New Sanctions Targeting Russia

International Trade & Compliance Alert

President Biden issued a new Executive Order 14024 (“E.O. 14024”) on April 15, 2021, expanding sanctions against Russia. E.O. 14024 authorizes, for the first time, U.S. sanctions against Russian technology companies and, through Directive 1 thereunder, expands prohibitions on dealings relating to Russian sovereign debt. On the same day, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) added numerous individuals and entities to its Specially Designated Nationals and Blocked Persons List (the “SDN List”) pursuant to Russia sanctions authorities.

E.O. 14024

E.O. 14024 establishes broad authority for additional sanctions targeting Russia. It authorizes blocking sanctions against a wide range of individuals and entities, including, most notably, persons determined to:

  1. be operating in Russia’s technology or defense and related materiel sectors or any other sector as determined by the U.S. government;
  2. be responsible for or complicit in, or have engaged in harmful activities for or on behalf of, or for the benefit of, the Russian government (malicious cyber-enabled activities; election interference; actions undermining U.S. or foreign democratic processes or institutions; transnational corruption; unlawful killing of, or infliction of bodily harm against, a U.S. person or citizen or national of a U.S. ally or partner; activities undermining peace or territorial integrity of the United States or its allies; or deceptive transactions or dealings to circumvent any U.S. sanctions, including through the use of digital currencies or assets);
  3. be Russian government officials, agencies and instrumentalities;
  4. have provided material, technological or other support for the identified harmful activities or any person blocked pursuant to the order, or
  5. be owned or controlled by, or to have acted for or on behalf of the Russian government or any person blocked pursuant to the order.

E.O. 14024 also authorizes sanctions on spouses and adult children of certain potential sanctions targets, which has not been a common feature of recent sanctions measures.

In addition, E.O. 14024 authorizes blocking sanctions against Russian persons who are determined to (i) have provided financial, material or technological support for, or goods or services to or in support of, any government blocked pursuant to OFAC sanctions (i.e., the governments of Cuba, Iran, North Korea, Syria and Venezuela)[1] or (ii) be responsible for, complicit in, or have engaged in cutting or disrupting gas or energy supplies to Europe, the Caucasus or Asia.

Finally, E.O. 14024 provides for suspension of immigrant and nonimmigrant visas for non-U.S. citizens blocked pursuant to the order.

Directive 1:  Expanding Sovereign Debt Sanctions

Building on existing prohibitions on certain dealings in Russian sovereign debt,[2] and pursuant to E.O. 14024, OFAC issued Directive 1, which prohibits U.S. financial institutions to (i) conduct transactions in the primary (but not secondary) market for new ruble or non-ruble denominated bonds issued after June 14, 2021 by, or (ii) lend ruble or non-ruble denominated funds to, the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation. The term “U.S. financial institution” is defined broadly to include, among others, U.S. depository institutions, banks, securities brokers and dealers, investment companies, futures and options brokers and dealers, securities and commodities exchanges, and their U.S. holding companies, affiliates and subsidiaries. The term also includes U.S. branches, offices and agencies of foreign financial institutions. OFAC has clarified that its 50 percent rule, which ordinarily extends sanctions to subsidiaries of designated persons, does not apply under the new directive.

SDN List Additions

OFAC immediately acted under E.O. 14024 to block six Russian technology sector entities that allegedly supported the Russian intelligence services’ cyber program. As is normally the case with blocking sanctions, this action generally forbids U.S. persons to engage directly or indirectly in transactions in which a designated party has a direct or indirect interest. OFAC’s 50 percent rule applies with regard to these designees, i.e., U.S. persons are to treat as being blocked entities that are 50 percent-or-more owned by one or more blocked parties.

OFAC confirmed that persons previously identified as subject to sectoral sanctions for operating in the Russian defense and related materiel sector but not designated under E.O. 14024 are not subject to prohibitions under E.O. 14024.[3]

OFAC also added 32 other entities and individuals to the SDN List pursuant to existing sanctions authorities for attempting to influence the 2020 U.S. presidential election. Finally, in partnership with the European Union, United Kingdom, Canada and Australia, OFAC sanctioned eight individuals and entities associated with the claimed annexation of Crimea, pursuant to existing sanctions authorities.


These latest sanctions targeting Russia increase compliance risks for both U.S. and non-U.S. parties, making clear the importance of thorough counterparty due diligence and screening when doing business in or with Russia, including in connection with the Russian technology and defense sectors. U.S. companies and individuals are required to block and report to OFAC any property or property interests of the designated persons that come within their possession or control. In addition, non-U.S. persons may be designated under Section 228 of the Countering America’s Adversaries Through Sanctions Act for facilitating significant transactions for sanctioned Russian parties. As the U.S. – Russia relationship evolves under the Biden Administration, U.S. and non-U.S. companies doing business in or with Russia will want to follow developments closely.

[1] This provision of E.O. 14024 also authorizes the imposition of sanctions on persons ordinarily resident in Russia who engage in such activities.

[2] The Russia-Related Directive pursuant to Executive Order 13883 of August 1, 2019 prohibited U.S. banks from participating in the primary market for non-ruble denominated bonds issued by the Russian government, including the three Russian government-related financial entities listed above.

[3] Existing sectoral sanctions under Executive Order 13662 target certain debt financing by U.S. persons for identified entities in the Russian defense and related materiel sector.