O’Melveny Worldwide

Biden Administration Continues to Broaden Economic Sanctions on Russia in Response to Ongoing Aggression in Ukraine

March 4, 2022


The United States continues to expand economic sanctions targeting Russia in response to its full-scale military invasion of Ukraine. Over the course of the last week, the United States expanded sanctions on the Russian financial sector, Russian political leaders and oligarchs, and the defense industry. It also added sanctions against Russian entities responsible for disinformation and propaganda. In addition, the United States applied the new export controls applicable to Russia to Belarus, out of concern that Belarus would be used as a conduit to divert restricted sensitive items to Russia.

These actions build upon earlier sanctions following Russia’s initial actions in Ukraine and similarly are being imposed in coordination with the United States’ allies and partners including the European Union and the United Kingdom. Earlier efforts included a broad set of economic sanctions and export controls targeting Russia’s financial, defense, maritime, aerospace, and high tech sectors, discussed in our prior alerts: Biden Administration Issues Second Set of Sanctions on Russia Broadly Targeting the Financial and High-Tech Sectors and Biden Administration Issues Initial Set of Sanctions in Response to Russian Invasion of Eastern Ukraine.

For now, other major sectors of the Russian economy, including the energy sector, have not been broadly targeted by the economic sanctions, and the US Treasury Department has said “that energy payments can and should continue.” Global businesses, however, including major energy companies, many tech companies, credit card companies, and global logistics providers, have begun to voluntarily wind down their business operations in Russia. As Russian aggression in Ukraine continues, we expect additional economic sanctions and other measures to be forthcoming, along with further unilateral withdrawals by US and European companies from the Russian market.

Financial Sector Sanctions

The new sanctions continue to target Russia’s financial sector in an effort to block Russian access to foreign capital and limit the access of Russian Banks to the global financial system.

On February 28, 2022, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued a new Directive 4 under E.O. 14024 prohibiting US persons from engaging in transactions involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation, including any transfer of assets to such entities or any foreign exchange transaction for or on behalf of such entities, except for certain energy-related transactions licensed by OFAC. Concurrently, OFAC imposed blocking sanctions on one of Russia’s key sovereign wealth funds, the Russian Direct Investment Fund, as well as its management company and CEO.

These measures were imposed in tandem with similar actions by US allies and partners to restrict Russia’s access to its foreign currency reserves and the global financial system. Among the actions of note, the SWIFT financial messaging system disconnected seven Russian entities and their Russia-based subsidiaries from the SWIFT network, each of which was previously blocked by the United States and designated on OFAC’s List of Specially Designated Nationals and Blocked Persons. The seven banks are VTB Bank, Bank Otkritie, Novikombank, Promsvyazbank, Rossiya Bank, Sovcombank, and VEB.

Sanctions Targeting Russian Intelligence-Directed Disinformation Outlets and Russian Defense Entities

In addition to sanctioning more targets in the Russian financial sector and the Russian defense sector, the United States also began targeting Russian intelligence-directed disinformation outlets. Specifically, OFAC imposed sanctions targeting certain Russian entities and individuals that it identified as propagating Russian intelligence services-directed content and advancing false narratives against a variety of topics, including the COVID-19 pandemic. These included media outlets and individuals affiliated with these organizations and having close ties to the Russian government that continue to advance false or misleading narratives.1

The US Department of State issued blocking sanctions, pursuant to E.O 14024, targeting 22 defense-related entities in Russia, including firms that make combat aircraft, infantry fighting vehicles, electronic warfare systems, missiles, and unmanned aerial vehicles for Russia’s military, as persons who operate or have operated in the defense and material or technology sectors of the Russian economy.2  As a result of these sanctions, all property and interest in property of the listed entities are generally blocked.

Sanctions Targeting Russian Leadership, Elites and Oligarchs

The United States also imposed sanctions on additional Russian individuals of concern and their families; these include political leaders, elites within President Putin’s inner circle, and Russian oligarchs. The political leaders include President Putin himself, who joins the small group of sanctioned heads of state that includes Kim Jong Un of North Korea, Alyaksandr Lukashenka of Belarus, and Bashar al-Assad of Syria, along with Russian Minister of Foreign Affairs Sergei Lavrov, and other members of the Russian Security Council.3

In addition, the Biden Administration sanctioned Russian elites, oligarchs, their families, and property for providing direct and indirect support to the Government of Russia “through their business empires, wealth, and other resources.” These individuals include a Alisher Usmanov, Russian billionaire with significant interests in metals and mining, telecommunications, and information technology sectors; Nikolay Tokarev, President of Transneft and close associate of President Putin; Yevgeniy Prigozhin, Russian financier of the Internet Research Agency (IRA); Arkady Rotenberg, owner of PSCJ Mosotrest, ally of President Putin and Russian elite; Sergei Chemezov, CEO of Rostec; Igor Shuvalov, Chairman of VEB; and Dmitry Peskov, President Putin’s press secretary.

As a result, all US persons are generally prohibited from engaging in transactions or other dealings with these individuals and entities. The State Department also issued new visa restrictions against certain Russian oligarchs, their family members, and close associates for their carrying out of malign activities in support of Russia’s foreign aggression.

Export Controls

Preventing Diversion of Sensitive Items Through Belarus

The US Department of Commerce’s (“Commerce”) Bureau of Industry and Security (“BIS”) extended recently expanded export controls against Russia to Belarus. As discussed in our previous Alert, BIS issued regulations imposing restrictions on the export of certain goods and technology to Russia, many of which Russia cannot produce itself. The new BIS rules extend the same export controls to Belarus.

