Beginning Feb. 21, 2022, the U.S. government began to issue sanctions on Russian officials in its continued response to the Russian invasion of Ukraine. In its latest round of designations, the U.S. Department of Treasury, Office of Foreign Assets Control (OFAC) designated President Vladimir Putin, along with several members of his cabinet and inner circle. These latest sanctions packages and other measures come on the heels of multiple prior waves of U.S. sanctions announced over the past week.
In addition to these sanctions, the United States and other allies agreed to cut off Russia from SWIFT banking communication system. The move is part of escalating, coordinated efforts by the United States and European countries to target the Russian financial sector, which include sanctions from the United Kingdom, European Union, and Switzerland.
Third Wave of Sanctions
On Feb. 25, 2022, OFAC added the President of the Russian Federation, Vladimir Putin to the Specially Designated Nationals (SDN) List. In addition to President Putin, OFAC designated Russia’s Minister of Foreign Affairs, Sergei Viktorovich Lavrov, Russia’s Minister of Defense, Sergei Shoigu, and Chief of the General Staff of the Russian Armed Forces and First Deputy Minister of Defense, General Valery Gerasimov as SDNs. These measures follow an initial sanctions package announced Feb. 22, 2022, which was targeted at the so-called Donetsk People’s Republic and the Luhansk People’s Republic (collectively, the Covered Regions). The sanctions relating to Nord Stream 2 were issued Feb. 23, 2022, and the banking sanctions and export controls were announced Feb. 24, 2022.
As a result of the sanctions measures, U.S. persons will effectively be prohibited from all dealings with President Putin and the other designated Russian officials direct or indirect. All property and assets of President Putin (as well as the other designated Russian officials) that are located in the United States, or in U.S. persons’ possession or control, are now deemed frozen and must be disclosed to OFAC. Further, any entity that is owned (directly or indirectly) 50% or more by any restricted person is also prohibited. The designation of Putin and Lavrov is seen as largely symbolic as Putin and Lavrov do not maintain significant assets in the United States, and from a compliance standpoint, there are significant challenges determining whether Putin and Lavrov are ultimate beneficial owners in entities comprised of opaque shell companies and other vehicles for obfuscating ultimate beneficial ownership around the world. All transactions by U.S. persons or within (or transiting) the United States that pertain to any property or any property interests of a restricted person are prohibited unless authorized by a general license or specific license granted by OFAC. Lastly, U.S. persons are prohibited from receiving or contributing assets, goods, products, or services for the benefit of restricted persons.
Read the full GT Alert.