Note

This update outlines the actions taken by U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) on Feb. 24, 2023, the one-year anniversary of the invasion of Ukraine by the Russian Federation (Russia). OFAC’s actions were coordinated with allies and other U.S. government agencies, including the U.S. Department of Commerce’s Bureau of Industry and Security (BIS). OFAC issued a determination extending the blocking and other sanctions authorized by Executive Order (EO) 14204 to any individual or entity determined to operate or to have operated in Russia’s metals and mining sector, as described in Section VI below. In addition, as part of its efforts to counter sanctions evasion and support for Russia’s war against Ukraine, OFAC added more than 100 additional individuals and entities to its Specially Designated Nationals and Blocked Persons List (SDN List). As discussed below in Section VIII, these designations included targets in Russia’s financial services and aerospace industries, technology and electronics sectors, and military-industrial complex supply chain.

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In response to the Russian Federation’s (Russia’s) egregious and unprovoked invasion of Ukraine that began in February 2022, the U.S. government has deployed a whole-of-government approach in imposing sanctions and export control restrictions on Russia. This alert summarizes key economic sanctions imposed by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC). It is not intended to be and is not a comprehensive summary of the economic sanctions implemented as a result of the invasion of Ukraine. Rather, this alert is a tool to help companies, both U.S. and foreign, identify whether their doing business with Russia or Ukraine is now prohibited due to the wide-ranging economic sanctions, including import prohibitions, export prohibitions, and the designations of hundreds of individuals and entities as sanctioned or blocked persons.

The OFAC economic sanctions are generally complements to the export controls imposed on Russia and Belarus by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) in the Export Administration Regulations (EAR). The EAR govern the export, reexport and transfers (in country) of most items exported from the United States, U.S.-origin items wherever located and certain foreign-produced goods. For any transaction involving Russia, Ukraine or Belarus, it is important to review both OFAC sanctions and the EAR as well as to conduct sanctioned-person screening to determine whether a contemplated transaction is authorized. A summary of the current state of BIS export controls implemented in response to the Russian Federation’s invasion of Ukraine can be found here.

This summary covers the following topics:

I. Overview of OFAC Economic Sanctions Regulations Relating to Russia

A. Ukraine-/Russia-related Sanctions Regulations
B. Russian Harmful Foreign Activities Sanctions

II. OFAC Restrictions on Doing Business in Ukraine

Imposition of embargoes on the Donetsk People’s Republic and Luhansk People’s Republic regions of Ukraine

III. Import Restrictions on Goods from Russia or of Russian Origin

A. Import Ban on Crude Oil, Petroleum and Related Energy Products
B. Import Ban on Items from Key Sectors (for example, seafood, alcohol and nonindustrial diamonds)
C. Import Ban on Gold

IV. Restrictions on the Export of Services to Russia

Export ban on accounting services, trust and corporate formation services, quantum computing, and management consulting services

V. Restrictions Regarding Maritime Services in Connection with Russian Crude Oil and Petroleum Products

Summary of restrictions on the provision of certain services related to maritime transport of Russian-origin crude oil and petroleum products

A. Services Related to Crude Oil Transport
B. Services Related to Petroleum Products Transport
C. Country of Origin Guidance

VI. Restrictions on Russian Metals and Mining Sector

Summary of restrictions on persons determined to operate or to have operated in the metals and mining sector of the Russian Federation economy

VII. Restrictions Regarding Financial Institutions, Financial Transactions and Related Transactions with Russia

A. Investment Prohibition
B. Prohibition Relating to U.S.-Denominated Banknotes
C. New Debt and Equity Restrictions
D. Designations of Financial Institutions and Executives and Board Members of Financial Institutions as Specially Designated Nationals (SDNs)

VIII. Further Specially Designated National and Blocked Person Designations

Additional SDN designations, including oligarchs, Russian elites, TV stations and key industry entities

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I. Overview of OFAC Economic Sanctions Relating to Russia

The economic sanctions relating to the Russian invasion of Ukraine are being implemented through two programs: the Ukraine-/Russia-related Sanctions program and the Russian Harmful Foreign Activities Sanctions program. OFAC also maintains sanctions against Russia under the Magnitsky Sanctions program and the Countering America’s Adversaries Through Sanctions Act of 2017, but these programs have not been deployed in response to the 2022 invasion.

As a general rule, OFAC’s economic sanctions against Russia apply to U.S. citizens, wherever located; U.S. permanent residents – “green card” holders, wherever located; entities formed in the United States, including their foreign branches; and anyone, including entities, located in or otherwise subject to the jurisdiction of the United States regardless of citizenship.

