Russia Sanctions: The U.S. Government Leans In

The week ending Saturday, April 9, 2022, witnessed a ramping up of U.S. and allied sanctions against Russia and the continuing evolution of U.S. enforcement activities against Russia in response to its invasion of Ukraine. This alert focuses on U.S. financial, economic, and law enforcement sanctions against Russia, summarizes the week's activities, and provides updated charts on U.S. and allied sanctions and enforcement releases. It does not include the diplomatic and security efforts being made by, among others, the U.S. Departments of State and Defense.

April 4, 2022

Justice Department announced the seizure in Spain of a $90 million yacht belonging to sanctioned Russian oligarch Viktor Vekselberg pursuant to request from the U.S. Justice Department.

April 5, 2022

State Department:
- Announced the formation of the Bureau of Cyberspace and Digital Policy (CDP) to address the national security challenges, economic opportunities, and implications for U.S. values associated with cyberspace, digital technologies, and digital policy.
- Announced sanctions on the world's "largest darknet market for Russian speakers, Hydra, and the virtual currency exchange Garantex," which has "processed millions of dollars in transactions associated with illicit actors," in coordination with U.S. "allies and partners."
Treasury's Office of Foreign Assets Control (OFAC) added to the List of Specially Designated Nationals (SDN List):
- Hydra (and associated web addresses), under Executive Order (EO) 13694; and
- Garantex pursuant to EO 14024. (See State Department, above.)
Justice Department announced the seizure of Hydra's servers (see Treasury, OFAC, above) and cryptocurrency wallets containing $25 million worth of bitcoin, in conjunction with the German Federal Criminal Police.

April 6, 2022

The President signed Executive Order (EO) 14071, prohibiting:
- New investment in the Russian Federation by any U.S. person;
- Provision of goods and services to any person in the Russian Federation as determined by the Secretary of the Treasury; and
- Any U.S. person, wherever located, from facilitating (approving, financing, or guaranteeing) a transaction by a foreign person where the transaction would be prohibited if performed in the United States or by a U.S. person.
State Department:
- Offered a reward of up to $5 million for information leading to the arrest and/or conviction of Semion Mogilevich, a transnational criminal living in Russia.
- Announced sanctions against additional Russian individuals and entities (see Treasury, OFAC, below).
Treasury (OFAC):
- Added 21 Russian National Security Council members, Putin's adult daughters, and Foreign Minister Lavrov's wife to the SDN List.
- Increased sanctions against Russia's economy by imposing full blocking sanctions against Sberbank, Alfa-Bank, and their subsidiaries, subject to wind-down periods (General Licenses (GL) No. 21A, 22 & 23).
- Updated GLs authorizing energy-related transactions with Russian banks (GL No. 8B), transactions related to dealings in specified debt or equity in certain banks and their subsidiaries (GL No. 9B) (superseded by GL 9C, April 7, below), and transactions related to dealings necessary to wind down (by May 25, 2022) derivative contracts in certain banks and their subsidiaries and authorizing the wind-down of derivative contracts with Alfa-Bank and its subsidiaries (by June 30, 2022) in light of the full blocking sanctions imposed (GL No. 10B) (superseded by 10C, April 7, below).
Justice Department:
- Attorney General Garland and Deputy Attorney General Monaco delivered remarks on enforcement actions to disrupt and prosecute Russian criminal activity focusing on "Task Force KleptoCapture," established to hold accountable the oligarchs who enable the Russian regime.
- Announced charges against Russian oligarch Konstantin Malofeyev for violating U.S. sanctions in support of the Russian invasion of Ukraine.
- Announced the results of a court-authorized operation to disrupt a global botnet by removing malware from infected firewall devices that the botnet (called Sandworm, and controlled by the Main Intelligence Directorate of the General Staff of the Armed Forces of the Russian Federation (GRU)) used for command and control of the botnet.

April 7, 2022

State Department announced sanctions against:
- Joint Stock Company United Shipbuilding Corporation, the entity that constructs Russia's warships, 28 subsidiaries, and members of the company's board of directors. (See Treasury (OFAC), below); and
- Public Joint Stock Company Alrosa, a diamond mining company controlled by the Russian government. (See Treasury, OFAC), below.)
Treasury (OFAC):
- Authorized (by GL No. 24) the wind-down of transactions related to Alrosa and its subsidiaries through May 7, 2022 (see also GL No. 21A, which extends the wind-down period for Alrosa USA, Inc. to June 7, 2022).
- Updated GLs authorizing transactions related to dealings in specified debt or equity in certain banks and their subsidiaries (GL No. 9C) (superseding 9B, above) and transactions related to dealings necessary to wind down derivative contracts with certain Russian government and Russian government controlled banks and their subsidiaries, as well as Alrosa and its subsidiaries (GL No. 10C) (superseding 10B, above).
- Authorized (by GL No. 25) transactions "ordinarily incident and necessary" to telecommunications transmission or reception that would otherwise be prohibited by the Russian Harmful Foreign Activities Sanctions Regulations.
Commerce Department, Bureau of Industry and Security (BIS), issued orders denying the export privileges of three Russian airlines – Aeroflot, Azur Air, and UTair – due to ongoing export violations related to comprehensive export controls on Russia imposed by the Commerce Department. These three Temporary Denial Orders (TDOs) terminate the right of these airlines to participate in transactions subject to the Export Administration Regulations (EAR), including exports and reexports from the United States. The TDOs are issued for 180 days and may be renewed.

April 8, 2022

Commerce (BIS) issued a rule adding Iceland, Liechtenstein, Norway, and Switzerland to the list of countries excluded from having to apply for certain licenses because they have adopted and are implementing export controls against Russia and Belarus substantially similar to those put in place by the U.S. The current list of countries can be found at Supplement 3 to Part 746 of Title 15, C.F.R.

April 9, 2022

Commerce (BIS) issued a rule expanding highly restrictive controls on the export and reexport of certain commodities, software, and technologies to Russia and Belarus that have utility in the military sector, applying a policy of denial to applications involving almost any sensitive dual-use technology, software, or commodities useful in this field.