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 8 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, which has been unprecedented in its complexity, impact, and speed in responding to Russia’s ongoing war against Ukraine.
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 9 April, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) expanded restrictions on the export and reexport of software and other technology to Russia and Belarus.1
- On 8 April, President Joe Biden signed two sanctions bills targeting Russia and Belarus.2 H.R. 6968 bans energy imports from Russia, including oil, coal, and natural gas. H.R. 7108 does the following:
- Suspends normal trade relations with Russia and Belarus;
- Establishes higher tariffs on imports from the two countries; and
- Extends indefinitely the President’s existing sanctions authority under the Global Magnitsky Human Rights Accountability Act.
- On 8 April, BIS announced that Iceland, Liechtenstein, Norway, and Switzerland have been added to the list of countries that are excluded from certain license requirements of the U.S. Russia/Belarus Sanctions rules.3 The countries joined a global coalition of nations that have committed to implement substantially similar export controls on Russia and Belarus under their domestic laws.
EU actions include:
- On 11 April, Europol, in collaboration with EU member states, Eurojust, and Frontex, launched Operation Oscar to support financial investigations into criminal assets owned by individuals and legal entities sanctioned in relation to the crisis in Ukraine.4 The initiative will continue for a period of at least one year and includes a number of separate investigations.
- On 8 April, the EU formally adopted a fifth round of sanctions against Russia, including bans on:
- Imports of coal and other solid fossil fuels;
- All Russian vessels from accessing EU ports;
- Russian and Belarussian road transport operators from entering the EU;
- Imports of other goods such as wood, cement, seafood, and liquor;
- Exports to Russia of jet fuel and other goods;
- Participation of Russian companies in public procurement in the EU;
- Sale of banknotes and transferable securities denominated in any official currencies of EU member states to Russia and Belarus; and
- Deposits to crypto wallets.5
The sanctions are estimated to slash at least 10 percent of the total imports from Moscow into the EU.6
- Also on 8 April, the EU adopted blocking sanctions against 217 individuals and 18 entities, including VTB Bank, Sovkombank, Novikombank, and Otkritie.7 Those financial institutions are also subject to a previous ban from the SWIFT system.
UK actions include:
- On 13 April, the UK government announced that it imposed blocking sanctions on 206 individuals, including 178 individuals who have been involved in supporting the so-called Donetsk and Luhansk regions of Ukraine.8
- On 8 April, the UK government added the daughters of Russian President Vladimir Putin and Foreign Minister Sergey Lavrov to its sanctions list.9 Putin's daughters—Katerina Vladimirovna Tikhonova and Maria Vladimirovna Vorontsova—and Lavrov's daughter—Yekaterina Sergeyevna Vinokurova—are subject to travel bans and asset freezes.
- The UK government released analysis showing more than GBP 275 billion, or 60 percent, of Russian foreign currency reserves have been frozen by the coordinated UK and international sanctions in recent weeks.10
Key Implications (Public, Private, and Non-Profit Sectors)
- On 13 April, Office of Foreign Assets Control (OFAC) General License 22 expired.11 The General License authorized the winding down of transactions involving Sberbank and any entity in which Sberbank owns, directly or indirectly, a 50 percent or greater interest. To the extent companies continue to rely on licenses issued by the U.S., EU, and UK, they need to consider an effective tracking mechanism since some of the licenses will begin to expire in the coming weeks and months.
- Legislation passed in the U.S. further underscores the permanence of Russia sanctions. Continuing to pressure Russia in response to its invasion of Ukraine is a priority across the entire U.S. Government and will not be easily or quickly reversed.
- Enforcement agencies around the world, including in jurisdictions not historically known for robust sanctions enforcement, continue to systematically identify, trace, and arrest billions of dollars in assets tied or suspected to be tied to sanctioned Russian oligarchs.12 This includes assets held via complex offshore structures or companies belonging to family members of the sanctioned persons. This reinforces the need for entities in the financial community to conduct thorough investigations of their client base and the assets of those clients. Such investigations will help to ensure the identification of and appropriate actioning against any assets that may belong to sanctioned persons or anyone acting on their behalf.
- Russia’s energy sector will likely continue to be a target of subsequent sanctions actions depending on the severity of Russian military activity in Ukraine.
- While the U.S., EU, and UK have coordinated their sanctions against Russia to a large extent, differences remain in the specific prohibitions and authorizations related to the Russia sanctions regimes implemented by those countries. Persons subject to EU, UK, and U.S. jurisdiction should conduct thorough due diligence on Russia-related transactions and customer relationships to assess the related risk and permissibility under each relevant regime.
- Companies should consider using a risk-based approach to implement policies that restrict or prohibit ongoing business relationships with entities that are sanctioned by other jurisdictions but that are not sanctioned by the company's home jurisdiction. For instance, a UK company that identifies a customer that is sanctioned by the U.S. but not the UK should consider a policy to restrict business with that U.S.-sanctioned entity.