A. Ukraine-/Russia-related Sanctions

The Ukraine-/Russia-related sanctions include the sanctions that were implemented in March 2014 in response to Executive Order (EO) 13660, which declared a national emergency to deal with the threat posed by Russia to the security, stability and sovereignty of Ukraine, including the annexation of the Crimea region by Russia. In addition to the restrictions set forth in EO 13660, the Ukraine Sanctions implement the restrictions set forth in three subsequent 2014 EOs: EO 13661 (March 16, 2014), EO 13662 (March 20, 2014) and EO 13685 (Dec. 19, 2014). As discussed in Part II below, this program also includes the first EO addressing the 2022 invasion (EO 14065) as well as the Ukraine-/Russia-related Sanctions Regulations, which are codified at 31 C.F.R. Part 589, and general licenses that have been issued authorizing certain transactions that would be prohibited under these sanctions (more than half of which have expired) as well as numerous FAQs and other guidance.

Select provisions of the Ukraine Sanctions are outlined in Section II below. For more information on the Ukraine-/Russia-related Sanctions, see the OFAC page on the Ukraine-/Russia-related Sanctions, Amendment to the Ukraine-Related Sanctions Regulations and Associated Administrative List Updates, and OFAC’s FAQs on the Ukraine Sanctions.

B. Russian Harmful Foreign Activities Sanctions

The Russian Harmful Foreign Activities Sanctions program began in 2021 with the issuance of EO 14024, and the Russian Harmful Foreign Activities Sanctions Regulations (RuHSR) were issued in May 2022. The RuHSR, which are codified at 31 C.F.R. Part 587, implement the restrictions set forth in EO 14024 and will incorporate any subsequent legal prohibitions or restrictions in EOs issued pursuant to the national emergency in EO 14024. In EO 14024, the president declared an unusual and extraordinary threat to the national security, foreign policy and economy of the United States due to the Russian government’s efforts to undermine the democracy of the United States and its allies and partners, Russia’s “malicious cyber-enabled activities against the United States and its allies and partners,” and Russia’s violations of “well-established principles of international law.”

To supplement the RuHSR, OFAC issued four directives in 2022 that set forth additional restrictions regarding financial transactions relating to Russia (see Section VI below). Under this program, OFAC also issued three additional EOs in 2022 (discussed in Sections III and VI below) as well as numerous general licenses, FAQs and other guidance. As of Feb. 27, 2023 there were 32 active general licenses under the RuHSR program, including authorizations for agricultural commodities and medicine; telecommunications; activities by nongovernmental organizations; overflight payments, emergency landings and air ambulance services; certain emergency vessel repairs or salvage operations; civil aviation safety; transactions related to certain agricultural equipment; certain transactions involving Russia’s Federal Security Service; certain energy transactions related to the importation of Russian crude oil into Bulgaria, Croatia and certain landlocked EU member states; and other support to people impacted by Russia’s further invasion of Ukraine.

Select provisions of the RuHSR program are outlined below. For more information on the program, see OFAC’s Russian Harmful Foreign Activities Sanctions page and OFAC’s Russian Harmful Foreign Activities Sanctions FAQ page.

II. OFAC Restrictions on Doing Business in Ukraine

As a result of the February 2022 invasion of Ukraine and Russia gaining control of the Donetsk People’s Republic and Luhansk People’s Republic regions of Ukraine (DNR and LNR regions, respectively), the United States imposed an embargo on the two regions. Specifically, on Monday, Feb. 21, 2022, the president issued EO 14065, prohibiting “United States persons” from engaging in new investment in the DNR and LNR regions as well as engaging in trade – including export, import, reexport, and sale or supply of goods, services or technology – with the DNR and LNR regions. The embargo on the two regions is the same as the U.S. embargo on the Crimea region of Ukraine.

As a result, all U.S.-origin items (other than food and medicine designated as EAR99 and certain software and Internet-based personal communications) require a license to go to the DNR or LNR regions. Also, U.S. persons, wherever located, are prohibited from approving, financing, facilitating or guaranteeing transactions by foreign persons that cannot be performed by U.S. persons as a result of the EO. Licenses from both BIS and OFAC may be needed for any export, reexport or transfer (in country) and related transactions involving the LNR or DNR regions.

OFAC issued general licenses authorizing certain transactions with the DNR and LNR regions, mainly for humanitarian reasons, that would have otherwise been prohibited under the EO. For example, General License 18 authorizes the “exportation or reexportation of agricultural commodities, medicine, medical devices, replacement parts and components for medical devices, or software updates for medical devices” as well as “the prevention, diagnosis, or treatment of COVID-19.” General License 20 authorizes transactions “for the conduct of the official business of certain international organizations and entities.”

For further information, see Feb. 21, 2022 Issuance of Executive Order Blocking Property Of Certain Persons And Prohibiting Certain Transactions With Respect To Continued Russian Efforts To Undermine The Sovereignty And Territorial Integrity Of Ukraine; Issuance of Ukraine-related General Licenses; White House Fact Sheet; FAQ 1007; and the Feb. 21 BakerHostetler Alert.

III. Import Restrictions on Goods from Russia or of Russian Origin

A number of import restrictions have been imposed on goods from the Russian Federation or goods that are of Russian origin. These restrictions include an import ban on crude oil, petroleum, energy products and gold as well as a ban on certain items from key Russian sectors.

