In response to Russia’s anticipated and then executed invasion of Ukraine, last week the U.S. Department of Treasury ("Treasury") announced two new rounds of economic sanctions against Russian-connected financial institutions and individuals.

On February 22, 2022, the Treasury announced sanctions against two major Russian state-owned financial institutions and certain individuals. These sanctions were issued in response to Russia’s recognition of two Ukrainian regions as independent states. These initial measures prohibited U.S. individuals and businesses from doing business with and froze the assets of two Russian financial institutions with ties to the Kremlin and Russian military. They also instituted full blocking sanctions on five individuals related to the Kremlin and these financial institutions.

Following the Russian invasion of Ukraine, on February 24, 2022, the Treasury announced significantly more expansive sanctions against the top ten Russian financial institutions. The Treasury’s Office of Foreign Assets Control (“OFAC”) targeted nearly 80 percent of all banking assets in Russia. This includes Russia’s two largest financial institutions – Sberbank and VTB Bank. These sanctions also prohibit certain transactions and dealings between Russian state-owned enterprises and U.S. persons and target the assets of more Kremlin-connected individuals. The U.S. has coordinated in this effort with global partners taking similar actions.

OFAC’s enforcement of these new sanctions is expected to be aggressive. It is important to review your company’s existing compliance policies and practices to ensure alignment with these new restrictions, and make sure that your business is not unintentionally facilitating any activities prohibited by these new sanction regimes.

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