Major Sanctions Developments
United States and Allied Nations Launch Multilateral Russian Oligarch Task Force. The U.S. Departments of Treasury and Justice announced the launch of the Russian Elites, Proxies, and Oligarchs (REPO) multilateral task force. The task force consists of representatives from the Finance Ministries and Justice or Home Ministries of Australia, Canada, Germany, France, Italy, Japan, the UK, the U.S., and the European Commission. According to the announcement, task force members are “committed to using their respective authorities in concert with other appropriate ministries to collect and share information to take concrete actions, including sanctions, asset freezing, and civil and criminal asset seizure, and criminal prosecution.” In concert with the announcement of the REPO task force:
- Treasury’s Financial Crimes Enforcement Network (FinCEN) will join in a statement with counterpart Financial Intelligence Units (FIUs) to increase information sharing and will release an alert about the importance of identifying and reporting suspicious transactions by sanctioned Russian elites, oligarchs, and their proxies that involve real estate, luxury goods, and high-value assets.
- Treasury will also launch the Kleptocracy Asset Recovery Rewards Program, which offers rewards payments for information leading to the seizure, restraint, or forfeiture of assets linked to foreign government corruption, including the government of Russia.
United States Targets Key Russian Military Leaders with New Round of Sanctions. The U.S. Department of State announced a new sanctions package targeting 11 Russian military leaders. The sanctioned individuals will be added to the list of specially designated nationals and blocked persons. The designated individuals include Dmitry Bulgakov, the senior-most officer responsible for logistics matters for the Russian Ministry of Defense, as well as Alexander Mikeev, the director general of Rosoboronexport, which is Russia’s state-controlled intermediary that carries out foreign trade with respect to military goods.
UK Adds Two Individuals to Russian Sanctions List. HM Treasury’s Office of the Financial Sanctions Implementation (OFSI) added Russian lawmaker Anatoly Borisovich Vyborny and Russian businessman and former Russian-backed mayor of Sevastopol Aleksei Mikhailovich Chaliy to its Russian sanctions list. According to the OFSI notice, entities with accounts or economic resources tied to Vyborny and Chaliy must freeze such accounts and other funds, or economic resources associated with the designated individuals. Financial institutions must also report any information about frozen assets to OFSI, which may be passed onto other regulatory and law enforcement authorities.
Canada Designates 15 Russian Officials for Supporting Invasion of Ukraine. Canada designated 15 Russian officials in a new round of sanctions for their role in enabling President Vladimir Putin’s invasion of Ukraine. The new measures add to Canada’s growing list of sanctions imposed on Russian leadership and are intended to apply additional pressure on Putin. The measures were imposed under the Special Economic Measures (Russia) Regulations.
U.S. Treasury Sanctions Russian Judge for Flawed Investigation into Death of Whistleblower Sergei Magnitsky. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced sanctions targeting four Russian individuals for their role in concealing information about the 2009 death in police custody of Russian lawyer and whistleblower Sergei Magnitsky. OFAC designated Russian District Judge Natalia Mushnikova for her effort to conceal the legal liability for the detention, abuse, or death of Sergei Magnitsky. OFAC noted that the Moscow court conducted a flawed investigation into the cause of Magnitsky’s death and failed to hold the alleged perpetrators accountable.
Sanctions Effects and Enforcement
Fitch Ratings: “Sovereign Default” Should Russia Pay Foreign Debt in Rubles. Fitch Ratings announced that it would constitute a “sovereign default” should Russia pay its foreign currency debt coming due on Wednesday in rubles rather than dollars, as its finance minister has threatened to do until sanctions that have frozen nearly half the currency’s foreign exchange reserves are lifted. In the event of a payment in rubles, Fitch noted, the rating on both bonds would be lowered to “D” after the grace period expires, while Russia’s long-term foreign currency rating would be set at “Restricted Default.”
Volkswagen Considers Moving Production Out of Europe Due to Russian Invasion. German carmaker Volkswagen revealed that it is struggling to secure crucial supplies from parts manufacturers in Ukraine and announced it would consider moving more of its production out of Europe to the United States and China if the conflict continues.
Sanctions Outlook
UK Bill to Accelerate Sanctions Implementation Against Russian Oligarchs Receives Royal Assent. The new Economic Crime (Transparency and Enforcement) Act, which would enable the government to streamline the implementation of sanctions against Russian oligarchs, received royal assent. The new law will, according to an announcement, assist the government in moving “quickly to impose sanctions against oligarchs already designated by” the international community. The legislation also mandates the creation of a new Register of Overseas Entities that would require beneficial owners of foreign companies that own UK property to reveal their identities.
Russia Imposes Sanctions Against U.S. Leaders in Retaliation to Western Measures. The Russian Foreign Ministry announced sanctions targeting U.S. President Joe Biden, Secretary of State Antony Blinken, Defense Secretary Lloyd Austin, and other top U.S. officials in retaliation to sanctions imposed by the international community. The sanctions also include Joint Chiefs of Staff Chairman Mark Milley and “a number of department heads and famous American leaders.” Russia also designated top Canadian officials, including Prime Minister Justin Trudeau, Foreign Minister Melanie Joly, and Defense Minister Anita Anand.
Multinationals Continue to Leave Russia. Pharmaceutical companies Eli Lilly and Novartis will cease exporting nonessential medicines to Russia and donate any profits generated from its sales of essential treatments to humanitarian relief efforts.
