Russia/Ukraine Sanctions

Following up on our earlier blog post, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced new blocking sanctions on April 6, 2018 against seven Russian oligarchs, 12 entities owned or controlled by those oligarchs, 17 senior Russian government officials, a Russian weapons trading company, and a banking subsidiary owned

Today, the US Department of Treasury, Office of Foreign Assets Control (OFAC) designated several Russian individuals and companies as Specially Designated Nationals (SDNs).  Specifically, in response to what Treasury Secretary Steven Mnuchin described as Russia’s “malign activity”, OFAC indicated that it sanctioned

seven Russian oligarchs and 12 companies they own or control, 17 senior Russian government officials, and a state-owned Russian weapons trading company and its subsidiary, a Russian bank.

In making the new designations, OFAC issued a press release, web notice, General License No. 12 under the Ukraine-Related Sanctions Regulations (URSR, 31 C.F.R. Part 589), General License No. 13 under the URSR, eight new Frequently Asked Questions (FAQs) related to the new designations, and one updated FAQ related to the Countering America’s Adversaries Through Sanctions Act (CAATSA).

OFAC made the designations pursuant to Executive Orders 13661 and 13662, which are focused on the crisis in Ukraine, as well as Executive Order 13582, which relates to the Syrian civil war.


Continue Reading OFAC Sanctions Russian Oligarchs and Major Russian Companies

The Treasury Department late last night issued several reports to Congress pursuant to mandates in the Countering America’s Adversaries Through Sanctions Act (CAATSA), including under CAATSA Sections 241 (Report on Senior Foreign Political Figures and Oligarchs in the Russian Federation) and 242 (Report on Effects of Expanding Sanctions to Include Sovereign Debt and Derivative Products).  While the headlines on the Section 241 report on Russian oligarchs, senior government officials, and parastatal entities blare “no sanctions imposed,” the details are less reassuring.

In response to a question from Senator Robert Menendez (D-NJ) in testimony before the Senate Banking Committee today, Treasury Secretary Mnuchin stated “There will be sanctions that come out of this,” seemingly referring to the Section 241 report.  Secretary Mnuchin went on later, in response to a separate question from Senator Brian Schatz (D-HI), to describe that intelligence work that went into this report and stated “And now, we will take the basis of that report and look at kind of – as we do in the normal course, where it’s appropriate to put sanctions. . . . So this should in no way be interpreted as we’re not putting sanctions on any of the people in that report.”  While the Secretary’s statements were not entirely clear, they suggest the possibility of sanctions on at least some of the individuals or entities on the Section 241 list as Treasury rolls out additional Russia sanctions going forward.
Continue Reading More Sanctions Ahead After Treasury’s Reports to Congress on Russian Oligarchs, Defense/Intel Sanctions?

Today is the effective date of the expanded sanctions set out in Directive 4 under the US Russia sanctions program, as amended by the US Department of Treasury, Office of Foreign Assets Control (OFAC) on October 31, 2017.  The amendment implemented Section 223 of the Countering America’s Adversaries Through Sanctions Act (CAATSA), signed into law by President Trump last August.  See our previous advisory.

As previously explained, the expanded Directive 4 prohibits US persons from providing goods, services (except financial services), or technology in support of any project worldwide for exploration or production of oil from deepwater, Arctic offshore, or shale in which certain designated Russian entities or their subsidiaries own a 33% or greater ownership interest, or a majority of the voting interests.  OFAC has issued FAQ guidance regarding how to calculate ownership interest where a designated entity owns an indirect ownership stake in a project.

The new restrictions are applicable to projects “initiated” on or after today, January 29. 
Continue Reading Russia Sanctions: Amended OFAC Directive 4 Effective Today

As indicated in recent media reports, for example from Bloomberg and The Wall Street Journal, many are closely watching developments related to the “Russian oligarch” report due from the Trump Administration next week under Section 241 of the Countering America’s Adversaries Through Sanctions Act.  Under Section 241, the Secretary of the Treasury (in consultation with the Secretary of State and the Director of National Intelligence) must submit to Congress by January 29 a “detailed report” that, among other things, identifies “the most significant senior foreign political figures and oligarchs in the Russian Federation,” as well as “Russian parastatal entities.”

