September 1, 2016, the U.S. Department of the Treasury, Office of Foreign
Assets Control ("OFAC") expanded its sanctions to target: (1)
individuals and firms working to destabilize the Donbass and Crimea regions of
Ukraine; (2) entities 50% owned by Gazprom, Gazprombank or the Bank of Moscow;
and (3) sanctions evaders. In a press release, OFAC said the new measures were intended
"to counter attempts to circumvent sanctions on Russia, to assist the
private sector with sanctions compliance, and to foster a diplomatic resolution
to the conflict in Ukraine." See Press Release, Treasury Sanctions Individuals
and Entities for Sanctions Evasion and Activities Related to the Conflict in
Ukraine (Sept. 1, 2016), available at
total, OFAC added 133 new entries to its Specially Designated Nationals
("SDNs") and Sectoral Sanctions Identifications ("SSI")
lists. (The SDN list imposes complete blocking sanctions; the SSI list imposes
sanctions targeted to particular sectors and types of transactions.) OFAC also
announced a new general license to authorize divestment from PJSC Mostotrest, a
major Russian construction company added to the SDN list.
sanctions come as tensions are increasing in Ukraine and days after reports
that Russian state hackers allegedly accessed voting registration systems in
Illinois and Arizona, which is the latest incident in a series of escalating
state-sponsored cybersecurity breaches over the summer. See, e.g., Ellen
Nakashima, Russian hackers targeted Arizona election system, Wash. Post (Aug.
29, 2016), available at
The announcement also comes a week ahead of the G-20 meeting, which both the
U.S. and Russian presidents plan to attend, as well as weeks before Russia is
scheduled to conduct military drills in the Donbass region.
Additions to the SDN List Include Construction, Shipping and Defense Companies Involved
in Building Bridge to Crimea
new round of sanctions added 20 new entities to the SDN list. They include 7
construction, engineering, and design companies working on construction of the
Kerch Strait Bridge, which would connect mainland Russian with the Crimean
peninsula. This group includes PJSC Mostotrest and SGM-Most OOO.
new entities additionally include 5 defense firms and 6 maritime firms
operating in the Crimea region. The defense firms include 3 companies that
build and repair ships. The 6 maritime firms are all related to the
Sovfracht-Sovmortrans Group, a shipping and logistics company that operates a ferry
line that travels the same route as the Kerch Strait Bridge between Russia and
SDN list also adds 17 new individuals, including 6 officials in the
self-proclaimed Luhansk People's Republic and 11 officials from the Republic of
Crimea. The Salvation Committee of Ukraine was added because it is owned or
controlled by, or acts on behalf of, former Ukraine Prime Minister Mykola
Azarov, who is an SDN.
Additions to the SSI List
added 96 new entities to the SSI list. These entities are all subsidiaries
owned 50% or more by one of three existing parent companies already listed on
the SSI list. Specifically, 52 of the new entities are linked with Gazprom, 25
are linked with Gazprombank, and 19 are linked with Bank of Moscow.
44 entities linked with Gazprombank and Bank of Moscow are subject to Directive
1, which prohibits certain transactions or dealing in debt and equity of the
sanctioned entities. The 52 entities linked with Gazprom are subject to
Directive 4, which prohibits U.S. persons from providing support pertaining to
Russian deepwater, arctic offshore, or shale oil projects.
96 entities were already subject to sanctions because they are 50% or more
owned by companies designated on the SSI list. Because determining ownership is
often difficult, these listings will make due diligence, screening and
compliance easier for industry.
Rossiya Related Entity Named as Sanctions Evader
ABR Management was designated as an SDN. The OFAC press releases states that
this company was established by officials at Bank Rossiya, an SDN, to manage
the bank's assets. Bank Rossiya was previously designated for its close ties to
Vladimir Putin's inner circle.
announced the release of General License 10, which authorizes U.S. persons to
divest their holdings in PJSC Mostotrest, one of the new additions to the SDN
list, which would otherwise be blocked. The general license is valid until
October 1, 2016.
Mostotrest is one of the largest construction companies in Russia, and the fact
that OFAC issued the general license suggests that there is U.S. investment in
sanctions announced on September 1, 2016 represent an escalation of the U.S.'s
sanctions against Russia. Although this round of sanctions is the first from
OFAC in nearly nine months, it demonstrates the administration's willingness to
react to increased Russian activity in eastern Ukraine, Crimea and cyberspace.
In addition to sending a message about continued U.S. support for Ukraine,
these sanctions also send a message to Russia that hacking and any attempts to interference
with the November elections will have severe consequences.