A. Import Ban on Crude Oil, Petroleum and Related Energy Products

As of March 8, 2022, pursuant to EO 14066, imports into the United States of Russian Federation-origin crude oil; petroleum; petroleum fuels, oils and products of their distillation; liquefied natural gas; coal; and coal products are prohibited.

B. Import Ban on Items from Key Sectors

As of March 11, 2022, pursuant to EO 14068, imports of Russian Federation-origin goods from several notable sectors of the Russian economy, including fish, seafood and preparations; alcoholic beverages; and nonindustrial diamonds, are prohibited. Goods of Russian Federation origin include goods produced, manufactured, extracted or processed in the Russian Federation that have not been incorporated or substantially transformed into a foreign-made product.

Based on FAQs 1016 and 1024, the import bans do not extend to U.S. persons engaging in transactions to sell or redirect shipments of goods covered by the import ban outside the United States that were previously destined for the United States.

OFAC has not issued clear guidance on how theories of incorporation or substantial transformation may impact the ban on importation of goods of Russian Federation origin into the United States. Country-of-origin determinations are the purview of U.S. Customs and Border Protection regulations and guidelines, which may offer some guidance for the purposes of OFAC’s ban on importation of Russian Federation-origin goods.

For more information on the crude oil and energy products import ban, see OFAC FAQs and the BakerHostetler March 8, 2022 Alert. For more information on the notable sector import ban, see the BakerHostetler 14, 2022 Alert and OFAC FAQs.

C. Import Ban on Gold

As of June 28, 2022, pursuant to a determination issued under EO 14068, imports of newly mined or refined gold of Russian origin are prohibited unless licensed or otherwise authorized by OFAC. The determination excluded gold of Russian origin that was located outside the Russian Federation prior to the effective date.

IV. Restrictions Imposed on the Export of Services to Russia

On May 8, 2022, pursuant to EO 14071, OFAC issued a determination that prohibited the export of certain professional services to Russia. The scope of the prohibition covers accounting, trust and corporate formation, and management consulting services, and the prohibitions took effect on June 7, 2022.

On Sept. 15, pursuant to EO 14071, OFAC issued another determination prohibiting the provision of professional services related to quantum computing. OFAC has broadly defined the scope of all concerned services as follows:

Accounting services include “services related to the measurement, processing, and transfer of financial data about economic entities.”

Trust and corporate formation services include “services related to assisting persons in forming or structuring legal persons, such as trusts and corporations; acting or arranging for other persons to act as directors, secretaries, administrative trustees, trust fiduciaries, registered agents, or nominee shareholders of legal persons; providing a registered office, business address, correspondence address, or administrative address for legal persons; and providing administrative services for trusts.”

Management consulting services include “services related to strategic advice; organizational and systems planning, evaluation, and selection; marketing objectives and policies; mergers, acquisitions, and organizational structure; staff augmentation and human resources policies and practices; and brand management.”

Quantum computing includes “any of the following services when related to quantum computing, quantum computers, electronic assemblies thereof, or cryogenic refrigeration systems related to quantum computing: infrastructure, web hosting, or data processing services; custom computer programming services; computer systems integration design services; computer systems and data processing facilities management services; computing infrastructure, data processing services, web hosting services, and related services; repairing computer, computer peripherals, or communication equipment; other computer-related services; as well as services related to the exportation, reexportation, sale, or supply, directly or indirectly, of quantum computing, quantum computers, electronic assemblies thereof, or cryogenic refrigeration systems related to quantum computing to any person located in the Russian Federation.”

In numerous FAQs, OFAC has provided additional guidance regarding the ban on provision of services for each category of prohibited services: accounting, corporate, management and quantum computing. These prohibitions will not apply to services provided to entities in Russia that are owned or controlled by a U.S. person or to services provided in connection with the winding down or divestiture of an entity located in Russia that is not owned or controlled by a Russian person.

V. Restrictions Regarding Maritime Services in Connection with Russian Crude Oil and Petroleum Products

A. Services Related to Crude Oil Transport

On Nov. 21, 2022, OFAC issued a determination pursuant to EO 14071 – the Prohibitions on Certain Services as They Relate to the Maritime Transport of Crude Oil of Russian Federation Origin – restricting maritime services in connection with the maritime transport of Russian crude oil. A second determination – Price Cap on Crude Oil of Russian Federation Origin – was issued on Dec. 5, 2022, implementing the $60-per-barrel price cap agreed to by allied and participating nations, including the United States, the 27 member states of the European Union and the members of the G-7. Under the determinations, U.S. persons are prohibited from providing a wide range of services, including trading/commodities brokering, financing, shipping, insuring (including reinsurance and protection and indemnity), flagging and rendering customs brokering services (“covered services”) related to the maritime transport of Russian crude oil that is priced above the $60 price cap.