One challenging and potentially problematic aspect of the Section 241 report is that CAATSA does not define “oligarch,” nor are we aware of any relevant definition elsewhere in U.S. law or regulation.  Generally speaking, the term “oligarch” has been used in the context of contemporary Russia to refer loosely to very wealthy and politically-connected businessmen, generally with close ties to President Putin, and independent of whether the relevant individuals have necessarily engaged in illicit activity.  Given the lack of a statutory definition and the imprecise use of the term “oligarch” in public circles, the Executive Branch’s own definition will be important in setting the scope for this report.  Section 241 defines the term “senior foreign political figure” by cross-reference to the very broad definition found in the regulations of Treasury’s Financial Crimes Enforcement Network (FinCEN) — this definition includes any current or former senior officials in civilian, military, or judicial positions, or in political parties; state-owned entities and senior executives of state-owned entities; and immediate family members and close associates of any such individuals.  The requirement to identify only “the most significant” senior foreign political figures and oligarchs provides the Executive Branch with additional discretion. 
Continue Reading More on the Russian Oligarch Report

The US Departments of State (State) and the Treasury (Treasury) have, in recent weeks, issued implementation guidance on the new secondary sanctions on Russia in the Countering America’s Adversaries Through Sanctions Act (CAATSA), which became law on August 2, 2017.  For a  general discussion of CAATSA, please see our previous advisory.  This advisory addresses

There has been a lot of chatter over the past few weeks about Russian companies loading up on debt in anticipation of increased sanctions, and even the Russian government planning a bond issuance in Chinese Yuan for the first time out of concern that western investors may be shut out of the sovereign debt market as a result of sanctions.  US sanctions targeting the debt of certain Russian companies are well-known and have been in place since 2014.  But what is underlying this renewed concern about Russian sovereign debt?

To put this into context, this is not the first time that sanctions concerns about Russian sovereign debt have arisen.  Last year, US and EU authorities warned banks not to participate in a Russian sovereign Eurobond offering, with the reported rationale being that the proceeds may be diverted to sanctioned state-owned enterprises.  (There were, at the time, no sanctions in place targeting Russian sovereign debt per se.)  That sovereign Eurobond offering ultimately succeeded, and was followed by additional issuances this year, after record performances by Russian bonds and a growing share of foreign participants in that market. 
Continue Reading US Sanctions On Russian Sovereign Debt: Coming Soon or Already Here?

On October 31, 2017, the Office of Foreign Assets Control (OFAC) took a number of actions to implement the Countering Russian Influence in Europe and Eurasia Act (CRIEEA) (also known as the Countering America’s Adversaries Through Sanctions Act (CAATSA), a larger sanctions statute of which CRIEEA was a part).  As part of this, OFAC amended Directive 4 under Executive Order 13662—related to prohibitions on supplying Russian oil projects—and issued updated Frequently Asked Question (FAQ) guidance on restrictions related to foreign financial institutions, facilitating transactions with sanctioned persons, sanctions evasion, and investments in Russian state-owned assets.  OFAC also provided guidance regarding CRIEEA’s authorization of sanctions targeting the railway and metal and mining sectors.

Expansion of Prohibitions on Supplying Russian Oil Projects

Directive 4 as amended prohibits US persons from directly or indirectly providing, exporting, or re-exporting goods, services (except for financial services), or technology in support of exploration or production for deepwater, Arctic offshore, or shale projects that meet all three of the following criteria: (1) the project was initiated on or after January 29, 2018; (2) the project has the potential to produce oil in any location; and (3) Russian individuals or entities designated under Directive 4—individually or in the aggregate—either have a 33 percent or greater ownership interest in the project or own a majority of the voting interests in the project.  Directive 4 does not apply to gas-only projects.   
Continue Reading Russian Sanctions Update: OFAC Amends Directive 4 and Updates FAQ Guidance

On Wednesday, November 15 at 12:00 PM EST, Anthony Rapa will be presenting “Recent Developments in Economic Sanctions: Russia, Iran, Venezuela, North Korea, and Cuba,” a webinar hosted by Federal Publications.  As described on the Federal Publications website:

From “decertifying” the Iran deal to disputes with “Rocket Man,” the economic sanctions world has seen dizzying

On October 27, 2017, the US Department of State, pursuant to Section 231 of the Countering America’s Adversaries Through Sanctions Act (CAATSA), published the list of entities that are part of, or operate for or on behalf of, the Russian defense or intelligence sectors, as well as Guidance that sets out indicators of how