The Russian invasion of Ukraine is continuing to prompt escalating sanctions and export controls on both sides of the Atlantic. Our team breaks down the latest measures coming out of the European Union, the United Kingdom and the United States.

On March 15, 2022, the EU formally approved the fourth package of sanctions against Russia,1 which included a broad set of new trade restrictions, including a ban on (1) investments in the Russian energy sector; (2) specific transactions with certain Russian state-owned enterprises; (3) the import of Russian-origin goods steel and iron products; and (4) the export of certain luxury goods to Russia (e.g., luxury cars, jewelry).

The EU’s latest measures come on the heels of similar — yet decidedly more stringent measures — announced by the United States and the United Kingdom last week (see recap below). The core elements of the EU’s new trade restrictions consist of the following:

Under the EU regulations, it is prohibited to (directly or indirectly) engage in any transaction with the following SOEs (including (i) any person or legal entity established outside of the EU owned (directly or indirectly) more than 50% by any of the following entities and (ii) any person or entity acting on behalf or at the direction of any of the following entities) (Restricted SOEs):

This prohibition, however, does not apply to:

The EU has prohibited the following activities in the Russian energy sector:

The prohibition allows for EU member states to authorize, subject to any conditions, activities that (a) are necessary for ensuring critical energy supply within the EU or (b) where such legal entity operating in the Russian energy sector is owned by a legal entity incorporated in the EU.

The new measures also include a ban on the rating of Russia and Russian companies by EU credit rating agencies, along with the provision of rating services to Russian clients. This measure will go into effect on April 15, 2022.

The EU also published a "Questions and Answers" offering further guidance and policy context.

The measures described above came less than a week after the EU announced a new export ban targeting the Russian maritime sector — specifically, by prohibiting the sale, supply, transfer or export, directly or indirectly, of listed maritime navigation equipment and technology2 to any person in Russia, for use in Russia, as well as any Russian-flagged vessel. The export ban also covers technical assistance, brokering services, other services, financing and financial assistance related to maritime navigation equipment and technology. Certain limited exceptions apply, including if the items are intended for maritime safety, but remain subject to authorization by the competent national authority.

The U.K. Sanction Regulations3 have imposed trade prohibitions relating to:

Pursuant to the EO, these prohibitions extend to “any approval, financing, facilitation, or guarantee by a United States person, wherever located, of a transaction by a foreign person where the transaction by that foreign person would be prohibited by” the EO.

In conjunction with the EO, the White House also issued a Fact Sheet and Guidance.

The U.S. Department of Treasury’s Office of Foreign asset Controls (OFAC) also designated new entities and individuals to its Specially Designated Nationals and Blocked Persons List (SDN List), including:

Identifying information on the listed individuals and entities described above can be found on Treasury’s website.

OFAC also redesignated Belarus’s president, Alyaksandr Lukashenka, and newly designated Lukashenka’s wife, Halina Radzivonawna Lukashenka.

Identifying information on the listed individuals and entities designated on March 15, 2022, can be found on Treasury’s website.

Per President Biden’s March 8, 2022, EO, U.S. persons are also prohibited from making new investments in “any sector” of the Russian economy, as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State.

The March 8, 2022, EO also prohibits the export, reexport, sale or supply (direct or indirect) from the United States, or by a United States person, wherever located, of the following items:

On March 11, 2022, the U.S. Commerce Department’s Bureau of Industry and Security (BIS) also announced new restrictions on the export, reexport and transfer (in country) of luxury goods to all end users in the Russia and Belarus; as well as to certain Russian and Belarusian oligarchs and malign actors located worldwide. Per the announced rule, impacted products include certain alcoholic beverages, tobacco products, carpets and textile floor coverings, personal accessories, perfumery and cosmetics, clothing items, footwear, fabrics, jewelry, machinery, vehicles, works of art and antique goods.

On March 11, 2022, OFAC issued four general licenses:

OFAC also issued new and amended FAQs.

Despite the significant sanctions and export control measures imposed thus far, U.S. and European leaders continue to face significant pressure to impose additional measures.

In the U.S., Congress is now moving on legislation to (1) revoke Russia’s MFN status (a move that, as noted above, cannot be accomplished via executive authority), (2) authorize the president to unilaterally impose or increase tariffs on Russian-origin goods and (3) impose a statutory ban on Russian-origin energy products. It is reported and we anticipate that members of Congress will continue to press the Biden administration to further expand current sanctions and export controls, particularly in relation to Russia’s energy sector.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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