The ban on covered services does not apply to services related to maritime transport of Russian crude oil priced at or below the price cap. The price cap excludes the cost of shipping, freight, customs and insurance, provided they are invoiced separately at commercially reasonable rates. There are also certain de minimis exceptions, and the price cap does not apply when crude oil is substantially transformed (when the crude oil loses its identity and is transformed into a new product with a change in name, character and use) in a jurisdiction other than Russia or has cleared another jurisdiction’s customs for onshore sale. OFAC does not consider certain blending activities alone to be substantial transformation of crude oil.

In addition, in some instances, the price cap will apply beyond the first point of sale:

• If the Russian crude oil is imported into a country other than Russia, has cleared customs and is then exported back to Russia via maritime transport without undergoing a substantial transformation, the price cap still applies.
• If the Russian crude oil is sold at sea, the price cap will still apply to the sale and transfer until it clears customs into a jurisdiction other than Russia.

On Feb. 3, OFAC issued updated and consolidated guidance (February 2023 Price Cap Guidance) covering the price cap on both crude oil and petroleum products as well as the covered services prohibitions. The guidance did not change the price cap on crude oil or the scope of services that constitute covered services. The Price Cap Guidance now includes the crude oil and petroleum products guidance in one document. However, the guidance published by OFAC on Nov. 22, 2022, remains applicable to the assessment of any violations that may have occurred prior to the issuance of the consolidated guidance (see OFAC November 2022 Guidance on Implementation of the Price Cap Policy for Crude Oil of Russian Federation Origin).

With respect to both crude oil and petroleum products, the scope of covered services prohibited, including key definitions of terms, is as follows:

Trading/Commodities Brokering: Buying, selling, or trading commodities and/or brokering the sale, purchase or trade of commodities on behalf of other buyers or sellers.

Financing: A commitment for the provision or disbursement of any debt, equity, funds or economic resources, including grants, loans, guarantees, suretyships, bonds, letters of credit, supplier credits, buyer credits, and import or export advances. For the purposes of the determination, the term “financing” does not include the processing or clearing of payments by intermediary banks. [Note: This exclusion is subject to certain conditions as further provided in the guidance.]

Shipping: Owning or operating a ship for the purposes of carrying or delivering cargo and/or freight transportation, chartering or subchartering ships to deliver cargo or transport freight, brokering between shipowners and charterers, and serving as a shipping/vessel agent.

Insurance: The provision of insurance, reinsurance, or protection and indemnity (P&I) services; satisfying claims related to underwriting insurance policies that protect policyholders against losses that may occur as a result of property damage or liability; assuming all or part of the risk associated with existing insurance policies originally underwritten by other insurance carriers, including the reinsurance of a non-U.S. insurance carrier by a U.S. person; and liability insurance for maritime liability risk associated with the operations of a vessel, including cargo, hull, vessel, P&I and charterers liability.

Flagging: Registering or maintaining the registration of a vessel with a country’s national registry of vessels. This definition does not include the deflagging of vessels transporting Russian oil sold above the price cap.

Customs Brokering: Assisting importers and exporters in meeting requirements governing imports and exports. This definition does not include legal services or assisting importers and exporters in meeting the requirements of U.S. sanctions.

Per the February 2023 Price Cap Guidance, covered services do not include medical evacuation or other emergency services for crew members; health, travel or liability insurance for crew members; or classification, inspection, bunkering and pilotage.

The February 2023 Price Cap Guidance has also implemented a safe harbor from OFAC enforcement for participating service providers based on their level of involvement in maritime service; the safe harbor groups participating service providers into “tiers” – Tier 1, Tier 2 and Tier 3. All tiered actors are required to maintain records for a period of five years and have specific due diligence requirements as follows:

• Tier 1 actors are those that regularly have direct access to price information – for example, commodity brokers and oil traders. To receive safe harbor protection, these actors are required to maintain documentation that the purchase price of the Russian crude oil was at or below the $60 price cap.
• Tier 2 actors are financial institutions, ship/vessel agents, customs brokers, etc., that sometimes are able to request and receive price information from customers. To the extent practical, these actors must request and retain documents demonstrating the Russian crude oil was purchased at or below $60. If it is not practical to obtain price information, these actors must obtain and retain signed attestations from the customers regarding the purchase price.
• Tier 3 actors are those that do not regularly have access to price information in the ordinary course of business and include insurers, P&I clubs, shipowners and flagging registries. These actors can be afforded safe harbor protection by obtaining customer attestations, which can be accomplished by utilizing preexisting or revised sanctions exclusion clauses.

OFAC has noted that it does not intend to pursue penalties against U.S. service providers that reasonably relied on documentation or attestations, provided there are no red flags that suggest evasion of the sanctions. Red flag indicators include a customer’s or counterparty’s refusal to provide any necessary documentation or attestations, which may be indicative of that party’s involvement in the purchase of Russian crude oil above the relevant price cap. If the U.S. service provider knew or had reason to believe the crude oil was or was potentially purchased above the price cap, then the safe harbor protections will not protect the U.S. service provider.

For more information on the price caps and covered services ban, see OFAC’s February 2023 Price Cap Guidance, OFAC’s Nov. 21 determination, OFAC’s Dec. 5 determination and OFAC FAQs.

