Russia

February 24 witnessed the most significant expansion of sanctions against Russia since the initial stages of the war, and the Administration announced a number of multilateral initiatives aimed at enforcing these measures. The Treasury and Commerce departments imposed sanctions on over 100 Russian persons, added dozens to the Entity List1, and imposed additional export control restrictions on multiple non-controlled items with a commercial applicability, including biologics and associated equipment. They also imposed new export control restrictions targeting the Russian-Iranian trade in unmanned aerial systems. Also announced were increases in tariffs on dozens of Russian products, including aluminum. Finally, the G7 is reportedly establishing an “Enforcement Coordination Mechanism” to improve the information sharing and coordinate enforcement efforts related to individuals and entities engaged in sanctions evasion. The EU also renewed Russia sanctions during the reporting period. 

Equally as significant is the Administration’s articulated enforcement posture. On March 2, the Treasury, Commerce, and Justice departments jointly published updated guidance highlighting warning signs for sanctions and export control evasion, and encouraged the imposition of a risk-based approach to sanctions compliance. On March 9, the Russian Elites, Proxies and Oligarchs (REPO) Task force (Australia, Canada, France, Germany, Italy, Japan, the United Kingdom, the United States, and the European Commission) held a meeting in which they issued an advisory on sanctions evasion methodologies and noted the status of Russian assets owned by the Central Bank and National Wealth Fund. This was followed by the U.S. obtaining a warrant to seize an aircraft owned by Rosneft Oil Company. As noted before, the status of Russian sovereign assets is an area to watch, particularly as the U.S. criticizes the pace of enforcement with certain partners. There remain a few other areas to watch in the near-term include the following: 

• Nuclear Sanctions: Future Polish and Ukrainian officials also continued to call for international sanctions against Russia’s nuclear energy sector, which is an area to pay close attention to as a potential next step by the U.S. and other G7 members. 

• Sanctions Targeting Central Bank Digital Currencies (CBDCs): Russia’s central bank announced that it is set to soon debut the first digital ruble transactions involving 13 local banks and several merchants.  An operational CBDC may prompt a response from the U.S. and other G7 members on designating entities tied to Russia’s missile production may result in additional enforcement actions in the near future.
• Increased Sanctions on Russia’s Defense Production Base: The Government of Ukraine’s increased focus on designating entities tied to Russia’s missile production may result in additional enforcement actions in the near future.

Another area to watch, as previously noted, is the selective removal of sanctions against certain entities.  For example, OFAC recently delisted a former Kazakh subsidiary of Sberbank after it was sold to the Kazakh government-owned Baiterek bank.  The Administration and G7 will likely try to repeat sanctions removal for foreign branches of Russian banks and companies that are sold off and are no longer tied to Russia.