The Department of the Treasury’s Office of Foreign Assets Control yesterday designated and identified 34 new individuals and entities under four executive orders related to Russia and Ukraine. The updated sanctions list also provides several new lessons for compliance officers.

Among the new sanctioned individuals entities include:

14 individuals and entities linked to those that have engaged in serious and sustained evasion of existing sanctions or are 50 percent or more owned by a designated entity;

Six separatists designated for threatening the security or stability of Ukraine;

Two former Ukrainian government officials for being complicit in the misappropriation of public assets and/or threatening the security or stability of Ukraine; and

12 entities for operating in the Crimea region of Ukraine. 

OFAC also identified a number of subsidiaries that are owned 50 percent or more by the previously-designated VTB Bank, Sberbank, and Rostec.

Treasury said the sanctions “will not begin to be rolled back until Russia fully implements its commitments under the Minsk Agreements, including the return to Ukraine of control of its side of the international border with Russia.” A number of these designated individuals and entities also previously have been designated by the European Union, underscoring continued trans-Atlantic unity in responding to Russia’s actions in Ukraine.

Compliance Lessons

“The designations and identifications sent an equally clear message to U.S. and international businesses: OFAC will facilitate compliance with these sanctions, but do not anticipate a lifting of the Crimea embargo in the near future,” Jeremy Paner, of counsel with law firm Holland & Knight, said in a client alert.

The Treasury’s actions also signal that OFAC will assist compliance efforts by maintaining alignment with sanctions imposed by the EU, Paner added. “Although there are notable differences between the sanctions regimes, including the European imposition of restrictive measures as a matter of law on entities controlled by listed persons, compliance efforts by international businesses are greatly simplified when the U.S. and EU lists are in harmony.”

OFAC’s identification of several subsidiaries of VTB Bank, Sberbank, and Rostec also “demonstrates the agency’s desire to aid compliance efforts,” Paner said.

Prior to their inclusion on the Sectoral Sanctions Identification (SSI) List, financing restrictions were placed on these entities as a matter of law under the 50 percent rule. According to OFAC guidance issued last year, “any entity owned in the aggregate, directly or indirectly, 50 percent or more by one or more blocked persons is itself considered to be a blocked person.”

The placement of VTB Bank, Sberbank, and Rostec subsidiaries on the list “clarifies any possible ambiguity regarding their ownership,” Paner said.

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