Major Sanctions Developments

Official Says U.S., Allies Plan New Sanctions on More Russian Sectors. Deputy U.S. Treasury Secretary Wally Adeyemo revealed that the U.S. government and its allies are planning new sanctions on more sectors of Russia's economy that are critical to sustaining its invasion of Ukraine. Adeyemo said the broadening of the restrictive measures imposed on Russia is aimed at undermining “the Kremlin's ability to operate its war machine.” The official noted that the western allies also plan to disrupt Russia's critical supply chains, including implementing export controls and targeting alternative military suppliers used by Russia. Adeyemo made the statement during a European trip to consult with allies on strengthening and enforcing sanctions to punish Russia.

Export Controls

Japan Puts Pressure on Russian Elites with Luxury Car Export Ban. The Japanese government imposed a ban on the export of luxury cars and other items to Russia. Prime Minister Fumio Kishida's Cabinet revised an ordinance to implement the export embargo on April 5, which will also cover jewelry and artwork. The ban is intended to add pressure on Russian elites who have been supporting Russian President Vladimir Putin's military actions in Ukraine. A number of car brands, including Italian carmaker Ferrari and German companies BMW and Mercedes-Benz, have ceased operations in Russia since the invasion of Ukraine commenced.

Sanctions Effects and Enforcement

U.S. Issues Sanctions Evasion Warning. A U.S. Treasury official warned that his department is monitoring the financial transactions of Russian oligarchs and businesses for any signs of sanctions evasion, as well as tracking those offering them “material support.” The official told the Financial Times that wealthy Russians were exploiting the “leaky” capital controls imposed by Moscow as part of its efforts to prevent a financial system meltdown: “We’re seeing the transfer of wealth to new associates and the creation of shell companies. We’re watching these moves.” G7 countries and Australia are setting up a task force to track the assets of sanctioned individuals and those who may be targeted by future measures.

U.S. Treasury Warns it will Target Businesses Assisting Russia Evade Sanctions. Deputy U.S. Treasury Secretary Wally Adeyemo warned that the United States government will actively pursue individuals and companies that help Russia circumvent economic sanctions imposed by the international community over its invasion of Ukraine. Adeyemo singled out cryptocurrency exchanges and other businesses in the financial sector, saying they will be held accountable if proven to be aiding Russia evade the restrictive measures. Adeyemo noted that there is no indication that Moscow has been successful in any significant way with its attempts to evade international economic sanctions, echoing comments from Undersecretary of the Treasury for Domestic Finance Nellie Liang on March 18 that, so far, transaction volume of crypto assets is too small to help Russia evade sanctions.

U.S. Lawmakers Probe Credit Suisse Over Russia Sanctions Compliance. Members of the U.S. House of Representatives Committee on Oversight and Reform have requested Credit Suisse submit documents detailing the bank's compliance with sanctions imposed on Russia over its invasion of Ukraine. In a letter to CEO Thomas Gottstein, Representatives Carolyn Maloney, chairwoman of the committee, and Stephen Lynch, chair of the Subcommittee on National Security, asked the bank to provide information on its financing of yachts and aircraft owned by potentially sanctioned individuals. The request follows reports that the bank instructed investors in a recent debt deal to destroy and erase information related to its dealings with wealthy clients.

Bloomberg Halts Access to Trading Terminals in Russia and Belarus. Bloomberg announced that it has suspended its business in Russia and Belarus, meaning banks in the region will not have access to its financial data terminals. Earlier in March, the company removed Russian stocks from its global equity indices and suspended its journalists from working in the country. Reuters, Bloomberg’s main competitor, scrapped a partnership with Russian state news agency TASS last week after staff criticized the affiliation.

UK Authorities Seize $50 Million Superyacht. The UK seized a GB £38 million (USD $50 million) Russian-owned superyacht docked in London, marking the first such detention in UK waters. The Financial Times established that the yacht, which was registered to Saint Kitts and Nevis and carried a Maltese flag, was ultimately owned by Vitaly Vasilievich Kochetkov, the founder of Motiv Telekom, a small mobile phone network in Russia’s Urals region. While Kochetkov does not appear on any sanctions lists, the UK government announced that it seized the vessel under the Russian sanctions regime.

Sanctions Outlook

Ukrainian President Urges Western Nations to Impose Oil Embargo on Russia. Ukrainian President Volodymyr Zelenskyy called on western nations to immediately put more pressure on Russia, including imposing an oil embargo. In a video addressing his country's citizens, Zelenskyy said the west had miscalculated last year in delaying sanctions and the invasion had followed. The Ukrainian president said the sanctions had to be “effective and serious” given Russia's actions to date.

UK Sanctions May Remain After Potential Ceasefire. UK Prime Minister Boris Johnson warned that “a ceasefire alone would not be cause for UK sanctions to be removed from Russia.” The announcement came after the Foreign Secretary Liz Truss said on Sunday that a “full ceasefire and withdrawal” might lead to the relaxation of some sanctions on banks and individuals but added that “snapback sanctions” could be immediately reimposed if Russia reneged on any agreement. A US official told the Financial Times a ceasefire was required before the lifting of their country’s sanctions would even be considered.

U.S. Court Dismisses Russian Tycoon Deripaska’s Appeal to Lift Sanctions. A U.S. appeals court in Washington rejected a bid by Russian tycoon Oleg Deripaska to lift U.S. sanctions imposed in 2018. The D.C. Circuit concluded that the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) had sufficient evidence to back their action against Deripaska, who is a close associate of Vladimir Putin. Deripaska and other Russian elites connected to President Vladimir Putin were targeted by U.S. sanctions in response to Russia's annexation of Ukraine's Crimea region in 2014 and have been subsequently designated by U.S. partners and allies following Russia’s 2022 invasion of Ukraine.