The U.S. Department of the Treasury ("Treasury") sanctioned dozens of Russian individuals and entities, including senior Russian government officials, some of the country's wealthiest "oligarchs" and a number of the businesses they control.
In a foreign policy statement, the White House explained that these individuals and entities were placed on the Specially Designated Nationals ("SDNs") and Blocked Persons List due to their reported roles in "advancing Russia's malign activities." Such activities include profiting from Russia's "destabilizing activities" – a reference to the conflict in Ukraine - election meddling, weapons proliferation and other activities, and supporting, through weapons or funding, the Government of Syria's continued attacks against Syrian citizens. Under the sanctions, U.S. persons are barred from dealing with any of the listed SDNs, and all properties and interests in property of the SDNs that are in the possession or control of U.S. persons or within the United States must be blocked.
In connection with this action, the Office of Foreign Assets Control ("OFAC") issued General License 12 and General License 13, authorizing specified "wind down" activities and divestiture transactions with certain sanctioned parties during a limited time period. OFAC also issued eight new FAQs relating to this action and one updated FAQ pertaining to the Countering America's Adversaries Through Sanctions Act.
Commentary / James Treanor
Many of the individuals sanctioned on April 6 previously appeared in a Treasury report to Congress on senior Russian political figures and oligarchs. That report, when issued in January 2018, generated many questions – and some confusion – because while it imposed no legal restrictions on dealings with the parties named, it clearly carried the threat of future sanctions. This undoubtedly led U.S. and other financial institutions to scrutinize their dealings with the Russians included in the report, in order to prepare for and understand the impact of any eventual sanctions.
Now that sanctions have in fact been imposed, the questions have only multiplied. First, Treasury's action reached a small percentage of the names contained in its January report to Congress, and there can be no guarantee that additional sanctions will not follow in the weeks and months ahead. Second, under OFAC's 50-Percent Rule, U.S. persons must block the property of, and avoid dealings with, any entities owned 50 percent or greater by one or more SDNs. With some of Russia's wealthiest individuals now joining the SDN List, the number of internationally-listed and globally-connected firms potentially subject to these sanctions has grown significantly. Finally, Treasury's action underscores that, at least in some cases, family members who receive property from their SDN relatives may themselves be sanctioned. While this likely represents an effort to head off the circumvention of U.S. sanctions, the effect on financial institutions is to expand even further an already deep pool of potential sanctions targets.
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