The European Union (EU) and the United States have now both taken targeted action to address the evolving situation in Ukraine. These measures do not impose restrictions on the country or government as a whole. On 6 March 2014, the EU implemented sanctions that target designated persons in Ukraine but these EU measures do not currently affect overall trade with the country. On the same day, President Obama issued a formal statement and an Executive Order (the Order) giving the administration broad authority to also designate persons who are, among other things, engaging in activities undermining democratic processes or institutions in Ukraine; threatening the peace, security, stability, sovereignty, or territorial integrity of Ukraine; contributing to the misappropriation of state assets of Ukraine; or purporting to assert governmental authority over any part of Ukraine without authorization from the Ukrainian government in Kyiv. To date, the president has not designated any persons or entities under this Order. The U.S. sanctions also do not currently affect overall trade with Ukraine. We have set forth below key elements of these restrictions as well as additional measures under these sanctions.

Based on these new measures, companies should assess their business operations and relationships in Ukraine. In reviewing these activities, companies should determine whether they are engaging in activities or have relationships with these designated persons, including companies owned or controlled by them. For companies with automated screening software solutions, any such persons should be added to your systems and screening filters.

  1. EU Sanctions

The Council of the European Union (Council) has adopted Council Regulation 208/2014 (EU Ukraine Sanctions) imposing targeted economic sanctions on 18 Ukrainian individuals. The EU Ukraine Sanctions provide for the freezing of funds and economic resources belonging to, owned, held, or controlled by the persons identified as responsible for the misappropriation of Ukrainian State funds and persons responsible for human rights violations in Ukraine (listed persons). Furthermore, no funds or economic resources shall be made available, directly or indirectly, to or for the benefit of the listed persons.

To ensure the compliance with the EU Ukraine Sanctions, EU persons, entities, and bodies are required to supply immediately any information related to the funds and economic resources of the listed persons to the competent authorities.

The listed persons include the former President Viktor Fedorovych Yanukovych, two of his sons, and several members of the deposed administration:

  1. Viktor Fedorovych Yanukovych, former President of Ukraine
  2. Vitalii Yuriyovych Zakharchenko, former Minister of Internal Affairs
  3. Viktor Pavlovych Pshonka, former Prosecutor General of Ukraine
  4. Oleksandr Hryhorovych Yakymenko, former Head of Security Service of Ukraine
  5. Andriy Volodymyrovych Portnov, former Adviser to the President of Ukraine
  6. Olena Leonidivna Lukash, former Minister of Justice
  7. Andrii Petrovych Kliuiev, former Head of Administration of President of Ukraine
  8. Viktor Ivanovych Ratushniak, Deputy Minister of Internal Affairs
  9. Oleksandr Viktorovych Yanukovych, businessman and son of former President
  10. Viktor Viktorovych Yanukovych, politician and member of Verkhovna Rada of Ukraine; son of former President
  11. Artem Viktorovych Pshonka, Deputy Head of the faction of the Party of Regions in the Verkhovna Rada of Ukraine
  12. Serhii Petrovych Kliuiev, businessman, brother of Mr. Andrii Petrovych Kliuiev
  13. Mykola Yanovych Azarov, Prime Minister of Ukraine until January 2014
  14. Oleksii Mykolayovych Azarov, son of former Prime Minister Azarov
  15. Serhiy Vitaliyovych Kurchenko, businessman
  16. Dmytro Volodymyrovych Tabachnyk, former Minister of Education and Science
  17. Raisa Vasylivna Bohatyriova, former Minister of Health
  18. Ihor Oleksandrovych Kalinin, former Adviser to the President of Ukraine
  1. U.S. Sanctions

The new Order allows the administration to block (freeze) all property and interests of property of persons determined by the U.S. Secretary of the Treasury, in consultation with the U.S. Secretary of State, to have engaged in any of the sanctionable activities identified in the Order. No individuals or entities have been designated to date under this new Order. As such, U.S. persons are not yet required to block any specific property or property interests pursuant to this Order, but  it provides legal basis to the U.S. government to designate persons and entities that will be subject to blocking, upon designation. As indicated in the press statement, this Order is “a flexible tool that will allow us to sanction those who are most directly involved in destabilizing Ukraine, including the military intervention in Crimea,  and does not preclude further steps should the situation deteriorate.”

Specifically, the Order provides basis to target those who are determined by the U.S. government to be responsible for or complicit in, or who have engaged in, directly or indirectly, actions that undermine  democratic processes or institutions in Ukraine, threaten the peace, security, stability, sovereignty, or territorial integrity of Ukraine, or that contribute to the misappropriation of state assets of Ukraine. Other sanctionable activities that could give rise to a designation by the U.S. government include those who have asserted governmental authority over any part of Ukraine without authorization from the Ukrainian government, and those who have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any of the foregoing activities. The Order also targets those acting as a leader of an entity that has, or whose members have, engaged in any of the foregoing activities as well as those who are owned or controlled by, or who have acted for or on behalf of, any person designated under the Order.

In addition, the Order provides authority to impose a U.S. visa ban (for both immigrant and nonimmigrant visas) and prohibit entry of such designated persons to the United States.