Sanctions Watch

Roundup: May 1 - May 15, 2022

May 19, 2022

Expect a continuing buildout on Russia sanctions and additional North Korea sanctions that may implicate China or other entities. While sanctions and related provisions have not been included in the Ukraine supplemental package, Congress has passed multiple Ukraine-related sanctions bills since May 1, indicating prospective medium-term congressional action. The Senate’s USICA votes on Iran may also signal increasing tension over Iran terrorism sanctions.


At the end of May, the U.S. permitted Russia to make payments on its bonds in dollars under a Treasury General License authorizing the continuation and wind down of such payments after imposing sanctions that could prevent such payments and force a Russian default.  Russia’s ability to make future payments on their bonds is now in doubt as the Administration is considering whether to continue the General License noted above. See our Sanctions Watch on Russia’s General Licenses for more details. 

On May 8, the Biden Administration expanded U.S. sanctions to target accounting, business and consulting services, and impose additional export controls on goods and services.  They imposed additional sanctions against Russian banking officials, television stations, ships and other entities.  The Department of Commerce also signaled its intent to continue to expand export control restrictions after expanding the list of controlled items to low-technology goods and inputs on May 8th.  See Sanctions Watch on Russia’s General Licenses for more information.    

Given that Western ship insurers are pulling their coverage for the Russian shipping company Sovcomflot, expect the Administration to take further action against Russia’s maritime assets to include either an expansion of sanctionable conduct or additional sanctions designations. 

The Administration continues to engage in significant seizures of property belonging to Russian oligarchs and kleptocrats, including the $300 million yacht belonging to sanctioned Russian oligarch Suleiman Kerimov in Fiji on May 5th.  While the Administration’s request for additional authorities targeting sanctions evasion networks was not included in the Ukraine supplemental appropriations legislation, the Treasury Department was given an additional $52 million and the Department of Justice another $67 million for targeting these networks.

North Korea

During a UN Security Council meeting earlier this month, the U.S. ambassador to the United Nations called for tightening sanctions against North Korea for its missile proliferation activities.  Concurrently, Treasury has been increasing the pressure on North Korea’s virtual currency-related activities, principally by designating the virtual currency mixer (Blender) which Treasury alleged  is used by the North Korean government to support malicious cyber activities and laundering of stolen virtual currency. According to OFAC, Blender was used in processing millions in proceeds gained by Lazarus Group, and it was the first time that the Administration had designated a virtual currency mixer for sanctions.  Rumors of a North Korean nuclear test with President Biden’s visit to Asia this week could lead to an increased Administration focus on targeting North Korean networks, which in turn could implicate Chinese companies.  

Senate leadership has stated its intent to begin to conclude the USICA conference by May 25th, and many of the sanctions-related provisions—from targeting human rights violators to unfair Chinese trade practices—remain open.   The first week in May, the Senate took sanctions-related votes as noted in {LINK TO PRIOR SANCTIONS ROUNDUP} with the Motion to Instruct (MTI) authored by Sen. Lankford passing 62-33. An MTI is a proposal to instruct conferees of a conference committee to take a certain position but is non-binding. The MTI requires that any deal with Iran address Iran’s development of nuclear weapons, and other destabilizing activities, and prohibits lifting sanctions on the Islamic Revolutionary Guard Corps. (IRGC) or removing their designation as a foreign terrorist organization,.  Another MTI authored by Sen. Cruz requiring a report identifying links between China and Iran and to limit cooperation through terrorism-related sanctions imposed on the Central Bank of Iran and the IRGC passed 86-12.  Any attempt by the Administration to weaken the application of terrorism sanctions on Iran’s IRGC will likely be met with significant, bipartisan resistance.  


While the Ukraine supplemental package is likely to pass on May 19th, the Administration may return to Congress in the late Summer or early Fall with another supplemental request, based on the prior rate of the expenditure of funds.  Additional sanctions provisions or additional authorities targeting sanctions evasion networks noted above, could be attached to such a measure.  Also, additional resource requests may begin to strain the bipartisan consensus surrounding Ukraine.  

On May 11, the House passed the following House Financial Services Committee bills: 

  • HR 7081, the Ukraine Comprehensive Debt Payment Relief Act of 2022 (instructing U.S. representatives to international financial institutions to support Ukraine sanctions relief), by a vote of 362-56.
  • HR 6891, the Isolate Russian Governments Officials Act of 2022 (attempting to exclude Russian officials from certain international meetings, including the activities of the Group of 20, the Basel Committee for Banking Standards, and the Bank for International Settlements), passed by a vote of 416-2.
  • HR 6899, the Russia and Belarus SDR Exchange Prohibition Act of 2022 (prohibiting the Department of the Treasury from engaging in any transaction involving the exchange of Special Drawing Rights (SDRs) held by Russia or Belarus and requires Treasury to take actions to oppose financial assistance to Russia or Belarus), passed by a vote of 417-2.   

Finally, of particular note, Sen. Bill Hagerty led a letter to the U.S. Department of the Treasury along with Senators Thom Tillis (R-NC), Steve Daines (R-MT), Cynthia Lummis (R-WY), Tim Scott (R-SC), and Mike Rounds (R-SD) calling on the Biden Administration to extend sanctions or related restrictions to Russia’s National Credit Payment System.  

The Biden Administration will likely continue to expand the range of sanctionable and/or prohibited conduct into new areas, and gradually integrate more EAR99 products into its export control regime.  Congress will likely take additional votes on limited Russia sanctions measures, but a comprehensive Russia sanctions bill is unlikely in the near-term.  China and Iran could emerge as contentious sanctions-related issues in the near to medium term.