On January 29, 2018, the U.S. government released a nonclassified part of a report on senior political figures and oligarchs in Russia (the "Report"). The U.S. Department of the Treasury prepared the Report in consultation with other U.S. federal agencies as mandated under Section 241 of the Countering America's Adversaries Through Sanctions Act (the "CAATSA"), enacted on August 2, 2017 with overwhelming bipartisan support. As described in our prior alert, the CAATSA intensified U.S. policy regarding Iran, North Korea and Russia sanctions.

Crucial Points

1.         No Immediate Additional Sanctions: No new sanctions attend issuance of the Report. The Treasury Department advised that it included individuals in the nonclassified portion of the Report based on purported "objective criteria," that is, individuals' official position for senior political figures and net worth of $1 billion or more for oligarchs. The Treasury Department has confirmed that the Report does not create any restrictions, prohibitions or limitations on U.S. or non-U.S. persons' dealings with persons identified in the Report.

2.         Potential for Sanctions:  At the same time, both the Trump Administration and the Congress are expected to consider the Report in determining if, when and what additional Russia-related sanctions may, in their view, be warranted. Indeed, Treasury Secretary Mnuchin testified before the Congress that "there will be sanctions that come out of this report." Inclusion in the Report appears to create risk of being the subject of two types of U.S. sanctions measures: 1) through U.S. government designation, "primary" sanctions prohibitions, which could make illegal, among other things, specified types of actions involving sanctioned persons if there is U.S. person involvement or if there is otherwise a nexus to the United States; and 2) "secondary" sanctions measures, which would authorize, or direct, the U.S. government to impose sanctions on persons engaged in specified types of activities involving sanctioned persons.

3.         Primary Sanctions Considerations:  Possible primary sanctions measures could include:  1) blocking sanctions that would generally prohibit U.S. persons' dealings, direct and indirect, with sanctioned persons and their 50%-or-more owned affiliates; 2) more limited restrictions on U.S. persons' dealings in debt or equity of sanctioned persons and their 50%-or-more owned affiliates; 3) related export control restrictions on supply to or connected with sanctioned persons; and 4) bans on the sanctioned persons' entry into the United States. The U.S. government may rely on existent legal measures for new designations or the Congress may pass new sanctions legislation.

4.         Secondary Sanctions Considerations: Relevant secondary sanctions measures could include sanctions authorizations related to certain dealings with sanctioned persons and potential new legislation. For example, such measures generally provide for imposition of sanctions in connection with facilitation of certain transactions on behalf of specified categories of sanctioned persons and their immediate family members and evasion of sanctions prohibitions.