Russia Sanctions Update - April 7, 2022

• Published date: 11 April 2022
• Subject Matter: International Law, Export Controls & Trade & Investment Sanctions
• Law Firm: Foley Hoag LLP
• Author: Luciano Racco, Anthony D. Mirenda, Shrutih V. Tewarie and Anna Maria Annino

Key Takeaways:

• New Executive Order prohibits all new investment by U.S persons in Russia
• U.S. imposes full asset freezing sanctions on Alfa-Bank and Sberbank, along with more Russian government officials and their family members, including the daughters of Russian President Vladimir Putin
• Sanctions target Russian cybercrime and ransomware

I. New Executive Order Bans U.S. Investment in Russia

On April 6, 2022, President Biden issued a new Executive Order, "Prohibiting New Investment in and Certain Services to the Russian Federation in Response to Continued Russian Federation Aggression" (the "April 6 EO"). The April 6 EO prohibits the following:

• "new investment in the Russian Federation by a United States person, wherever located";
• "the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of any category of services as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State, to any person located in the Russian Federation"; and
• "any approval, financing, facilitation, or guarantee by a United States person, wherever located, of a transaction by a foreign person where the transaction by that foreign person would be prohibited by this section if performed by a United States person or within the United States."

"Investment" is not defined in the EO, and it is currently unclear how broadly the prohibitions on new investment will apply and what types of transactions will be covered. However, a FAQ published in connection with the EO issued on March 8, 2022, "Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine," defines "investment" as a "transaction that constitutes a commitment or contribution of funds or other assets for, or a loan or other extension of credit." A similar definition may be applied for the April 6 EO, but further guidance will be needed from OFAC on the scope of the prohibitions in the April 6 EO. The Secretary of the Treasury has not yet identified any "categories of services" subject to the exportation, reexportation, sale, or supply prohibition, and until further guidance is issued, it is unclear what specific services may be covered.

II. Blocking Sanctions on Russian Banks, Government Officials, and Family Members

Also on April 6, 2022, the U.S. Department of the Treasury's Office of Foreign...