US, EU and Russia Swap Sanctions

by Dechert LLP

President Obama issued yet another new Executive Order (E.O.) blocking property of additional Russian persons the U.S. Government holds responsible for the situation in Ukraine on 20 March 2014. For its part, on 21 March 2014, the EU added another 12 names to its list of designated persons. Russia responded by enacting countermeasures that prohibit nine U.S. officials from entering Russia. Below we discuss the specific sanctions imposed by the U.S., EU and Russia and highlight screening solutions that companies should implement as part of a broader compliance program.

United States

Thursday’s E.O. marks the third such order issued by the President in the past two weeks. As discussed in our recent prior posts, the Executive Orders of 6 March and 16 March demonstrated the White House’s desire to impose costs on certain named individuals who wield influence in the Russian government and those purportedly responsible for the deteriorating situation in Ukraine. Thursday’s E.O. marks an important departure from the two previous orders by authorizing the Secretary of Treasury, in consultation with the Secretary of State, to impose sanctions on entire sections of the Russian economy.

The new E.O. authorizes the Secretary of Treasury to require U.S. persons, including foreign branches, to block the property and interests in property of persons involved in any sector of the Russian economy, and it calls out the following as examples: “financial services, energy, metals and mining, engineering, and defense and related materiel.” The order also authorizes blocking the property of individuals and entities deemed to materially assist, sponsor, or provide support for goods or services of any person or entity whose property is blocked pursuant to the order. The prohibitions are permitted to extend to providing material support for entities owned and controlled by entities blocked pursuant to the order.

In a Background Briefing on Ukraine on Thursday, senior U.S. government officials confirmed that the E.O. authorizes the Secretary of Treasury to issue such sanctions in the future but does not impose any additional restrictions at this time. The distinction is significant because it may be understood as a negotiating tactic designed to show Russian officials the “potential future consequences” of a failure to reach a diplomatic resolution. If the authority provided by the E.O. is utilized by the Secretary of Treasury, the Office of Foreign Assets Control (OFAC) is expected to promulgate specific regulations and guidance.

In the interim, in addition to the new E.O., OFAC designated approximately two dozen Russian individuals and a Russian bank on the List of Specially Designated Nationals and Blocked Persons (SDN List) pursuant to the previous Executive Orders. The designations include Bank Rossiya. While U.S. officials describe Bank Rossiya as the 17th largest bank in Russia, more notably it is considered a personal bank for many senior Russian officials. The designation of a Russian bank may be viewed as a warning for Russia of forthcoming sanctions in the absence of a diplomatic resolution.

In response to the latest round of U.S. sanctions, international payment service providers VISA and MasterCard halted payment operations for clients of Bank Rossiya, as well as for clients of SMP Bank, which is majority owned by Arkady and Boris Rotenberg, both of whom were designated on Thursday. Furthermore, VISA reportedly announced that in compliance with U.S. sanctions they would also halt operations for clients of SobinBank, which is a wholly owned subsidiary of Bank Rossiya, and InvestCapitalBank, which is majority owned by the Rotenberg brothers. Although clients of the aforementioned banks will not be able to use their cards to make purchases, they will still be able to receive cash from ATMs without any restrictions.

Any assets of any individual or entity on the SDN List that is subject to U.S. jurisdiction – or that comes under the control or possession of U.S. persons – must be blocked, and U.S. persons are prohibited in dealing in such assets. In order to comply with the orders, we recommend companies remain vigilant in screening all parties to contemplated transactions involving Russians or Ukrainians for connections to individuals or entities listed above as well as entities or individuals listed on the SDN List. In addition, companies should remain proactive in assessing their exposure to the sectors of the Russian economy listed in the order and described above.

European Union

Following the events of last week in Crimea, the European Council (EU Heads of State and Government) also agreed last night to step up the restrictive measures previously adopted on Monday 17 March 2014 (Regulation EU No 269/2014), including asset freezing measures and a visa ban, targeting Russian individuals linked with the political decisions that resulted in the Republic of Crimea joining the Russian Federation.

The European Council decided to extend the list with the inclusion of 12 new individuals (Regulation EU No 284/2014), including prominent Russian political and media figures such as Dmitry Rogozin, Deputy PM of Russian Federation; Sergey Glazyev, Advisor to President Putin; Valentina Matviyenko, Speaker of the Federation Council and Dimitry Kiselyov, Head of Federal State News Agency.

As is the case for U.S. sanctions, any funds or economic resources held by, for or on behalf of these individuals/entities must be blocked and reported to the competent authorities in the relevant Member States.

Unlike the U.S., the EU has not included in its list economic entities or prominent businessmen close to the Kremlin. This is partly due to the fact that the EU’s legal base for introducing restrictive measures (Article 215 of the Treaty of the Functioning of the European Union) requires that these acts “include the necessary provisions on legal safeguards,” including ensuring that those individuals can be directly linked with the political decisions triggering the EU’s decision.

Additionally, the European Council has instructed the European Commission to prepare an assessment of the potential impact of a broader package of economic and trade sanctions to be implemented in a third phase of retaliatory measures.

Russian Federation

In response to the first round of sanctions of 16 March 2014, imposed by the U.S. on Russian officials, the Russian Ministry of Foreign Affairs yesterday released its own blacklist of U.S. administration officials and lawmakers who will be barred from entering the Russian Federation. Those named include White House advisors and several prominent lawmakers. In its statement announcing the sanctions, the Russian Ministry of Foreign Affairs noted that these sanctions were introduced on the “principle of reciprocity” in terms of the number of individuals named (the U.S. sanctions of 16 March also named nine individuals). The statement goes further to mention that “there must be no doubt that we will provide an adequate response to every hostile move made against us” – possibly referring to further action to be taken in light of the second round of sanctions, which were imposed on Russia this week.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Dechert LLP | Attorney Advertising

Written by:

Dechert LLP

Dechert LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.