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 29 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. As the war persists, countries have slowed their sanctions actions. Nevertheless, K2 Integrity will continue to monitor sanctions updates and provide insight into the meaning and potential outcomes of sanctions actions.

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 5 May, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) issued General Licenses (GLs) 31 and 32. GL 31 authorizes certain transactions related to patents, trademarks, and copyrights in the United States or Russia.1 GL 32 authorizes the winding down of transactions involving Amsterdam Trade Bank NV (ATB), or any entity in which ATB owns a direct or indirect interest of 50 percent or greater that are prohibited by Executive Order (E.O.) 14024.2
  • On 2 May, OFAC issued GL 30, which authorizes transactions involving Gazprom Germania GmbH, or any entity in which Gazprom Germania GmbH owns a 50 percent or greater interest, that would otherwise be prohibited by Directive 3 under E.O. 14024.3 Among other things, Directive 3 of E.O. 14024 prohibits dealing in new debt beyond a tenor of 14 days for named Russian entities, including Gazprom.4

EU actions include:

  • On 4 May, European Commission President Ursula von der Leyen announced a proposed EU embargo on Russian oil imports as part of a future sixth sanctions package in response to Russia’s invasion of Ukraine, although the specific details have yet to be revealed. The proposal seeks to wean the EU off Russian crude oil imports within six months and halt imports of refined oil by the end of 2022.5 The proposal also reportedly includes provisions for the removal of Sberbank, the Credit Bank of Moscow, and Russian Agricultural Bank from the SWIFT messaging system, as well as blocking sanctions targeting 58 individuals, including Patriarch Kirill, the head of the Russian Orthodox Church.6 The proposed ban needs to be approved by the 27 Member States of the EU, and the measure will still be subject to debate.
  • On 2 May, German Chancellor Olaf Scholz said in an interview that sanctions imposed on Russia will not be removed until a peace agreement in Ukraine is reached.7 The comment comes after reports that Scholz’s government is prepared to support an immediate EU ban on Russian oil imports, a move the Germans previously have resisted.8 In order to support Germany if such a move were to take place, the Polish government announced that it would assist Germany with decreasing its Russian energy imports through supply of additional deliveries of oil.9
  • On 2 May, Reuters reported that the EU may grant Hungary and Slovakia exemptions on a possible EU embargo on Russian oil.10 The Hungarian government repeatedly has stated that it would not be party to EU sanctions on Russian oil, while Slovakia is among the EU Member States that are most reliant on Russian oil.
  • On 2 May, the Latvian Financial and Capital Market Commission revealed that five individuals subject to EU asset freeze sanctions on Russia and Belarus have been identified as having accounts with Latvian financial institutions. By the end of April, Latvia froze approximately EUR 56 million (USD 59 million) worth of assets as part of its implementation of EU sanctions imposed against Russia over its invasion of Ukraine.11

UK actions include:

  • On 4 May, Foreign Secretary Liz Truss announced sanctions pursuant to the Russia (Sanctions) (EU Exit) Regulations thattarget various pro-Kremlin media outlets including Channel One, a major state-owned outlet in Russia. The sanctions freeze the assets of listed individuals and companies and include travel bans for individuals.12

Key Implications (Public, Private, and Non-Profit Sectors)

  • OFAC GL 23 is set to expire on 6 May.13 GL 23 authorized the winding down of transactions involving Alfa-Bank and its direct or indirect majority-owned subsidiaries. To the extent U.S. persons wish to continue to engage in business with Alfa-Bank following the expiration of the GL, they should apply for a specific license.
  • Russia's finance ministry announced that it made coupon and interest payments on two of its dollar-denominated bonds using its pool of U.S. dollar reserves on 29 April, prior to the 30-day grace period that was to end on 4 May.14 The move means Russia has avoided a default on its foreign debt for now, although the ability of Russia to continue to make payments on U.S. dollar-denominated bonds is still in question due to its finite reserve of U.S. dollar holdings and U.S. sanctions.15 OFAC GL 9C, which permits investors to receive sovereign payments from Russia, is set to expire on 25 May.16
  • Companies that continue to provide services to politically sensitive individuals in Russia should be aware that the United States, European Union, and the United Kingdom have demonstrated a willingness to prevent the provision of certain services to Russia.
    • In April, President Biden signed E.O. 14071, "Prohibiting New Investment in and Certain Services to the Russian Federation in Response to Continued Russian Federation Aggression," through which the United States can prohibit the exportation or supply of any category of services determined by the Secretary of the Treasury to any person located in Russia.17 To date, the United States has not yet announced any services to Russia that would be prohibited under this authority, however.
    • The UK and the EU also announced a forthcoming ban on the export of accountancy, consultancy, and public relations services to Russia, although the details and timing of those plans are still in development.18 19 Such a move serves to bolster the exodus by multinational companies from the Russian market.

1 GENERAL LICENSE NO. 31 (5 May 2022)

2 GENERAL LICENSE NO. 32 (5 May 2022)

3 GENERAL LICENSE NO. 30 (2 May 2022)

4 DIRECTIVE 3 UNDER EXECUTIVE ORDER 14024 (24 February 2022)

5 The EU just proposed a ban on oil from Russia, its main energy supplier (4 May 2022)

6 Commission chief announces further Russia sanctions, including oil, banks, broadcasters (4 May 2022)

7 Sanctions will not be lifted until Russia signs peace deal with Ukraine -Germany's Scholz (2 May 2022)

9 Poland ready to help Germany stop using Russian oil, says minister (2 May 2022)

10 EU may offer Hungary, Slovakia exemptions from Russian oil embargo (2 May 2022)

11 Five individuals directly subject to EU sanctions have been identified in Latvian financial institutions (2 May 2022)

12 Russia cut off from UK services (4 May 2022)

13 GENERAL LICENSE NO. 23 (6 April 2022)

14 Russia Dodges Default for Now as Investors Get Dollar Funds (3 May 2022)

15 Ibid.

16 Authorizing Transactions Related to Dealings in Certain Debt or Equity (7 April 2022)

17 Executive Order 14071 of April 6, 2022 (6 April 2022)

18 Russia cut off from UK services (4 May 2022)

19 Speech by President von der Leyen at the EP Plenary on the social and economic consequences for the EU of the Russian war in Ukraine – reinforcing the EU's capacity to act (4 May 2022)