Banking and Finance Law Daily Wrap Up, TOP STORY—Further sanctions enacted; OFAC adds relatives, business associates to sanctions, (Mar 14, 2022)
Organizations Mentioned:Office of Foreign Assets Control | U.S. State Department
The President issued an Executive Order imposing new import and export restrictions on Russia. In addition, OFAC has designated additional regime elites and business executives who are associates and facilitators of the Russian regime.
President Joseph Biden has issued a new Executive Order Prohibiting Certain Imports, Exports, and New Investment with Respect to Continued Russian Federation Aggression. The Executive Order imposes new import and export restrictions on Russia, including the export of U.S. banknotes to Russia. Following this, the Treasury Department’s Office of Foreign Assets Control (OFAC) issued a new round of sanctions targeting Russian and Kremlin elites, oligarchs, and Russia’s political and national security leaders who have supported Russian President Vladimir Putin’s brutal and illegal invasion of Ukraine. OFAC is also issuing guidance and authorizations to implement the new Executive Order (E.O.). Secretary of the Treasury Janet L. Yellen stated that these actions “further isolates the severely damaged Russian economy by prohibiting trade in products that are key to the economic and financial interests of all Russian elites.”
Among other things, the E.O. prohibits the importation into the United States of the following products of Russian Federation origin: fish, seafood, and preparations thereof; alcoholic beverages; and non-industrial diamonds. In addition, this E.O. bans the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a U.S. person, wherever located, of U.S. dollar-denominated banknotes to the Government of the Russian Federation (GoR) or to any person located in the Russian Federation.
OFAC has issued Russia-related General License 17, General License 18, General License 19, and Ukraine-related General License 23. OFAC’s guidance, issued after the E.O., is in line with the G7 leaders statement, and is intended to guard against potential attempts to use virtual currency to evade U.S. sanctions imposed on Russia. OFAC published new Frequently Asked Questions and amended one Frequently Asked Question to make clear that Treasury’s expansive sanctions actions against Russia require all U.S. persons to comply with OFAC regulations, regardless of whether a transaction is denominated in traditional fiat currency or virtual currency. The Treasury Department cautioned that sanctioned Russian persons are known to employ a wide variety of measures in their efforts to evade U.S. and international sanctions. The guidance warns U.S. persons, wherever located, including firms that process virtual currency transactions, to be vigilant against attempts to circumvent OFAC regulations and to take risk-based steps to ensure they do not engage in prohibited transactions.
SDN list updates. OFAC’s actions designating regime elites and business executives who are associates and facilitators of the Russian regime, including three immediate family members of President Putin’s spokesperson, Dmitriy Sergeevich Peskov; Russian tycoon and Kremlin insider Viktor Vekselberg; and the Management Board of the sanctioned VTB Bank. OFAC also designated 12 members of the Russian State Duma, including Vyacheslav Victorovich Volodin, who is also a permanent member of Russia’s Security Council.
As a result of the sanctions, all property and interests in property of the individuals that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked. All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt.
On March 3, the U.S. State Department designated Dmitriy Sergeevich Peskov, identified as the lead propagandist and spokesperson of the Russian Federation. Peskov was designated pursuant to E.O. 14024 for being or having been an official of the GoR. Now OFAC has designated three of Peskov’s family members, all of whom live “luxurious lifestyles that are incongruous with Peskov’s civil servant salary and are likely built on the illgotten wealth of Peskov’s connections to Putin.” These are Peskov’s wife, Tatiana Aleksandrovna Navka and his two adult children, Nikolay Peskov and Elizaveta Dmitriyevna Peskova. All three are being designated pursuant to E.O. 14024 for being a spouse or adult child of a person whose property and interests in property are blocked pursuant to E.O. 14024.
OFAC has also designated Viktor Feliksovich Vekselberg, a prominent Russian businessman with an estimated net worth exceeding $6 billion who was previously designated in 2018 for operating in the energy sector of the Russian Federation economy. OFAC is identifying as blocked property two of Vekselberg’s luxury assets: an aircraft with tail number P4-MIS and a yacht titled Tango. Both P4-MIS and Tango are valued at approximately $90 million each for a total of $180 million in identified blocked property.
VTB Bank, Russia’s second largest bank, was designated on February 24 pursuant to E.O. 14024. Now OFAC is also designating the ten individuals comprising VTB Bank’s management board. All were designated pursuant to E.O 14024 for being or having been leaders, officials, senior executive officers, or members of the board of directors of the GoR and for operating or having operated in the financial services sector of the Russian Federation economy.
OFAC also designated twelve members of the Duma, one of two chambers of the Russian Federal Assembly, Russia’s legislature. These designations are intended to further hold to account those actors who were “directly responsible for Russia’s illegitimate and unlawful recognition of the DNR and LNR regions of Ukraine and facilitating the sham pretext used by Putin to justify the Russian Federation’s unprovoked war against Ukraine.” These individuals were designated pursuant to E.O. 14024 for being or having been leaders, officials, senior executive officers, or members of the board of directors of the GoR.
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