On August 2, 2019, the US Department of State announced that it was imposing new sanctions on Russia as required by the Chemical and Biological Weapons Control and Warfare Elimination Act (the “CBW Act”), 22 U.S.C. § 5601 et seq. The announced sanctions include:
- US opposition to the extension of loans or other financial or technical assistance to Russia by any multilateral development bank;
- restrictions on US banks dealing in new non-ruble denominated Russian government bonds and the lending of non-ruble denominated funds to the Russian government;
- certain new export licensing restrictions on controlled goods and technology.
This action follows Executive Order 13883, “Administration of Proliferation Sanctions and Amendment of Executive Order 12851,” which was required in order to delegate the authority to the Secretary of the Treasury to implement two of the three announced sanctions.In addition, on August 3, 2019, following the release of the Executive Order and the State Department’s announcement of sanctions, the Office of Foreign Assets Control of the US Department of the Treasury issued a Russia-related directive entitled CBW Act Directive, which implements the following prohibitions:
- participation in the primary market for non-ruble denominated bonds issued by the Russian sovereign after August 26, 2019; and
- lending non-ruble denominated funds to the Russian sovereign after August 26, 2019.
The Directive applies to a broad array of financial institutions located in the United States, as well as foreign branches of US institutions. It also excludes Russian state-owned entities from the definition of “Russian Sovereign.” The Directive also prohibits transactions aimed at evading or violating its provisions. The US imposed a first round of sanctions against Russia following the Secretary of State’s determination that the government of the Russian Federation had used lethal chemical weapons against its own nationals on UK soil. In November 2018, the Department of State determined that the Russian government had failed to meet certain conditions and was a second round of sanctions were required, as set forth in the CBW Act.