OFAC Adds 19 Individuals and a Bank to SDN List; President Obama Signs New Executive Order Authorizing Sanctions to Against Key Sectors of Russian Economy; EU and Australia Sanctions Also Keeping Pace

On March 20, 2014, the United States continued its march of Ukraine-related sanctions against Russia:

  • The US Treasury Department’s Office of Foreign Assets Control (OFAC) designated 19 additional Russian individuals and a bank, Bank Rossiya, adding them to the Treasury Department’s Specially Designated Nationals (SDN) list pursuant to Executive Order 13661 [UKRAINE2]; and
  • President Obama signed a third executive order that paves the way for additional designations on a broad trade-related sanctions on key sectors of Russia’s economy.

These measures come on the heels of recent Ukraine-related sanctions that are discussed in our March 17, 2014 legal alert and are in response to Russia’s actions to annex Crimea subsequent to the March 16, 2014 Crimean Referendum to join Russia, as well as international concerns regarding possible further Russian incursions into Ukraine.

The new SDN designations freeze the assets of 19 additional Russian individuals, including both senior Russian officials and President Putin’s inner circle, a/k/a “cronies,” whom the White House describes as having “substantial resources and influence who provide material support to the Russian leadership.” Their names appear with the designator “[UKRAINE2]” and are listed below. OFAC also added Bank Rossiya, the personal bank for many Russian officials and members of President Putin’s inner circle, to the SDN list on the grounds that it “provides material support to these individuals.”

Moments after President Obama announced this next wave of targeted individuals and entities, Russia responded in kind and announced sanctions that would bar 10 American officials — including House of Representatives Speaker John Boehner, Senator John McCain, and advisers to President Obama (Dan Pfeiffer and Caroline Atkinson) — from entering Russia. President Putin has said that he sees no immediate need for further Russian retaliation against the US but, as the US and international community continue increasing the possibility of new sanctions against Russia, Russia will likely respond in kind.

Additionally, the President signed a new Executive Order that opens the door for broad future sanctions on key sectors of the Russian economy.

Specifically, the new executive order authorizes the designation as SDNs persons who:

  • Operate in such sectors of the Russian Federation economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State, such as financial services, energy, metals and mining, engineering, and defense and related materiel;
  • Have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to, or in support of, any person whose property and interests in property are blocked pursuant to this order; or
  • Have been owned or controlled by, or have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this order.

The new Executive Order provides the US Government further flexibility to sanction Russia if Russia further escalates the Ukrainian crisis. The President voiced concern that Russian military positioning could point to “further incursions” into southern and eastern Ukraine, so upcoming events on the ground will likely indicate whether the US will impose sanctions measures pursuant to this new Executive Order.

The President acknowledged that the threatened economic measures if implemented could hurt the global economy, as well as the Russian economy, but said that “Russia must know that further escalation will only isolate it further from the international community.”

On Capitol Hill, House Foreign Affairs Committee Chairman Ed Royce and Ranking Member Eliot Engel introduced a new bill on Friday, March 21, 2014 that would impose sanctions on Russia and provide economic aid to Ukraine. It closely mirrors Senate legislation that is scheduled for a procedural vote on the March 24, 2014 — but without language sought by the White House that would provide more funding for International Monetary Fund loans. When lawmakers return from their spring recess next week, more action is expected.

The European Union has reportedly added 12 additional names to its list of 21 people subject to EU visa bans and asset freezes March 21, 2014. However, like the US, the EU has yet to impose broader economic and trade sanctions, only tasking the European Commission to prepare such measures if Russia further destabilizes Ukraine. The names added to the EU list are also provided below.

Australia on March 19, 2014, announced it would impose travel bans and asset freezes on Russian and Ukrainian officials deemed responsible for Russia’s annexation of Crimea. This list includes eight Russians and four Ukrainians but their names have yet to be released.

As the sanctions swirled, Russian and Ukrainian politicians took definitive steps in different directions: On March 21, 2014, Russian President Putin signed the law annexing Crimea, while the same day, Ukraine’s interim prime minister, Arseniy Yatsenyuk, signed the political provisions of the EU Association Agreement, the Agreement that the former Ukrainian President refused to sign, triggering the protests.

The new lists of designations by the US, EU, and Russia are provided below:

Click here to view the table.