Russia Sanctions Update – February 28, 2022: US imposes central sanctions

Key Takeaways:

  • New guidelines 4 prohibit transactions with the Russian central bank, the National Asset Fund and the Ministry of Finance
  • Complete blockade on Russian direct investment funds and associates
  • The multifaceted response to the Russian attack continues, with unprecedented sanctions imposed on Switzerland and Monaco.


On February 28, 2022, the US government announced new sanctions on Russia’s central bank, the National Asset Fund, the Ministry of Finance, and the Russian direct investment fund, dramatically increasing the economic impact of existing sanctions on Russia in response to the Russian invasion. Ukraine. As described in our previous Client Warning, these actions continue the “drum beat” approach to sanctions and export controls already imposed on Russia by the United States, EU member states, the United Kingdom and many other countries.

In a move aimed at blunting Russia’s ability to use its foreign exchange reserves to mitigate the effects of the sanctions, the US Treasury Department’s Office of Foreign Asset Control (“OFAC”) has issued guidelines 4, which prohibit US individuals from engaging in any transactions. The Central Bank of the Russian Federation, the National Wealth Fund, or the Ministry of Finance, including asset transfers and foreign exchange transactions. These sanctions, which were enforced under Executive Order (“EO”) 14024, “blockade of property with respect to certain harmful foreign activities of the Government of the Russian Federation,” will take effect immediately, February 28, 2022. As a result of Guideline 4, the Central Bank, the National Asset Fund, and the Ministry of Finance have been added to the OFAC’s Non-SDN Menu-Based Sanctions (“NS-MBS”) list.

In addition to the NS-MBS list titles under Guideline 4, the Russian Direct Investment Fund – a core Russian sovereign asset fund – and its affiliates were added to the list of specially designated citizens and blocked persons (“SDN list”). Kirill Alexandrovich is a close associate of Dmitriev, CEO of the Russian Foreign Investment Fund and a close associate of Russian President Vladimir Putin. U.S. individuals are generally barred from engaging in most transactions with the SDN, a specific or generic license is missing, and all U.S. assets on the SDN are “blocked” and must be reported to OFAC. In addition, any person, including a non-US person, may be nominated to provide these SDNs with material support, sponsorship or financial, material, or technical support, or for the provision of goods or services.

In addition to these new restrictions, OFAC has updated an earlier general license to allow certain transactions involving energy. General License 8A (instead of General License 8), adds the Russian Central Bank to the list of financial institutions with which “energy related” transactions are allowed. However, the following transactions shall be prohibited: (1) transactions prohibited by Guideline 1A under EO 14024; (2) opening or maintaining a reporter account or pay-per-account for or on behalf of an entity subject to guidelines 2 under EO 14024; (3) any debit in the book account of the US financial institution of the Central Bank of the Russian Federation; And (4) any transaction involving any person blocked in accordance with EO 14024 except as listed in the General License.

On the same day, OFAC issued new regulations for the implementation of EO 14024 (Russian Prevention of Harmful Foreign Activities Regulation, 31 CFR Part 587), issued by President Biden on April 15, 2021. The regulations code all prohibitions in the EO. 14024. In addition to the existing prohibitions, the Regulations add to the scope of EO 14024 for personal communication and adds exemptions for official business of the United States and the United Nations, with some general licenses authorizing certain transactions, including a general license for certain legal provisions.

In a historic departure from the country’s tradition of strict neutrality, on February 28, 2022, Switzerland announced that it would accept full EU sanctions against Russia. Russian oligarchs are widely believed to have large assets in Swiss banks, which could have serious financial implications if such assets were frozen. Monaco, which has a reputation as a tax haven for the super-rich and possibly possesses the financial assets of many Russian oligarchs, also announced on February 28, 2022, that it would enforce asset-free restrictions and economic sanctions just like the imposition. By the EU.

Foley Hoag will continue to provide updates as the situation develops. Organizations that have questions about these activities or how to ensure compliance with U.S. sanctions and export control regulations should contact a member of the Foley Hog Trade Prohibition and Export Control Practice.

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