New sectoral sanctions: 

The US Office of Foreign Assets Control ("OFAC") has implemented extensive new sectoral sanctions in response to the situation in Ukraine and added additional entities to the Specially Designated Nationals ("SDN") list. In summary, the new measures:

  • Update and add to the entities in the Sectoral Sanctions Identification List ("SSI List") under Directive 1 (applicable to certain financial institutions) and reduce the tenor of permissible financing and dealings in new debt to 30 days or fewer, from 90 days or fewer for persons subject to Directive 1.
  • Update and add to the entities in the SSI List under Directive 2 (applicable to certain companies in the energy sector).
  • Create a new prohibition against financing persons in the SSI List under a newly announced Directive 3. These entities are largely defense-related companies.
  • Create a new prohibition against the provision of goods, services (other than financial services) or technology in support of certain deepwater, Arctic offshore or shale products which could produce oil for Russia and which involved specified companies listed in new Directive 4.

Directive 1 and Directive 2

The original version of Directive 1, issued on July 16, 2014, prohibited transacting with, providing financing for, or dealing in new debt with a maturity of more than 90 days or new equity, by, on behalf of, or for the benefit of persons named under Directive 1 in the SSI list, their property or their interests in property. The amendment to Directive 1, issued on September 12, 2014, reduces the tenor of prohibited new debt to 30 days. The restrictions relating to new equity remain in place.

Directive 2 separately prohibits transacting with, providing financing for, or dealing in new debt with a maturity of more than 90 days by, on behalf of, or for the benefit of persons named under Directive 2 in the SSI list, their property or their interests in property. The persons listed in Directive 2 operate in Russia's energy sector. The amendment to Directive 2, issued on September 12, 2014, added further names to the SSI List. The measures now apply to Novatek, Rosneft, Transneft and Gazpromneft.

Directive 3

Directive 3, issued on September 12, 2014, prohibits transacting with, providing financing for, or dealing in new debt with a maturity of more than 30 days by, on behalf of, or for the benefit of persons named under Directive 3 in the SSI list, their property or their interests in property. The persons listed in Directive 3 operate in Russia's defense sector. At present the only company listed is state corporation Rostec (and its various aliases), which holds stakes in defense and technology firms.

Directive 4

Directive 4, issued on September 12, 2014, prohibits the direct or indirect provision, exportation or reexportation of goods, services (other than financial services) or technology in support of the exploration or production for deepwater, Arctic offshore, or shale projects that have the potential to produce oil in Russia and that involve persons named under Directive 4 in the SSI list, their property or their interests in property. The OFAC FAQs state that the prohibition on the exportation of services includes, for example, drilling services, geophysical services, geological services, logistical services, management services, modeling capabilities, and mapping technologies.

Licenses

General License 1A

The new General License 1A, issued on September 12, 2014, authorizes transactions involving derivative products that would otherwise be prohibited according to Directive 1, 2 or 3. This replaces General License 1 which did the same in relation to Directive 1 and 2 only.

General License 2

The new General License 2, issued on September 12, 2014 authorizes, until September 26 at 12.01am (EDT), all services and activities prohibited by Directive 4 which are ordinarily incidental and necessary to winding down operations, contracts or agreements involving persons subject to Directive 4. This 14 day authorization only applies to operations, contracts or agreements that were in effect before September 12.

Specially Designated Nationals

In addition to the sectoral sanctions, several new persons have been added to the SDN list. The additional persons can be found here, from page 110 onwards.