Russia Sanctions:  Since the Russian invasion of Ukraine on February 24, the U.S. has continued to expand the scope of restrictions imposed against Russia’s largest banks, expanded sanctions on several individual Russian oligarchs and politicians with influence and connections to President Putin, and imposed expansive restrictions on exports of U.S. goods and technology.  Numerous other countries, including the EU, U.K., Canada, Japan, and others have imposed similar restrictions and continued to expand them on a daily basis.  It is expected that the sanctions will continue to expand as they have been, on a near daily basis, as long as Russia continues with its invasion into Ukraine.

Financial Sector Restrictions: Further actions have been taken to target the Russian financial sector. In particular, in addition to the placement of numerous Russian banks on the Specially Designation Nationals and Blocked Persons List (the SDN list), the U.S. has prohibited U.S. persons from undertaking any transactions involving the Central Bank, National Wealth Fund, and Ministry of Finance of the Russian Federation, with limited permitted exceptions. The U.S. has also placed substantial financial restrictions on U.S. financial institutions’ ability to transact with Sberbank, Russia’s largest bank, effectively cutting off Sberbank from the U.S. financial system and U.S. dollar-denominated trade.  The UK has imposed similar restrictions against Russian banks.  The EU, in turn, has announced, and SWIFT has confirmed, that seven major banks and majority-owned subsidiaries will be disconnected from the SWIFT messaging system: VTB, Bank Otkritie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank and VEB effective March 12, 2022.  Limited transactions with Sberbank and Gazprombank remain permissible, which EU officials have stated is due to their significant involvement in channeling payments for Russian oil and gas.

Oligarch Sanctions:  In addition to sanctions imposed against financial institutions, several “families close to Putin” and “financial sector elites” have been designated by the U.S., EU, and UK, in a largely, but not completely, coordinated fashion. These individuals have far reaching business connections globally and understanding their corporate holdings, which may be subject to restrictions by operation of law, will be complicated.  We anticipate additional sanctions should the Russian invasion continue.  The U.S. Department of Justice has established a “KleptoCapture” task force designed to target sanctions and export control violators, and seize their assets connected to such activity, including yachts, airplanes and real property.

Export Controls:  As previously telegraphed, the U.S., EU, and UK all imposed comprehensive export controls on both Russia and Belarus, covering high-tech goods such as semiconductors, encryption security, lasers, sensors, and maritime technologies.  The U.S. prohibited the export of many U.S.-origin items to Russia without authorization from the Department of Commerce, which has indicated that such authorizations are likely to be denied.  These restrictions have also led to additional designations of Russian and Belarusian parties to the Entity List. Similarly, the EU and UK have imposed restrictions on the export of all dual-use goods to Russia. 

The U.S. has implemented a Foreign Direct Product Rule for Belarus and Russia, similar to that used against Huawei since 2019, to restrict the export of most foreign manufactured goods which use U.S.-origin software or technology as part of their manufacturing process.  This rule will severely curtail the export of semiconductors and other high-tech goods and services to Russia, many of which are manufactured outside the U.S. but are based on U.S.-origin software and technology.

Finally, BIS has imposed significant restrictions on the export of 5A992 and 5D992 items to Russia and Belarus such that 5A992 and 5D992 items may only exported to civil end-users that are wholly-owned U.S. subsidiaries, foreign subsidiaries of U.S. companies that are joint ventures with other U.S. companies, joint ventures of U.S. companies with companies headquartered in countries from Country Group A:5 and A:6, the wholly-owned subsidiaries of companies headquartered in countries from Country Group A:5 and A:6, or joint ventures of companies headquartered in Country Group A:5 and A:6 with other companies headquartered in Country Groups A:5 and A:6.

License Exception ENC has been restricted to an identical scope of end users in Russia and Belarus.