Recently the U.S. announced sanctions as a result of the ongoing Russia-Ukraine conflict, and as this dispute continues, the nature of the sanctions may change as well. By no means are all transactions involving these countries prohibited, but certain types of transactions and transactions involving certain financial institutions are or will shortly be subject to sanctions by the U.S. government.
At present the following sanctions have been imposed on Russia by the U.S. government:
- As of 12:01am EDT on March 26, 2022, a prohibition on opening or maintaining accounts to receive deposits from or make payments on behalf of Sberbank (correspondent accounts) or accounts that allow bank customers to use the account to engage in banking in the U.S. (payable-through accounts) for SBERBANK or any of its subsidiaries listed in Annex 1 of OFAC Directive 2.
- A prohibition on any transaction OFAC determines is prohibited under Directive 2, effective at 12:01 am EDT, 30 days after such determination.
- Full blocking sanctions on VTB Bank, which is majority-owned by the Government of Russia, and 20 subsidiaries controlled directly or indirectly by VTB Bank, under Executive Order 14024.
- Blocking sanctions on Otkritie, a financial institution controlled by or having acted on behalf of the Government of Russia, as well as 12 subsidiaries controlled or act on behalf of Otkritie. Additionally, any entity owned at least 50% or more by Otkritie is also subject to blocking.
- Blocking sanctions on Sovcombank, along with 22 subsidiaries controlled by or who act on behalf of Sovcombank. Additionally, any entity owned at least 50% or more by Sovcombank is also subject to blocking.
- Blocking sanctions on Novikombank, which operates primarily in the Russian defense sector.
- As of 12:01 am EDT on March 26, 2022, a prohibition all transactions in, provision of financing for, and other dealings in new debt of greater than 14 days maturity and new equity issued by thirteen entities owned by the Government of Russia, as indicated by Annex 1 of Directive 3.
- A prohibition on any new debt of longer than 14 days maturity or new equity OFAC determines is prohibited under Directive 3, effective at 12:01 am EDT, 30 days after such determination.
At present, the following sanctions have been placed on Ukraine by the U.S. government:
- Prohibitions on U.S. persons engaging in new investment, trading, exporting, importing, reexporting, selling or supplying goods, services or technologies in the section of eastern Ukraine recognized by Russia as Donetsk People's Republic and Luhansk People's Republic. Further, U.S. persons, wherever located, are prohibited from approving, financing, facilitating or guaranteeing transactions that cannot be performed as a result of Executive Order 14065.
In addition to the above, various individuals and entities from the region have been added to OFAC lists as specifically designated nationals or blocked persons. It’s also noteworthy that numerous countries are also imposing various levels of sanctions on Russia and Ukraine that involve different individuals and entities than those being sanctioned by the U.S., which doesn’t limit the ability of U.S. persons to transact with those parties sanctioned by other governments by not the U.S. Therefore, running OFAC checks against sanctions lists will continue to be important going forward so that U.S. financial institutions do not engage in prohibited transactions with those subject to sanctions by the U.S. government.