23 February 20227 minute read

New US sanctions in response to Russia’s actions against Ukraine

On February 21, 2022, President Biden issued an Executive Order (EO) imposing comprehensive sanctions on the Donetsk (DNR) and Luhansk (LNR) regions of Ukraine (collectively, the Separatist Regions) to prohibit US persons and entities from new investment, trade, and “approval, financing, facilitation, or guarantee” of transactions related to or involving the Separatist Regions.  In addition, the EO allows for sanctions designations of members of entities operating in the Separatist Regions and anyone providing material assistance or support to a designated party.  These designations can include persons and entities located outside of the Separatist Regions.

Building on prior sanctions issued on April 15, 2021 through Executive Order 14024 (as more fully discussed in a previous client alert), and prohibiting participation in the primary market for Central Bank of Russia (CBR), National Wealth Fund of Russia (NWF), or the Ministry of Finance (MOF) ruble or non-ruble denominated bonds (as of June 14, 2021), under Directive 1 of E.O. 14024, on February 22, 2022, OFAC issued a revised Directive 1A.  Directive 1A prohibits U.S. financial institutions (a term broadly defined) from participating, as of March 1, 2022, in secondary market transactions of ruble or non-ruble denominated bonds issued after March 1, 2022 by the CBR, NWF, or MOF.

While E.O. 14024 targeted the technology sector and defense and related materiel sector, on February 22, 2022, the Secretary of the Treasury, in consultation with the Secretary of State, also issued a determination pursuant to EO 14024 that authorizes sanctions against persons that operate or have operated in the financial services sector of Russia.  A sector determination pursuant to EO 14024 does not automatically impose sanctions on all persons who operate or have operated in the sector; persons must be specifically designated pursuant to EO 14024 by the Secretary of the Treasury or by the Secretary of State (in consultation with each other). 

In practical effect, the financial sector determination significantly increases the risk of doing business with anyone in the financial services sector of Russia.  US persons and entities will need to assess the risks of counterparty relationships and advise on strategies to mitigate risks of doing business with entities or individuals in the financial services sector of Russia that have not yet been designated. 

On February 22, OFAC designated Vnesheconombank (VEB), Promsvyazbank (PSB), 42 of their subsidiaries, and five Russian vessels owned by a designated subsidiary of PSB.  In addition, OFAC also individually listed:


  • Petr Fradkov, the Chairman and CEO of PSB

  • Denis Bortnikov, Deputy President of VTB Bank and chairman of its Management Board (and son of Alessandro Bortnikov, Director of the Federal Security Service and permanent member of the Security Council of the Russian Federation)

  • Vladimir Kiriyenko, CEO of VK Group (and son of Sergei Kiriyenko, First Deputy Chief of Staff to Putin).

On February 23, the White House announced it will impose sanctions on Nord Stream 2 AG, the company owned by Gazprom that effectively controls the operation and management of the Nord Stream 2 pipeline, along with “its corporate officers.”

As part of its implementation of this new round of sanctions, the Treasury Department also issued eight related General Licenses (GLs):

  1. GL 2 permits certain transactions with VEB, or any entity VEB owns, ordinarily incident and necessary to the servicing of bonds issued before March 1, 2022 by the CBR, NWF, or MOF.

  2. GL 3 permits a short 30-day wind-down for transaction ordinarily incident and necessary to the wind down of transactions involving VEB, or any entity it owns.


    GL 4 provides for a short wind-down period for transactions with Nord Stream 2 AG.
  4. GL 17 allows for a short-term 30-day wind-down of certain business activities in the Separatist Regions.

  5. GL 18 allows for the export of certain food, medicine, medical devices, and other items related to the COVID-19 pandemic to the Separatist Regions.

  6. GL 19 allows for transactions incident and necessary to a) the receipt or transmission of telecommunications (but not the provision, sale or lease of telecommunications equipment, technology, or transmission facilities) and b) the receipt or transmission of mail.

  7. GL 20 allows for the conduct of official business of certain international organizations.

  8. GL 21 allows for certain transactions ordinarily incident and necessary to the transfer of noncommercial personal remittances.

  9. GL 22 allows for certain transactions ordinarily incident and necessary to the exportation or re-exportation to the Separatist Regions of services incident to certain personal communications over the Internet and exportation of certain software necessary to enable such permitted services.

Implications of the new sanctions

Impacted companies are advised to review any and all implicated bond holdings to implement an orderly wind-down.  Impacted companies are also advised to determine relationships with Russian financial institutions, including those not designated, to assess risk and prepare for any potential future sanctions. 

Companies with activity in Ukraine and Russia are advised to review any and all transactions, and counterparty and third-party relationships to assess and determine any direct or indirect touchpoints to the Separatist Regions or with designated parties.

Companies in the pharmaceutical, medical supply, agricultural, food, Internet and telecommunications sectors should assess whether current or planned activities in the Separatist Regions may be consistent with the GLs.

Anticipated US sanctions in the event of further escalation

The White House announced that these measures are “separate from and would be in addition to” the economic measures that the US is expected to put in place in coordination with allies and partners “should Russia further invade Ukraine.”  If Russia’s military pushes further into Ukraine, we can expect designations of more Russian financial institutions, further export restrictions, and energy-related sanctions.


UK and EU sanctions

Finally, the US is closely coordinating with its allies and partners, and the UK and EU have issued their own sanctions against Russia.  The UK has frozen the assets of and imposed travel bans on Gennady Timchenko and Boris and Igor Rotenberg, and five Russian banks (Bank Rossiya, Black Sea Bank for Development and Reconstruction, IS Bank, Genbank, and Promsvyazbank), all of which are also SDNs designated by the US. In addition, the UK will impose an embargo against the Separatist Regions similar to that of the US.

The UK and EU will also sanction those members of the Russian Duma and Federation Council who voted to recognize the independence of the Separatist Regions.  The EU will also sanction “27 individuals and entities who are playing a role in undermining or threatening Ukrainian territorial integrity, sovereignty and independence” which will include those in Russia's defense, banking and financial sector.  See our related alert issued today, US, EU and UK implement “first phase” of new sanctions in response to Russia’s recognition of the independence of the Donetsk and Luhansk regions

Going forward


Along with our global colleagues, we continue to monitor these developments and update this alert as changes take place.  If you have any questions regarding these sanctions and their implications, please contact any of the authors or your DLA Piper relationship attorney.