China or any Chinese entity has provided support for Russia with respect to its invasion of Ukraine. This includes efforts to circumvent sanctions, inhibit export control end-use checks, provide any technology that supports Russian intelligence or military capabilities, establish economic or financial arrangements to alleviate sanctions impact, and promote propaganda, and provide any material, technical, or logistical support.
- Section 6807: Requires semi-annual reports to Congress over the next two years on the effect of US and allied sanctions relating to Russia’s invasion of Ukraine, including efforts by Russia to circumvent sanctions through other countries such as Cuba, Nicaragua, Venezuela, China, Iran, and any other country considered appropriate. The report must include an assessment of the material effects of sanctions on individual sectors of the Russian economy, senior leadership, senior military officers, and state-sponsored and state-affiliated actors targeted by such sanctions,” and a description of evasion techniques such as through the use of digital assets. Finally, it should assess the impact of any general licenses issued including the extent to which internet-based communications have enabled continued monetization by Russian influence actors, while not silencing human-right activists and independent media, and the extent to which licenses authorizing energy-related transactions have affected Russia’s ability to earn hard currency.
- Section 6808: Requires an assessment of the current and potential impact of the invasion by Russia of Ukraine on global food security, including whether Russia has taken intentional steps to cause a global food shortage.
4. U.S. and allies
On March 24, 2022, the U.S. and EU announced new initiatives to support Europe’s energy security, secure global food supplies, ensure the security of cyberspace, and combat illicit use of digital assets.
In another statement, G7 leaders announced resolve to act together to:
- Engage other governments on adopting similar sanctions and to refrain from evasion and backfilling to assist Russia.
- Ensure monitoring, full implementation and enforcement of sanctions and to stand ready to impose additional sanctions as needed.
- Take the steps necessary to reduce reliance on Russian energy sources and support other nations willing to do the same.
- Ensure stable food production and supplies in vulnerable countries, including Ukraine. They pledged to avoid trade restrictive measures in agriculture, such as export bans, and called for an extraordinary session of the Council of the Food and Agriculture Organization (FAO) to address food security.
- Urge International organizations and multilateral fora to suspend “business as usual manner” with Russia.
On September 2, 2022, G7 finance ministers issued a statement on the united response to Russia´s war of aggression against Ukraine, confirming their joint intention to finalize and implement a comprehensive prohibition of services that enable maritime transportation of Russian-origin crude oil and petroleum products globally unless such products are purchased at or below a price determined by the broad coalition of countries adhering to and implementing the price cap. The Department of Treasury published on September 9, 2022, a preliminary guidance on the implementation of the proposed price cap on Russian oil. The ban will take effect on December 5, 2022, with respect to maritime transportation of crude oil and on February 5, 2023, with respect to maritime transportation of petroleum products. According to the guidance, the ban will not apply to jurisdictions or actors that purchase seaborne Russian oil at or below the price cap.
6. Review of Russia’s Market Economy Status
In a May 13 Federal Register notice, the Department of Commerce announced that it is launching a review of Russia’s market economy status for purposes of assessing antidumping and countervailing duties. Commerce argued that there may be important changes in the economic conditions in Russia linked with the six factors governing NME determinations. If Commerce determines Russia an NME, it could apply higher antidumping and countervailing duties on Russian imports.
On November 17, Commerce issued a final determination that it will no longer treat Russia as a market economy in its antidumping (AD) proceedings effective November 1. In a decision memorandum, Commerce attributed its decision to a “significant” backtrack in market-oriented economic reforms that have unfolded in Russia since Commerce’s 2021 Review of Russia’s Status as a Market Economy Country. According to a press release by the International Trade Administration, Commerce will apply an alternative methodology to calculate the AD duties on imports from Russia, using market-based prices and costs from a country at a comparable level of economic development that produces comparable merchandise.