The Week in Review delivers the impact and analysis for the public, private, and non-profit sectors from our regular reporting of the evolving global sanctions campaign against Russia.
This week, we reviewed the recent developments since our last update on 15 April as the United States (U.S.), the European Union (EU), and the United Kingdom (UK) continue to lead a global coalition in this sanctions campaign, which has been unprecedented in its complexity, impact, and speed in responding to Russia’s ongoing war against Ukraine.
Recent Developments Related to Sanctions Against Russia
Since the last update, numerous authorities have undertaken sanctions-related actions against Russia.
U.S. actions include:
- On 20 April, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated a Russian commercial bank, a network of individuals and entities involved in efforts to evade U.S. sanctions against Russia, and virtual currency mining companies. Specifically, OFAC took the following actions:
- OFAC blocked Transkapitalbank, a Russian commercial bank, pursuant to Executive Order (E.O.) 14024 for allegedly offering its clients the ability to conduct transactions via its proprietary banking system for the purpose of processing USD transactions for sanctioned clients. OFAC concurrently issued general license (GL) 28 and GL 29. GL 28, which authorizes transactions involving Transkapitalbank that are destined for or originating from Afghanistan, expires on 20 October.1 GL 29, which authorizes the winding down of transactions involving Transkapitalbank or subsidiaries owned 50 percent or more by Transkapitalbank, expires on May 20.2
- OFAC also imposed blocking sanctions on a network of more than 40 individuals and entities for being involved in efforts to evade sanctions for the benefit of a U.S.-designated Russian oligarch, Konstantin Malofeyev, who was originally designated under E.O. 13660.3 Malofeyev was recently charged by the U.S. Department of Justice with violating U.S. sanctions in connection with his hiring of a U.S. citizen to work for him.
- OFAC also blocked companies in Russia’s virtual currency mining industry, representing the first time OFAC has designated a virtual currency mining company.
- On 19 April, OFAC published a fact sheet that outlines the current humanitarian and food-related authorizations issued by OFAC in support of people impacted by Russia’s war.4 According to the fact sheet, such “activities that benefit the Ukrainian and Russian people…are not the target of [U.S.] sanctions efforts, and U.S. and non-U.S. persons can avail themselves of the authorizations, exemptions, and public guidance that the Treasury has issued.”5
- On 14 April, the U.S. Department of Justice announced charges against three Russian nationals for conspiring to use a U.S. citizen as an agent of the Russian Federation in the United States without prior notice to the attorney general, conspiring to violate U.S. sanctions, and conspiring to commit visa fraud. Aleksandr Mikhaylovich Babakov, a member of the Russian legislature; Aleksandr Nikolayevich Vorobev, the chief of staff of Babakov; and Mikhail Alekseyevich Plisyuk, another member of Babakov’s staff, used a nonprofit organization based in Russia as a front for a global foreign influence campaign to advance Russia’s foreign policy objectives. The defendants worked to weaken U.S. partnerships with European allies, undermine Western sanctions, and promote Russia’s illicit actions designed to destroy the sovereignty of Ukraine. The three defendants have previously been blocked by the United States pursuant to E.O. 13661.6
- On 14 April, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an advisory directing financial institutions to focus their efforts on detecting the proceeds of foreign public corruption. According to the advisory, “Russia is of particular concern as a kleptocracy because of the nexus between corruption, money laundering, malign influence, armed interventions abroad, and sanctions evasion.”7
- Also on 14 April, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) identified 10 additional aircraft that likely violated U.S. export controls. Seven of the 10 planes are owned by Belarusian operator Belavia. According to BIS, the aircraft on the list have violated the Export Administration Regulations (EAR) by continuing to operate despite restrictions imposed by the United States. BIS also updated the tail numbers of 32 aircraft that were on a previously published list of aircraft that have likely violated the EAR. In addition, BIS authorized two planes to leave Russia.8 BIS has warned that providing any service to the listed aircraft requires an authorization.
EU actions include:
- On 19 April, Greek authorities announced they impounded a Russian-flagged oil tanker, Pegas, in the Aegean Sea, citing EU sanctions against Russia.9
UK actions include:
- On 14 April, the UK government announced additional blocking sanctions against Russian oligarchs Eugene Tenenbaum and David Davidovich for allegedly being part of the inner circle of individuals enabling Russia's invasion of Ukraine. Tenenbaum and Davidovich were identified as long-time business associates of previously sanctioned Putin associate Roman Abramovich. British Foreign Secretary Liz Truss announced the government will freeze assets connected with Tenenbaum and Davidovich estimated to total up to GBP 10 billion (USD 13 billion).10
- OFAC GL 16 is set to expire on 22 April. GL 16 authorizes transactions that are ordinarily incident and necessary to the importation into the United States of crude oil, petroleum, liquified natural gas, and coal products prohibited by E.O. 14066.11
- Two GLs issued by the UK's Office of Financial Sanctions Implementation are set to expire in the coming days.
