February 28, 2022

Russian Sanctions/Export Controls Update: Extraordinary Measures

A full week has passed since Russia formally recognized the so-called Donetsk People’s Republic (DNR) and Luhansk People’s Republic (LNR) regions of Ukraine, ultimately leading to its ongoing military invasion of Ukraine. During that time, the U.S. — in close coordination with its western allies — has imposed a series of escalating sanctions and export control measures, including:

However, the most dramatic measures (at least to date) have come over the last few days, as the U.S. — joined by Canada, the European Union and the United Kingdom — took the extraordinary steps of (1) imposing sanctions on a head of state (President Vladimir Putin); and (2) announcing their commitment to removing certain Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) and imposing sanctions on Russia’s Central Bank. As to the latter, on February 28, 2022, the U.S. announced that all U.S. persons are prohibited from engaging in transactions with the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation and the Ministry of Finance of the Russian Federation, a move that, according to the Biden administration, “effectively immobilizes any assets of the Central Bank of the Russian Federation held in the United States or by U.S. persons.”

 Below is a breakdown of the latest developments.

Blocking Sanctions

  • Individuals: On February 25, 2022, OFAC made the “exceedingly rare” move of designating the Russian head of state, President Vladimir Putin, to its Specially Designated Nationals and Blocked Persons List (SDN List). OFAC has also added to the SDN List Sergei Lavrov, Russia’s Minister of Foreign Affairs and a permanent member of Russia’s Security Council; Sergei Shoigu, Russia’s Minister of Defense; Valery Gerasimov, Russian General of the Army; and Kirill Dmitriev, CEO of the Russian Direct Investment Fund (RDIF) and the Joint Stock Company Management Company of the Russian Direct Investment Fund (JSC RDIF).
  • Entities: OFAC also added to the SDN the following entities deemed “critical to managing one of Russia’s key sovereign wealth funds”:
    • The Russian Direct Investment Fund (RDIF). According to OFAC, RDIF operates in a number of industries, including insurance and financial services.
    • Joint Stock Company Management Company of the Russian Direct Investment Fund (JSC RDIF). According to OFAC, JSC RDIF is RDIF’s management company.
    • Limited Liability Company RVC Management Company (LLC RVC), which, according to OFAC, is a subsidiary of JSC RDIF and operates in deposit banking, management of investment funds, unit investment trusts, insurance and private pension funds.

Identifying information for the blocking sanctions listed above can be found on the U.S. Treasury website.

Similar measures were also imposed by Canada, the EU, and the U.K.

Non-SDN Menu-Based Sanctions List (NS-MBS)

Aside from the blocking sanctions described above, OFAC also issued a new directive that prohibits any U.S. person, unless licensed or otherwise authorized by OFAC, from engaging in “any transaction” involving Russia’s Central Bank, National Wealth Fund, or Ministry of Finance, “including any transfer of assets to such entities or any foreign exchange transaction for or on behalf of such entities. any transaction involving [such entities].” Per the directive, also prohibited is “(1) any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions of” the directive” and “(2) any conspiracy formed to violate” the directive.

According to OFAC, these measures are intended to limit Russia from making transactions with foreign exchange reserves, potentially imposing devastating consequences for the value of the ruble (which has fallen in value by more than 30 percent against the dollar over the past week).


On February 26, 2022, the European Commission, France, Germany, Italy, the United Kingdom, Canada and the United States issued a joint statement pledging their collective commitment to “ensuring that selected Russian banks are removed from the SWIFT messaging system.”

The SWIFT network consists of approximately 11,000 banks across the world and is used to facilitate cross-border payments. As described by the Biden administration, a “de-SWIFTed” Russian financial institution will be forced to use non-digital means (e.g., the telephone or a fax machine) to make or receive a payment with a bank outside of Russia. Given these barriers, the intended practical effect of SWIFT removal — in the eyes of the U.S. and its western allies — is that global financial institutions will cease all transacting with “de-SWIFTed” Russian banks. As has been reported over the past few weeks, the potential collateral impact of effectively excluding Russian financial institutions from the global markets via “de-SWIFTing” measures — particularly on the EU — rendered this measure as being a possible only in the most extraordinary of circumstances.   

According to recent reporting, the process of identifying the list of banks that will be cut off from the SWIFT system is still underway; however, according to a Biden administration official during a recent press call, the Russian banks that have been targeted for new international sanctions over the past week “will be the first ones considered.” Because SWIFT is under Belgian jurisdiction, the list of “de-SWIFTED” banks will be finalized by the EU. 

For More Information

In the coming days, more details will be released related to SWIFT and other measures that have been (or will be) taken. In the U.S., Treasury issued abbreviated regulations that it intends to supplement with more comprehensive regulations in the days ahead, including additional interpretive guidance and definitions, general licenses, and other regulatory provisions. As we’ve reported earlier, while the vast majority of the new sanctions are aimed at Russia’s financial services sector, sanctions targeting Russia’s oil and natural gas industry still remain on the table in the event of continued escalation. 

Please note that we will continue to closely monitor this situation and provide timely updates, as warranted. In the meantime, please do not hesitate to reach out to a member of the Faegre Drinker Customs and International Trade Team if you have any questions.

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