B. Services Related to Petroleum Products Transport

Effective Feb. 5, price caps were implemented for two categories of Russian-origin petroleum products:

• A price cap of above $100 per barrel for “premium to crude” petroleum products.
• A price cap of above $45 per barrel for “discount to crude” petroleum products.

See Price Cap on Petroleum Products of Russian Federation Origin

Also effective Feb. 5, the covered services ban related to the maritime transport of petroleum products was implemented. The covered services prohibition for petroleum products has the same scope as the covered services ban related to maritime transport of crude oil, as discussed above. See Covered Services for Petroleum Products determination.

1. Premium to Crude

Petroleum products subject to the premium to crude price cap are those that have specific classifications in 2710 of the Harmonized Tariff Schedule of the United States (HTSUS). The HTSUS classifications for premium to crude petroleum products are shown in the chart below.

These HTSUS classifications generally include gasoline, motor fuel, blending stock, gas oil and diesel fuel, kerosene and kerosene-type jet fuel, and vacuum gas oil. A full description of the HTSUS classifications listed above can be found on the U.S. International Trade Commission website. Premium to crude products that are sold at or below $100 per barrel are not subject to the covered services ban.

2. Discount to Crude

Articles subject to the discount to crude price cap are classified under HTSUS 2710 and include naphtha, residual fuel oil, waste oils and any other articles in the 2710 HTSUS heading that are not subject to the premium to crude price cap. See the U.S. International Trade Commission website for further details on HTSUS 2710. Discount to crude products that are sold at or below $45 per barrel are not subject to the covered services ban.

C. Country of Origin Guidance

For origin determinations of petroleum products, the substantial transformation rules that apply to the covered petroleum products are broader than those applicable to crude oil. OFAC has previously stated that examples of processing that constitute substantial transformation (meaning that the product loses its identity and is transformed into a new product with a change in name, character and use) of crude oil and petroleum products are generally refinery processes involving chemical transformation, separation, conversion or treatment of the subject item. In addition, for petroleum products, OFAC will consider that blending operations constitute a substantial transformation if they result in a tariff classification shift. As stated above, OFAC has stated that certain blending operations alone do not result in substantial transformation of crude oil.

D. Future Developments

The price caps for Russian crude oil and petroleum products are subject to revision. Secretary of the Treasury Janet Yellen has signaled that a review in March will assist the United States and the G-7 in analyzing whether additional steps to alter the current price cap regimes are necessary in the ongoing effort to limit Russia’s war efforts in Ukraine. Any changes in the price caps agreed upon will be implemented by OFAC in subsequent actions.

VI. Restrictions on Russian Metals and Mining Sector

On Feb. 24, 2023, OFAC issued a sectoral determination pursuant to Section 1(a)(i) of EO 14024, targeting the metals and mining sector of the Russian Federation economy, and issued related FAQs. While OFAC anticipates publishing regulations defining the term “metal and mining sector of the Russian Federation economy” for the purposes of this determination, FAQ 1115 states that OFAC intends to define the term “to include any act, process, or industry of extracting, at the surface or underground, ores, coal, precious stones, or any other minerals or geological materials in the Russian Federation or the act of procuring, processing, manufacturing, or refining such geological materials or transporting them to, from, or within the Russian Federation.”

Under the determination, OFAC can impose sanctions on any individual or entity determined to operate or to have operated in the metals and mining sector of Russia. Four entities were designated on the same day for operating or having operated in the metals and mining sector of Russia:

• Joint Stock Company Burevestnik Central Scientific Research Institute, a Russia-based arms and artillery manufacturer that is also involved in manufacturing metals.
• OOO Metallurg-Tulamash, a Russia-based steel manufacturer that also manufactures armaments for Russia’s navy.
• TPZ-Rondol OOO, a Russia-based company that specializes in coating metals and is a subsidiary of one of Russia’s leading ammunition manufacturers.
• Mtsenskprokat, a Russia-based company that produces unique metal alloys and products for Russia’s aviation and defense industries.

New FAQ 1114 emphasizes that although only designated persons are subject to sanctions, persons who operate or have operated in this sector are at risk of sanctions. FAQ 1117 makes clear that non-U.S. persons may be exposed to sanctions for dealing with persons designated under EO 14024. However, OFAC also signaled in FAQ 1117 that it does not intend to target persons operating in the sector for activities that U.S. persons could engage in without a specific license or where the provision of goods or services is solely for certain purposes, such as safety, protection of human life or environmental protection (for example, provision of goods such as personal protective equipment or services such as rescue and accident response services).

VII. Restrictions Regarding Financial Institutions, Financial Transactions and Related Transactions

Numerous restrictions have been implemented regarding transactions with financial institutions in Russia as well as prohibitions regarding financial transactions with entities in Russia, including those for the benefit of certain sectors of the Russian economy. These restrictions include the following.

