February 23, 2022

US, UK and EU impose coordinated sanctions against Russia in response to continuing Ukraine aggressions

On February 22, 2022, the US Department of the Treasury’s Office of Foreign Assets Control imposed financial sanctions against two state-owned financial institutions that support Russia’s defense industry and economy – the Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB) and Promsvyazbank Public Joint Stock Company (PSB) – as well as 42 of their subsidiaries, in an effort to limit Russia’s ability to finance defense-related contracts and raise new funds to finance its campaign against Ukraine.  Sanctions were also imposed against influential Russians and their family members who are considered to be part of Putin’s inner circle.  These sanctions build upon President Biden’s Executive Order of February 21, 2022 that enables the US to impose severe restrictions on economic activities with the Donetsk People’s Republic (DNR) and Luhansk People’s Republic (LPR) in response to Russian President Putin’s decision to recognize the DNR and LNR as “independent” states and deploy troops to these regions.  In addition to the new EO, OFAC also issued Directive 1A under EO 14024, General Licenses 2 and 3, and new and updated frequently asked questions to further clarify the limitations placed on US transactions with these regions going forward.

These actions were taken pursuant to Executive Order 14024, which authorizes sanctions against Russia for engaging in harmful foreign activities including its failure to respect the territorial integrity of other states.  In addition, sanctions under EO 14024 are now extended to the financial services sector of the Russian Federation economy, including the new designations of VEB and PSB, based on a determination made by the Secretary of the Treasury, in consultation with the Secretary of State.  As a result of these designations, all property and interests in property of today’s designees within the United States or within the possession or control of a US person are blocked, and US persons are generally prohibited from engaging in transactions involving the designated persons unless authorized by OFAC.  In addition, entities owned fifty percent or more by one or more designated persons are also blocked. As part of the PSB’s designation, OFAC also identified five vessels that have been blocked pursuant to EO 14024.

On the same day, the UK’s Foreign Secretary Liz Truss announced designations that target oligarchs and banks associated with the Kremlin in a first wave of sanctions imposed in response to Russia’s further violation of Ukraine’s sovereignty.  Under new Russia-related sanctions introduced on February 10, 2022, the UK imposed immediate asset freezes and travel bans on three leading members of Russian elite as well as 5 Russian banks including Bank Rossiya, Black Sea Bank for Development and Reconstruction, IS Bank, Genbank, and PSB. The UK also announced plans to sanction members of the Russian Duma and Federal Council who voted to recognize the independence of DNR and LNR and, in the coming weeks, will extend territorial sanctions imposed on Crimea to the DNR and LNR in an effort to prevent UK individuals and businesses from dealing with these territories until it is returned to Ukrainian control.  In addition, the UK Financial Conduct Authority encouraged individuals and firms in the UK to review the UK Sanctions List and the Office of Financial Sanctions Implementation consolidated list of asset freeze targets in order to comply with new sanctions measures.

On February 21, 2022, the Council of the EU adopted restrictive measures against five individuals who are members of the State Duma of the Russian Federation who were elected to represent the illegally-annexed Crimean peninsula and the City of Sevastopol on September 19, 2021.  Restrictive measures were also imposed against the head and deputy head of the Sevastopol electoral commission.  The designees are subject to asset freezes, including a prohibition on the availability of funds to these persons, and travel bans that would prevent them from entering or transiting through the EU.

US Dept of Treasury Press Release | US Dept of Treasury Recent Actions | UK Foreign Secretary Press Release | OFSI Financial sanctions Notice (Feb 22, 2022) | UK FCA Press Release | European Council Press Release | Official Journal of the EU Council (Feb 21, 2022)