Restricted items include semiconductors, computers, telecom equipment, information security equipment, lasers, and sensors that are relied on by the Russian defense, maritime, and aerospace industries. Under the new regulations, the items above will now require licenses from BIS for export to Russia or Belarus, which will be reviewed under a policy of denial.

The new rule also adds Belarus to the two new Foreign Direct Product Rules (“FDPRs”) implemented last week as part of Commerce’s actions targeting Russia. The FDPRs extend US jurisdiction and related controls to certain foreign-produced items that are based on US-origin technology destined for Russia or Belarus. These expanded rules are modeled on measures that target Huawei and will enable the United States to restrict Russia and Belarus from accessing high-tech products like semiconductors because of the prevalence of US-origin software, technology, and equipment used in the manufacture of those items.

These measures are also intended to target Russia’s military and defense capabilities and protect against diversion of restricted items through Belarus. The United States is coordinating its actions with its allies and partners in Australia, Canada, the European Union, Japan, New Zealand, and the United Kingdom. The export controls generally do not impose restrictions on consumer goods used by the Russian or Belarusian people.

Export Controls – Defense and Technology Sectors

BIS added Russian and Belarusian companies to the Entity List that have been involved in, contributed to, or otherwise supported those countries’ security services, military and defense sectors, and military and defense research and development efforts. As a result, export of certain US technology goods to those listed entities in the military, aerospace, maritime, and high-technology sectors will now require an export license from BIS.

Export Controls – Oil and Gas Refining

BIS also imposed new export controls on certain oil and gas extraction equipment to target the Russian oil and gas refining sector. As a result, trade in those items will now require a license from BIS for export to Russia, which will be reviewed under a policy of denial.


Recent sanctions actions continue to follow a targeted approach focused on specific sectors and malign actors in Russia and its ally Belarus. The United States has thus far refrained from imposing comprehensive sanctions and has said that it will continue to coordinate with its allies as it considers imposing “further costs” on Russia.

O’Melveny recognizes law clerk Dillon Roseen for his valuable contribution in researching and drafting this article.

1 The full list of sanctioned intelligence-directed disinformation entities includes: Odna Rodyna, Rhythm of Eurasia, Journal Kamerton, New Eastern Outlook, Oriental Review, United World International, and Geopolitica.

2 The full list of sanctioned entities includes: Izhevsk Unmanned Systems Research and Production Associated Limited Liability Company (UAV manufacturer), JSC Research and Production Association Kvant (electronic warfare systems manufacturer), Kurganmashzavod (infantry fighting vehicle manufacturer), Joint Stock Company Research and Production Corporation Konstruktorskoye Byuro Mashynostroyeniya (military equipment and weapons manufacturer), Joint Stock Company Federal Scientific and Production Center Titan Barrikady (missile manufacturer), Komsomolsk-on-amur Aviation Plant (fighter aircraft manufacturer), Makeyev State Missile Center (missile manufacturer), JSC Central Research Institute of Automation and Hydraulics (missile developer and manufacturer), UEC-Saturn (engine manufacturer), Design Bureau of Special Machine Building (military equipment developer), Joint Stock Company Salavat Chemical Plant (chemical manufacturer), Joint Stock Company Avangard (armored vehicle manufacturer and missile developer), Radioavtomatika (foreign procurement organization), JSC Novosibirsk Aircraft Production Association Plant Named After V.P. Chkalov (UAV and bomber aircraft producer), Irkutsk Aviation Plant (fighter aircraft producer), ODK-UMPO Engine Building Enterprise (fighter aircraft engine producer), Nizhny Novgorod Aviation Plant Sokol (fighter aircraft developer), All-Russian Scientific Research Institute of Aviation Materials (specialized material and weapons systems provider), Aviastar-SP Aircraft Manufacturing Enterprise (military aircraft manufacturer), Public Joint-Stock Company ODK-Kuznetsov (bomber aircraft engine manufacturer), Joint Stock Company ODK-Klimov (attack helicopter engine producer), The Planar Company (high-technology provider and foreign technology procurer).

3 Valentina Matviyenko, Chairwoman of the Council of Federation; Sergei Naryshkin, Director of the Foreign Intelligence Service; Sergei Ivanov, Special Presidential Representative for Environmental Protection, Ecology, and Transport; Nikolai Patrushev, Secretary of the Russian Federation Security Council; Vladimir Kolokoltsev, Interior Minister; Alexander Bortnikov, Director of the Federal Security Service; Igor Krasnov, Prosecutor General; Igor Shchegolev, Presidential Plenipotentiary Envoy to the Central Federal District; Vladimir Ustinov, Presidential Plenipotentiary Envoy to the Southern Federal District; Viktor Zolotov, Director of the Federal Service of National Guard Troops and Commander of the National Guard Troops.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Greta Lichtenbaum, an O’Melveny partner licensed to practice law in the District of Columbia, David J. Ribner, an O’Melveny counsel licensed to practice law in the District of Columbia and New York, and Dillon Roseen, an O’Melveny law clerk, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

© 2022 O’Melveny & Myers LLP. All Rights Reserved. Portions of this communication may contain attorney advertising. Prior results do not guarantee a similar outcome. Please direct all inquiries regarding New York’s Rules of Professional Conduct to O’Melveny & Myers LLP, Times Square Tower, 7 Times Square, New York, NY, 10036, T: +1 212 326 2000.