A. Investment Prohibition

As of April 6, 2022, pursuant to EO 14071, U.S. persons, wherever located, are prohibited from making any new investment in the Russian Federation. While “investment” was not defined in EO 14071, based on OFAC guidance, “new investment” includes any commitment or contribution of funds or other assets for or “any transfer or extension of funds or credit on the basis of an obligation to repay, or any assumption or guarantee of the obligation of another to repay an extension of funds or credit, including overdrafts, currency swaps, purchases of debt securities, purchases of a loan made by another person, sales of financial assets subject to an agreement to repurchase, renewals or refinancing whereby funds or credits are transferred or extended to a borrower or recipient described in the provision, the issuance of standby letters of credit, and drawdowns on existing lines of credit.”

Initially, the investment ban was limited to new investment in the energy sector, but as of April 6, it was expanded to prohibit new investment into any sector of Russia.

For more information, see Background Press Call by Senior Administration Officials on New Economic Costs on Russia.

B. U.S.-Denominated Banknotes

Effective March 11, the export and reexport of U.S. dollar-denominated banknotes to the Russian government or any person located in Russia is prohibited. Pursuant to General License 18, certain noncommercial personal remittances are authorized, including withdrawals of U.S. dollar-denominated banknotes via automated teller machines and the hand-carrying of U.S. dollar-denominated banknotes. For further information, see also OFAC FAQ re Dollar-Denominated Banknotes.

C. New Debt and Equity Restrictions

As discussed below, effective Feb. 24, 2022, pursuant to EO 14024, OFAC Directive 3 prohibits all transactions in, provision of financing for and other dealings in new debt of greater than 14 days’ maturity and new equity issued by 13 Russian state-owned enterprises and entities.

For further information, see White House Fact Sheet, OFAC FAQs and OFAC Recent Actions page.

D. Designations of Financial Institutions and Executives and Board Members of Financial Institutions as Specially Designated Nationals

The designation of financial institutions as well as executives and board members of financial institutions as specially designated nationals (SDNs) has been a popular and powerful sanctions measurement imposed by OFAC. U.S. persons are prohibited from engaging in any business with an SDN and must freeze an SDN’s property and interests in property in the United States or in the U.S. person’s possession. An SDN designation is the most restrictive U.S. sanctioned-person designation. An SDN is an individual or entity listed on OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List) or an entity that is owned 50 percent or more, individually or in the aggregate, by an SDN.

In just the financial sector, OFAC has imposed:

a. SDN designations with full blocking restrictions on entities including:

1. Sberbank and 42 of its subsidiaries.
2. VTB Bank Public Joint Stock Company and more than 25 of its subsidiaries.
3. Joint Stock Company Alfa-Bank (Alfa-Bank), six of its subsidiaries and five vessels.
4. State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank and 25 of its subsidiaries.
5. Promsvyazbank Public Joint Stock Company, 17 of its subsidiaries and five vessels.
6. Public Joint Stock Company Bank Financial Corporation Otkritie and 12 of its subsidiaries.
7. Open Joint Stock Company Sovcombank and 22 of its subsidiaries.
8. Joint Stock Commercial Bank Novikombank and 34 of its subsidiaries.
9. Joint Stock Company Moscow Industrial Bank and 10 of its subsidiaries.
10. Public Joint Stock Company Rosbank (Rosbank).
11. Credit Bank of Moscow Public Joint Stock Company, described by OFAC as one of Russia’s 10 largest banks by asset value.
12. Joint Stock Company Commercial Bank Lanta Bank.
13. Public Joint Stock Company Commercial Bank Metallurgical Investment Bank.
14. Public Joint Stock Company MTS Bank.
15. Novosibirsk Social Commercial Bank Levoberezhny Public Joint Company.
16. Bank Saint-Petersburg Public Joint Stock Company.
17. Joint Stock Commercial Bank Primorye.
18. SDM-Bank Public Joint Stock Company.
19. Public Joint Stock Company Ural Bank for Reconstruction and Development.
20. Public Joint Stock Company Bank Uralsib.
21. Bank Zenit Public Joint Stock Company.
22. OOO Zenit Finance.
23. OOO Zenit Leasing.
24. OOO Zenit.

b. SDN designations of Russian state-owned and private financial institutions’ executives and board members, including:

• Certain board members of Sberbank.
• Certain board members of Gazprombank.
• Certain governors of the Central Bank of the Russian Federation.

c. Prohibited dealings in new debt and equity (per Directive 3 under EO 14024), including in:

1. Credit Bank of Moscow public joint stock company.
2. Gazprombank joint stock company.
3. Joint stock company Alfa-Bank.
4. Joint stock company Russian Agricultural Bank.
5. Joint stock company Sovcomflot.
6. Open joint stock company Russian Railways.
7. Public joint stock company Alrosa.
8. Public joint stock company Gazprom.
9. Public joint stock company Gazprom Neft.
10. Public joint stock company Rostelecom.
11. Public joint stock company Rushydro.
12. Public joint stock company Sberbank of Russia.
13. Public joint stock company Transneft.
14. Public joint stock company Rosbank.

d. ​​​​​​Prohibited transactions (with Non-SDN Menu-Based Sanctions List) including:

1. Central Bank of Russia.
2. Russian Ministry of Finance.
3. National Wealth Fund.
4. Credit Bank of Moscow Public Joint Stock Company.

