On February 21, 2022, President Biden issued Executive Order 14065, entitled “Blocking Property of Certain Persons and Prohibiting Certain Transactions with Respect to Continued Russian Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine” in response to Russian actions against Ukraine.  The U.S. had previously issued Executive Order 14024, entitled “Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation” to assist in targeting specific bad actors in Russia seeking to harm properly elected democratic institutions.  The U.S. is utilizing both Executive Orders to impose harsh financial sanctions on the Russian government and officials.  The sanctions are focused on targeting the Russian financial system to make it difficult for Russia to bear the costs associated with maintaining its military action in Ukraine.

The U.S. Department of Treasury has issued a series of four (4) directives aimed at targeting the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, the Ministry of Finance of the Russian Federation, as well as entities and individuals close to Vladimir Putin and Russian leadership.  The newly issued directives prevent U.S. banks and U.S. persons from processing transactions, maintaining correspondent bank accounts or payables through accounts for Russian banks, providing new debt with a majority date longer than fourteen (14) days, and participating in the ruble bond market.

The Department of Treasury has also identified and targeted specific banks including State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB), VTB Bank Public Joint Stock Company, Public Joint Stock Company Bank Financial Corporation Otkritie, Promsvyazbank Public Joint Stock Company, Sovcombank Open Joint Stock Company, Joint Stock Commercial Bank Novikombank, and several of the financial institutions’ subsidiaries.  As a result of the targeted blocking directives, all property and interest in property of these entities in the possession or control of U.S. persons and U.S. financial institutions are blocked and must be reported to the Office of Foreign Asset Control (“OFAC”).  The U.S. government officials believe the coordinating targeting of the Russian financial system through heavy sanctions (and support from the European Union, Great Britain, and Japan, among others), will disrupt Russia’s attempts to prop up its depreciating currency and restrict the ability of Russia to sustain its military action against Ukraine.  On Saturday, February 26, 2022, Russian Banks were removed from the international SWIFT program, which restricts the ability of financial institutions to send and receive funds globally beyond the borders of Russia.

In addition, the U.S. Department of Justice announced that it would be forming an interagency law enforcement task force, KleptoCapture, charged with seizing assets of Russian oligarchs in the U.S. in an effort to enforce the current sanctions.

President Biden and U.S. members of Congress have promised that further and harsher sanctions against Russia will continue in an effort to halt Russia’s military action against Ukraine, including the announcement on March 2, 2022 that sanctioning the Russian oil and gas industry could be next.  We will continue to monitor the dynamic and evolving landscape as new sanctions are announced and imposed.

To Read a Copy of Executive Order 14065 Click Here.

To Read a Copy of Executive Order 14024 Click Here.

To Read a Copy of Directive IA Click Here.

To Read a Copy of Directive 2 Click Here.

To Read a Copy of Directive 3 Click Here.

To Read a Copy of Directive 4 Click Here.

To Read a Copy of the Department of Justice Press Release Click Here.