- GL INT/2022/1424276, which authorizes the winding down of transactions involving Alfa Bank, GazPromBank, Rosselkhozbank, SMP Bank, and Ural Bank for Reconstruction and Development, is set to expire on 23 April.12
- GL INT/2022/1424277, which authorizes wind down transactions involving Bank Dabrabyt, expires on 23 April.13
- Companies that have yet to complete wind down activities pursuant to a GL should apply for a specific license from the relevant agency. If a GL expires before companies can obtain a specific license to carry out the prohibited activity, parties should apply the relevant prohibition to the transaction at hand.
- Although humanitarian activities involving Russia are permissible as described in OFAC's 19 April guidance, persons wishing to engage in such activities may encounter difficulties finding counterparties willing to process authorized transactions due to broader de-risking from the Russian economy.
- OFAC regularly adds or updates GLs related to the Russia sanctions program, resulting in an ever-evolving risk environment. Companies should continually check OFAC's website for the most recent version of a given GL to ensure that they are aware of what the latest version authorizes.
- The EU is reportedly considering a sixth sanctions package that targets Sberbank and Russian oil, although the details of the package are still unknown.14 To date, Germany and other members of the EU have been wary of targeting Russian oil due to reliance on the commodity. This has led to pressure from the international community to stop importing Russian oil as it provides Russia with a key source of revenue. Similarly, the EU to date has refrained from designating Sberbank since it is a key facilitator of energy payments.
1 Authorizing Certain Transactions Involving Public Joint Stock Company Transkapitalbank and Afghanistan (April 20, 2022) https://home.treasury.gov/system/files/126/russia_gl28.pdf
2 Authorizing the Wind Down of Transactions Involving Public Joint Stock Company Transkapitalbank (April 20, 2022) https://home.treasury.gov/system/files/126/russia_gl29_0.pdf
3 U.S. Treasury Designates Facilitators of Russian Sanctions Evasion (April 20, 2022) https://home.treasury.gov/news/press-releases/jy0731
4 FACT SHEET: U.S. Treasury Issues Fact Sheet on Food and Humanitarian Sanctions Authorizations (April 19, 2022) https://home.treasury.gov/news/press-releases/jy0722
5 Fact Sheet: Preserving Agricultural Trade, Access to Communication, and Other Support to Those Impacted by Russia’s War Against Ukraine (April 19, 2022) https://home.treasury.gov/system/files/126/russia_fact_sheet_20220419.pdf
6 Russian Legislator and Two Staff Members Charged with Conspiring to Have U.S. Citizen Act as an Illegal Agent of the Russian Government in the United States (April 14, 2022) https://www.justice.gov/opa/pr/russian-legislator-and-two-staff-members-charged-conspiring-have-us-citizen-act-illegal-agent
7 Advisory on Kleptocracy and Foreign Public Corruption (April 14, 2022) https://www.fincen.gov/sites/default/files/advisory/2022-04-14/FinCEN%20Advisory%20Corruption%20FINAL%20508.pdf
8 Commerce Department Identifies First Belarusian and More Russia Aircraft Exported to Belarus and Russia in Apparent Violation of U.S. Export Controls (April 14) https://www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/2963-2022-04-14-bis-press-release-russian-belarusian-aircraft-operating-in-violation-of-1/file
9 Greece impounds Russian tanker as part of EU sanctions against Russia (April 19, 2022) https://www.reuters.com/world/europe/greece-seizes-russian-tanker-part-eu-sanctions-2022-04-19/
10 UK hits key Russian oligarchs with sanctions worth up to £10 billion (April 14, 2022) https://www.gov.uk/government/news/uk-hits-key-russian-oligarchs-with-sanctions-worth-up-to-10bn
11 Authorizing Transactions Related to Certain Imports Prohibited by Executive Order of March 8, 2022 (March 24, 2022) https://home.treasury.gov/system/files/126/russia_gl16.pdf
12 General Licence - INT/2022/1424276 (March 24, 2022) https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1063224/INT20221424276_PN.pdf
13 General Licence - INT/2022/1424277 (March 24, 2022) https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1063226/INT.2022.1424277_PN.pdf
14 New EU sanctions on Russia to target Sberbank, Commission head tells paper (April 16, 2022) https://www.reuters.com/business/finance/new-eu-sanctions-russia-target-sberbank-commission-head-tells-paper-2022-04-16/