These designations are separate and apart from any designations, sanctions or license requirements imposed by BIS.

For more information, see the Feb. 23, 2022 BakerHostetler Alert, the March 1, 2022 Baker Hostetler Alert and links set forth below under Additional SDN Designations.

To screen for sanctioned persons, you may use the free online U.S. government screening tool.

VIII. Additional Specially Designated National and Blocked Person Designations

As of Feb. 27, 2023, OFAC has designated more than 1,240 individuals and more than 1,390 entities related to Russian and Ukrainian sanctions as SDNs, and that number does not include entities that are owned 50 percent or more, individually or in the aggregate, by an SDN, which, pursuant to OFAC guidance, must be treated as SDNs. Designated persons include influential financiers of Russian commercial banks; weapons manufacturer Limited Liability Company Promtekhnologiya (Promtechologia); state-controlled television stations Russia-1, Channel One and NTV, all of which are directly or indirectly state-owned and -controlled media within Russia; truck manufacturer KAMAZ Publicly Traded Company and its subsidiaries; many other distributors, manufacturers and state-owned enterprises involved in the Russian military industrial complex; government officials; oligarchs; and entities that support Russia’s war-fighting efforts against Ukraine.

On Feb. 24, 2023, OFAC designated more than 100 entities and individuals for their involvement in the Russian military supply chain, support of the Russian invasion of Ukraine and assistance with evasion efforts. Among those included in the designations are Russian financial institutions (included in list in Section VII.D.a, above), wealth-management related entities and individuals, and numerous Russian elites and their entities linked to illicit financial activities:

Russian elites and entities linked to illicit financial activity include:

• Aleksandr Yevgenyevich Udodov (alleged to be the former brother-in-law of Russian Prime Minister Mikhail Mishustin.)
• Entities owned by Udodov were also added to the SDN List:
  • Limited Liability Company Aforra Management.
  • Limited Liability Company Aforra Development.
  • Limited Liability Company Aforra Engineering
  • Limited Liability Company Aforra Property.
  • Limited Liability Company Aktiv R.
  • Limited Liability Company Arendoff.
  • Limited Liability Company Atlas Real Estate.
  • Limited Liability Company Ayaks.
  • Limited Liability Company Garantiya.
  • Limited Liability Company Mushroom Rainbow.
  • Limited Liability Company New City.
  • Limited Liability Company Nikoliya.
  • Limited Liability Company Optima Invest.
  • Limited Liability Company Russul.
  • Limited Liability Company Stork.
  • Avrora Capital SRO.
  • Leading Capital Investment Ltd.
  • Caliber Wealth Management Ltd.
• Wealth management-related entities and individuals:
  • CONFIDERI Pte Ltd and Vend Ore GmbH, along with its founders/owners, Olga Borisovna Raykes and Marat Maratovich Savelov.
  • IC Veles Capital LLC and its leaders, Dmitry Vitalyevich Bugayenko and Aleksei Dmitrievich Gnedovskii.
  • Veles International Limited and Hadlerco Limited.
  • Ulan Vladimirovich Ilishkin, deputy chairman of the management board of U.S.-sanctioned Public Joint Stock Company Rosbank.
  • Alina Olegovna Nazarova, head of A-Club, the private banking department of U.S.-sanctioned Joint Stock Company Alfa-Bank.
  • Evgeniya Sergeyevna Tyurikova, leader of the private banking department of U.S.-sanctioned Public Joint Stock Company Sberbank of Russia.
• Entities that produce carbon fiber and related advanced materials for Russia’s military supply chain:
  • UMATEX Joint-Stock Company (UMATEX JSC), Russia’s largest producer of a wide range of carbon fibers and fiber-based items.
  • Subsidiaries of UMATEX JSC:
    • UMATEX Group Europe S.R.O. 
    • Argon.  
    • Zavod Ulgerodnykh I Kompozitsionnykh Materialov.
  • UVICOM LTD (Russian company that produces carbon fibrous materials and develops technologies for carbon fiber materials).
• Entities that operate in Russia’s aerospace sector:
  • Joint Stock Company Prepreg Advanced Composite Materials.
  • Limited Liability Company Alabuga-Fibre.
  • Limited Liability Company Prepreg-Dubna.
  • Joint Stock Company Research Institute of Graphite-Based Materials NIIGRAFIT.
  • Joint Stock Company the Urals Scientific Research Institute of Composite Materials.
• Entities that operate in Russia’s defense and related materiel sector:
  • Perm Scientific Research Technological Institute.
  • Joint Stock Company Military Industrial Corporation NPO Mashinostroyenia.
• Persons operating in Russia’s technology and electronics sector:
  • ODay Technologies.
  • OOO Iteranet.
  • OKB Spektr OOO.
  • Limited Liability Company Maxtech.
  • Anastasiya Olegovna Eshstrut and Maksim Valeryevich Safonov (co-owners of Limited Liability Company Maxtech).
  • Novilab Mobile, LLC.
  • Limited Liability Company Promtekhekspert.
  • PSV Technologies LLC.
  • Sergei Valentinovich Petrov (owner of PSV Technologies LLC).
  • Tamimed.
  • Svetlana Alekseyevna Moretti (owner and CEO of Tamimed).
  • AO Russian High Technologies.
  • Forward Systems, R&DC.
  • ZAO Akuta.
  • Joint Stock Company Vakuum.ru.
  • By Trade OU.
  • OOO Lavina Puls.
  • AO Inforus, along with the head of both companies.
  • Andrey Igorevich Masalovich (head of OOO Lavina Puls and AO Inforus).
  • Open Joint Stock Company Ilyenko Elara Research and Production Complex.
  • Andrey Aleksandrovich Uglov (general director of Open JSC Illyenko Elara Research and Production Complex).
• Entities and individuals supporting Russia’s war in Ukraine:
  • Taerio Limited.
  • Taerio International LTD EOOD.
  • Tamyna FZE.
  • Tamyna AG.
  • Interpolytrade Limited Company.
  • Swisstec 3D AKUS AG.
  • Stratton Investment Group LTD.
  • Markus Gerhard Mueller.
  • Ronald Eric Cosman.
  • Bruno Koller.
  • Frederic Pierre Villa.
  • Hans-Peter Bomatter.
  • Lutwin Schommer.
  • Walter Moretti.
  • Stella Leone.
  • Nurmurad Kurbano (owner of Stella Leone).
  • Federal State Unitary Enterprise Central Scientific Research Institute of Economics, Informatics and Management Systems.
  • Independent Insurance Group LTD.
  • Private Military Company Redut.

