On January 29, 2018, the US Treasury Department (“Treasury”) delivered five reports to Congress, as required under the Countering America’s Adversaries Through Sanctions Act (“CAATSA”). Please see our prior blog post on CAATSA here. Among these reports was a list identifying Russian senior political figures, oligarchs, and parastatal entities pursuant to CAATSA Section 241. This report was released during the same week that other CAATSA sanctions targeting Russia have gone into effect.

CAATSA Section 241 Report

Under CAATSA Section 241, Congress required Treasury, in consultation with the Director of National Intelligence and the Secretary of State, to submit a report (“Report”) on:

  1. Russian oligarchs and the most “significant” senior foreign political figures as determined by their closeness to the Russian regime and their net worth, including an identification of any indices of corruption with respect to such individuals;
  2. Russian parastatal entities, including an assessment of their role in the Russian economy and their leadership structures;
  3. the exposure of key US economic sectors to Russian politically exposed persons and parastatal entities (e.g., banking, securities, insurance);
  4. the potential effects of imposing debt and equity restrictions on Russian parastatal entities or designating such entities on the US List of Specially Designated Nationals and Blocked Persons (“SDN List”); and
  5. the potential impacts of imposing secondary/extraterritorial sanctions with respect to Russian oligarchs, state-owned enterprises, and parastatal entities.

The Report delivered to Congress names 114 senior Russian political figures and 96 oligarchs in an unclassified annex, including the Russian Prime Minister and other Cabinet Ministers, among others. The Report indicates that the list of senior political figures consists of (i) senior members of the Russian Presidential Administration; (ii) members of the Russian Cabinet; and (iii) other senior political leaders. The list of oligarchs includes those individuals determined by Treasury to have an estimated net worth of $1 billion or more.

The Report also includes a classified annex that is not publicly available. The classified annex includes additional Russian senior political figures and oligarchs, as well as the list of Russian parastatal entities and the remaining analysis required under CAATSA Section 241. Parastatal entities are defined as those entities in which Russian state ownership is at least 25% and that had 2016 revenues of approximately $2 billion or more.

Implications of the Report

Notably, CAATSA Section 241 does not require that the identified individuals and entities be designated on US restricted parties lists (e.g., the SDN List, the Sectoral Sanctions Identifications List) or otherwise sanctioned by the US Government. In the Report and a subsequent FAQ, Treasury confirmed that the Report is not a sanctions list and inclusion in it “does not constitute the determination by any agency that any of those individuals or entities meet the criteria for designation under any sanctions program.” It also does not, “in and of itself, imply, give rise to, or create any other restrictions, prohibitions, or limitations on dealings with such persons by either U.S. or foreign persons.”

At a Senate Committee hearing on January 30, Treasury Secretary Steven Mnuchin warned that he expects some of the individuals identified in the Report will be sanctioned in the next few months. Some of the individuals listed in the unclassified annex to the Report are already targeted by US sanctions programs (i.e., they are already SDNs). These individuals are identified with an asterisk (*) in the Report.

Related Developments and Context

The Report follows an announcement by the Trump Administration that it would not impose sanctions on parties engaging in “significant transactions” with parties linked to Russia’s defense and intelligence sectors under CAATSA Section 231. The Administration was required to impose such sanctions by January 29, but reportedly did not do so because it had determined that the threat of sanctions was “deterrent enough.” The State Department previously published the list of Russian defense and intelligence sector entities and corresponding guidance on October 27, 2017, as described in our blog post here.

On January 29, the expanded prohibitions under Directive 4 also took effect for activities involving certain Russian energy companies and deepwater, Arctic offshore, or shale projects, as described in our blog post here. The Report also follows the designation of 21 individuals and 9 entities on the SDN List to target misappropriation of Ukrainian state assets, Russian officials and their supporters, and parties operating in Crimea, including the transfer of four Siemens turbines to Crimea in contravention of EU sanctions. The European Union previously imposed sanctions on some of the same Russian parties in connection with the transfer of the Siemens turbines to Crimea, as described in our blog post here.