This UPDATED post summarizes the situation as of late evening on Thursday, February 24, concerning current U.S. sanctions and export restrictions related to Russia and Ukraine. This supplements our post of late evening on Wednesday, February 23, which is available here.

As of late evening on Thursday, February 24, OFAC has taken the following additional actions, as follows:

Multiple additional banks were designated as SDNs.  Most prominently, OFAC designated VTB Bank Public Joint Stock Company (VTB Bank), which is reportedly Russia’s second-largest bank, along with 20 VTB Bank subsidiaries.  (Recall that any entity owned 50% or more by one or more SDN is itself an SDN, even if not specifically identified as an SDN.  In the case of a large entity such as VTB Bank, this means there may be many other entities affiliated with VTB Bank that are SDNs even though not identified on the SDN List).

OFAC also designated as SDNs Public Joint Stock Company Bank Financial Corporation Otkritie (Otkritie) and 12 Otkritie subsidiaries, Open Joint Stock Company Sovcombank (Sovcombank) and 22 Sovcombank subsidiaries, and Joint Stock Commercial Bank Novikombank (Novikombank).

In addition, OFAC imposed correspondence and payable-through account sanctions on the Public Joint Stock Company Sberbank of Russia (Sberbank) and 25 related entities.  Sberbank is reportedly Russia’s largest bank. Under this designation, issued in the form of Russia Directive 2, all U.S. financial institutions are required, within 30 days, to close any Sberbank correspondent or payable-through account and to reject any future transaction involving Sberbank or any of its foreign financial institution subsidiaries.

Further restrictions on Sberbank, and an additional 12 major Russian firms, were introduced pursuant to new Russia Directive 3, which is available here. Under this Directive, U.S. entities and individuals are prohibited from dealing in certain new debt or equity of designated firms. OFAC did issue General License No. 9, available here, to authorize transactions to divest or transfer (or facilitate the divestiture or transfer of) certain debt and equity to non-U.S. persons.  This General License expires on May 25, 2022.

OFAC also issued General Licenses Nos. 5, 6, and 7 authorizing:

  1. Activities by international organizations that would otherwise be prohibited under the new sanctions.
  2. Certain transactions related to the export or re-export of agricultural products, medicine and medical devices, and certain other items, included items intended for the prevention, diagnosis, or treatment of COVID-19.
  3. Overflight payments, emergency landings, and air ambulance services.

In addition, General License No. 8 authorizes certain transactions “related to energy,” which is defined as

the extraction, production, refinement, liquefaction, gasification, regasification, conversion, enrichment, fabrication, transport, or purchase of petroleum, including crude oil, lease condensates, unfinished oils, natural gas liquids, petroleum products, natural gas, or other products capable of producing energy, such as coal, wood, or agricultural products used to manufacture biofuels, or uranium in any form, as well as the development, production, generation, transmission, or exchange of power, through any means, including nuclear, thermal, and renewable energy sources.

General Licenses 5, 6, 7, and 8 are available here.

Additional General Licenses – numbers 10 and 11 – available here, authorize transactions ordinarily incident and necessary to the winding down of certain derivative contracts and other transactions, while General License No. 12, available here, authorizes U.S. persons to reject all transactions prohibited by the EO involving VTB Bank, Otkritie, Sovcombank, or any entity in which one of the foregoing owns a 50% or more interest.  Rejecting such a transaction is often easier, as a practical matter, than blocking the transaction and thus having to maintain the corresponding funds in a blocked account.

In addition, OFAC has designated as SDNs certain “Russian elites” with close ties to Vladmir Putin and/or senior executive positions at state-owned banks.  As is the case with any SDN, regardless of the basis for designation, U.S. entities and individuals are prohibited from conducting virtually any transaction with these designated individuals.

The Bass, Berry & Sims international trade team is actively monitoring the situation in Russia and Ukraine and providing real-time advice to clients on managing the situation. Please contact us anytime if we can assist. Read our post from February 23 for more information.