On April 15, 2021, the U.S. Department of the Treasury announced multiple sanctions actions against Russia in response to Russia’s efforts in carrying out malicious cyber activities against the United States, the Russian government’s attempts to influence U.S. elections, and escalating tensions in the Crimea region of Ukraine.
In connection with these actions, President Biden issued Executive Order 14024, titled “Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation,” which provides broad authority for the U.S. government to employ sanctions against numerous persons, including those that operate or have operated in the technology sector, the defense and related materiel sector, or any other sector of the Russian Federation economy as may be determined by the U.S. Government. The Executive Order also authorizes sanctions against those determined to be responsible for or complicit in certain activities for or on behalf of, or for the benefit of the Russian government, including malicious cyber-enabled activities, interference in a United States or other foreign government election, actions or policies that undermine democratic processes or institutions in the United States or abroad, and transnational corruption.
The Treasury Department’s Office of Foreign Assets Control (OFAC) also took the following actions under the new Executive Order:
- Sanctioned a number of Russian technology companies known to support Russian Intelligence Services’ attempts at executing cyberattacks directed at the United States;
- Expanded upon existing prohibitions on certain dealings in Russian sovereign debt that have been in place since August 2019 by issuing a directive that generally prohibits U.S. financial institutions from participating in the primary market for ruble or non-ruble denominated bonds issued after June 14, 2021 by the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation, and further prohibits U.S. financial institutions from lending ruble or non-ruble denominated funds to these three entities; and
- Sanctioned 32 entities and individuals for their roles in a coordinated effort by the Russian government to influence the 2020 U.S. presidential election. This network, cultivated by President Vladimir Putin, includes First Deputy Chief of Staff Alexei Gromov, as well as groups run by Russian Intelligence Services that serve as online disinformation outlets, including InfoRos, the Strategic Culture Foundation, SouthFront, and NewsFront.
Additionally, in cooperation with the European Union, United Kingdom, Canada, and Australia, OFAC designated five individuals and three entities in relation to Russia’s occupation of the Crimea region of Ukraine and as a response to those asserting governmental authority over the region without authorization from the country of Ukraine and those targeting others living or operating in Crimea. This move demonstrates the U.S. government’s continued commitment to Ukraine’s sovereignty and its territorial rights over the contested region, as well as takes a stand against Russia’s human rights abuses against Ukrainians.
All property and interests in property subject to U.S. jurisdiction of these sanctioned entities and individuals are blocked (as well as entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons), and U.S. persons are generally prohibited from engaging in transactions with them.
Although, these actions were billed as “sweeping new authority,” these actions are consistent with the steps the U.S. has taken to target Russia over the past few years, and they are not expected to have a significant impact on the day-to-day activities of U.S. companies’ operations involving Russia.
For more information on how these could impact your business, contact:
- Martin Lutz, Partner (email@example.com, 512-495-6024),
- Jamie Joiner, Special Counsel (firstname.lastname@example.org, 713-615-8530),
- Lindsey Roskopf, Partner (email@example.com, 713-615-8534),
- Justin Cawley, Senior Counsel (firstname.lastname@example.org, 202-812-2644), or
- Another member of the McGinnis Lochridge International Trade and Transactions Practice Group