In connection with the Feb.24, 2023 designations, OFAC issued updated and new general licenses (GLs):

Amended GL 8F: Adding authorization for U.S. persons to engage in certain energy-related transactions with Bank Zenit Public Stock Company and Bank Saint Petersburg, among other designated financial institutions. The GL remains valid until May 16, 2023.

Amended GL 13D: OFAC extended the authorization until June 6, 2023, permitting U.S. persons and entities owned or controlled by U.S. persons to continue to pay taxes, fees or import duties and purchase or receive permits, licenses, or registrations and certifications involving Central Bank of the Russian Federation, among other entities, provided the transactions are ordinary incidents and necessary to day-to-day operations in Russia.

New GL 60: Authorizing certain administrative transactions prohibited by Directive 4 under EO 14204. This GL permits U.S. persons to reject rather than block any transactions prohibited by EO 14204 that are for the processing of funds involving one or more of the authorized wind-down entities (listed in the GL) as the originating, intermediary or beneficiary financial institution.

New GL 61: Authorizing transactions related to debt or equity of or derivative contracts involving certain entities blocked on Feb. 24, 2023. This GL authorizes transactions for the divestment or transfer of debt or equity of the newly designated Russian financial institutions listed above or in facilitation of such transactions.

For more information, see OFAC Feb. 24, 2023 Targeting Key Sectors, Evasion Efforts, and Military Supplies, Treasury Expands and Intensifies Sanctions Against Russia; OFAC Dec. 22, 2022 Russia-Related Designations; Dec. 15, 2022 Further Constraining Russia’s Financial Sector Services; OFAC Nov. 14, 2022 Sanctions Kremlin Linked Networks Procuring Technology for Russian Military; OFAC Oct. 19, 2022 Targeting Military Procurement Operatives; OFAC Sept. 30, 2022 Announcement of Response to Ukraine Annexation; OFAC Sept. 15, 2022 Announcement Targeting Facilitators of Russian Aggression; OFAC Aug. 2, 2022 Announcement Sanctioning Elites and Revenue-Generating Companies for Russian War Effort; OFAC June 28, 2022 Announcement Regarding SDN Designations; OFAC April 6, 2022 Announcement Regarding SDN Designations; OFAC March 31 Announcement; OFAC March 24 Announcement; OFAC Announcement of Feb. 25; and OFAC Announcement of Feb. 24.

To ensure that you do not engage in business with an SDN or other sanctioned party, it is essential that all parties to the transaction, including all potential end users and intermediaries, be screened against OFAC’s SDN List and other applicable U.S. sanctioned-persons lists, which may include BIS’ Entity List and BIS’ List of Denied Persons. As a best practice, sanctioned-person screening should be done at the time the order comes in or negotiations begin, before engaging in the transaction, and before shipping. Dynamic screening is recommended to ensure that dealings do not occur between screenings. Penalties for violations of the OFAC economic sanctions may be imposed on a strict liability basis. You also should verify that no party to a transaction is owned 50 percent or more, individually or in the aggregate, by one or more SDNs.

To screen for sanctioned persons, you may use the free online U.S. government screening tool.

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