United States Expands Sanctions Targeting Russia in Response to Russia’s Purported Annexation of Regions of Ukraine
October 3, 2022
The United States has expanded economic sanctions targeting Russia in response to Russia’s purported annexation of the Luhansk, Donetsk, Kherson, and Zaporizhzhya regions of Ukraine following sham referenda in those areas. The sanctioned persons include companies and executives in Russia’s defense sector, non-Russian suppliers of Russia’s defense-industrial base, members of Russia’s financial leadership, family members of top-ranking Russian officials, and members of Russia’s legislature. In conjunction with the new sanctions, the United States Government issued a “clear warning supported by G7 Leaders” that it will target individuals, entities, and countries that provide political or economic support for Russia’s efforts to change the status of Ukrainian territory.
These new actions build upon earlier sanctions issued since the launch of Russia’s invasion in Ukraine in February 2022, discussed in our prior alerts: U.S. Economic Sanctions and Export Controls on Russia and Belarus Expand, with Further Measures Likely, Biden Administration Further Expands Sanctions on Russia as War in Ukraine Continues, United States Expands Sanctions Against Russia’s Defense-Industrial Sector and Russian Elites, United States Adds New Sanctions Targeting Russia, United States Expands Sanctions on Russia to Target Energy Sector, Biden Administration Continues to Broaden Economic Sanctions on Russia in Response to Ongoing Aggression in Ukraine, 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.
Additional economic sanctions and other measures targeting Russia are likely to be forthcoming in response to ongoing Russian activities in Ukraine. Most notably, both the Commerce and Treasury Departments issued guidance that the United States is preparing to “more aggressively” target third-country individuals and entities providing material support to Russia, in particular to Russia’s military and defense-industrial base and those providing political and economic support for Russia’s attempted annexation and occupation of Ukrainian territory. Companies that continue to do business in Russia will not only need to assess whether these new measures impact that business, but also whether their activities may be supporting Russia’s actions in Ukraine or support companies that are doing so.
New Economic Sanctions
The U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) designated additional individuals and entities that enabled “Russia’s sham referenda and attempt to annex sovereign Ukrainian territory.” The targets of the sanctions include:
- 14 individuals and entities providing support to Russia’s defense sector, including Russian defense and technology firms, and non-Russian suppliers located in Armenia, Belarus, and China.
- Russian financial leadership, including the Governor and First Deputy Government of the Central Bank of Russia.
- Immediate family members of senior Russian officials, including the wives and adult children of Sergei Shoigu, Russia’s Defense Minister, Viktor Zolotov, the head of the Russian National Guard, and Mikhail Mishustin, Russia’s Prime Minister.
- 278 members of Russia’s legislature, including the 167 members of the Federation Council of the Federal Assembly of the Russian Federation and the 109 members of the Duma who were not sanctioned previously.
The full list of newly designated individuals and entities is available here.
New Export Controls and Visa Restrictions
Concurrent with OFAC’s actions, both the Commerce and State Departments used their authorities to impose sanctions on Russia. The Commerce Department’s Bureau of Industry and Security announced the addition of 57 entities located in Russia and the Crimea region of Ukraine to its Entity List for activities that include “acquiring or attempting to acquire U.S. origin items in support of Russia’s military.”
The State Department also announced the imposition of visa restrictions on 910 additional individuals, who violated “Ukraine’s sovereignty, territorial integrity, and political independence,” including members of the Russian military, Belarusian military officials, and Russia’s proxies acting in Ukraine’s Luhansk, Donetsk, Kherson, and Zaporizhzhya regions.
Potential Future Measures
As Russia’s military campaign continues and the Russian Government attempts to legitimize its occupation of Ukrainian territory, the United States and its allies will likely take additional steps to target both those inside and outside of Russia that provide material support to Russia’s actions. Consistent with the warnings issued by the Commerce and Treasury Departments, such measures could include denying non-U.S. persons the ability to receive U.S.-origin goods, software, and technology, and prohibiting transactions or other dealings with U.S. persons. While Russia’s actions will ultimately dictate whether further actions are taken to target the Russian economy and its defense capabilities, decreasing European dependence on Russian oil and gas will provide the United States and its allies greater leeway to impose penalties on Russia that could lead to a decoupling of Russia from the Western economic system.
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 Youjin Kwon, an O’Melveny associate licensed to practice law in the District of Columbia, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.
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