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U.S. Announces Wide-Ranging New Russia Sanctions

April 20, 2021

On April 15, 2021, the United States announced numerous wide-ranging sanctions targeting Russia, including new prohibitions on dealings in Russian sovereign debt, sanctions in response to attempted election interference, and sanctions relating to the Crimea Region of Ukraine.

The President issued a new Executive Order that provides for broad authority to sanction varying degrees of misconduct, including efforts to undermine free and fair elections and democratic institutions, malicious cyber activities, transnational corruption, the targeting of dissidents and journalists, and violations of international law. The E.O. authorizes the U.S. to impose sanctions on a wide range of individuals and entities, including those operating in the technology and defense (and related material sectors) of the Russian economy.

Identifying information for all of the parties sanctioned is located here.


New Executive Order and Russia Sovereign Debt

The U.S. Department of the Treasury’s Office of Foreign Assets Control’s (OFAC) first use of the new E.O. targets numerous companies operating in the technology sector of the Russia economy for their support of the Russian Intelligence Services. Notably, OFAC sanctioned six entities for operating in the technology sector of the Russian economy, including numerous information technology companies.

In addition, OFAC issued Directive 1 under the new E.O., which prohibits U.S. financial institutions from: (i) participating in the primary market for ruble or non-ruble denominated bonds issued after June 14, 2021 by the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation, and (ii) lending ruble or non-ruble denominated funds to those entities.

The Directive defines “U.S. financial institution” as:

  • [A]ny U.S. entity (including its foreign branches) that is engaged in the business of accepting deposits, making, granting, transferring, holding, or brokering loans or other extensions of credit, or purchasing or selling foreign exchange, securities, commodity futures or options, or procuring purchasers and sellers thereof, as principal or agent. The term includes depository institutions, banks, savings banks, trust companies, securities brokers and dealers, futures and options brokers and dealers, forward contract and foreign exchange merchants, securities and commodities exchanges, clearing corporations, investment companies, employee benefit plans, and U.S. holding companies, U.S. affiliates, or U.S. subsidiaries of any of the foregoing. This term includes those branches, offices, and agencies of foreign financial institutions that are located in the United States, but not such institutions’ foreign branches, offices, or agencies.

Notably, OFAC advised that Directive 1 does not prohibit participation in the secondary market for bonds issued by the above-mentioned Russian Government entities. See OFAC FAQ 889. Further, Directive 1’s prohibitions do not apply to entities owned (directly or indirectly) 50% or more by the above-mentioned Russian Government entities. Thus, Directive 1 likely does not apply to Russian state-owned entities (for now). See OFAC FAQ 891.

Additionally, U.S. banks continue to be prohibited from participating in the primary market for non-ruble denominated bonds issued by the Russian sovereign (including the above-mentioned entities), and from lending non-ruble denominated funds to the Russia sovereign pursuant to the CBW Act Directive, issued pursuant to E.O. 13883. However, the CBW Act Directive does not prohibit U.S. banks from participating in the primary market for ruble denominated bonds issued by the Russia sovereign, or the lending of ruble denominated funds to the Russia sovereign. See OFAC FAQ 890. Note, however, that the new Directive 1 prohibits U.S. financial institutions, which includes U.S. banks, from participating in the primary market for ruble or non-ruble denominated bonds issued by, or the lending of 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.


Sanctions Relating to Crimea 

OFAC, in coordination with the European Union, United Kingdom, Australia, and Canada, also sanctioned five individuals and three entities associated with Russia’s occupation of Crimea, pursuant to E.O.’s 13660 and 13685. The sanctions targeted, among other things, those involved in the construction of the Kerch Straight Bridge and officials involved in Russia’s occupation of and efforts to control and govern Crimea.


Malicious Cyber Activities

The U.S. also formally named the Russian Foreign Intelligence Service (SVR) as the perpetrator of the SolarWinds hack and other information technology infrastructures. The U.S. is evaluating whether to take action under E.O. 13873 to protect the U.S.’s information and communications technology and services supply chain.


Election Interference Sanctions 

OFAC sanctioned 16 entities and 16 individuals for their attempts to influence democratic elections, including the 2020 U.S. presidential election. These entities and individuals were sanctioned under various E.O.’s, including 13848, 13694, and 13661.


Digital Currency Addresses

OFAC also added 29 digital currency addresses to the Specially Designated Nationals and Blocked Persons List (SDN List) relating to the election interference sanctions. The digital currency addresses added to the SDN List include those for Litecoin (LTC), Bitcoin (XBT), Verge (XVG), Zcash (ZEC), DASH, Ether (ETH), and Bitcoin Cash (BCH).

Relatedly, the U.S. Department of Justice charged two operators of an e-commerce business named SecondEye Solution (a/k/a Forwarderz) that allegedly had engaged in the sale of digital images of false identification documents. OFAC also designated SecondEye Solution for assisting Russia’s Internet Research Agency (IRA) in their attempts to influence the 2016 U.S. Presidential election. OFAC alleged that the IRA purchased 15 fraudulent U.S. driver licenses from Second Eye Solution, which were used as supporting documents for online social media accounts opened by the IRA.



In short, the Biden Administration’s sanctions announcement is one of the biggest of his administration to date, with wide-ranging implications for various industries. We will continue to track the new E.O., which provides broad authority for additional sanctions against Russia.

If you have any questions or concerns about U.S. sanctions, please contact Bruce G. Paulsen (212-574-1533) or Andrew S. Jacobson (212-574-1477) at Seward & Kissel’s Sanctions Practice Group.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm or its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.


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