New U.S. Sanctions on Russia Mark the Two-Year Anniversary of Its Ukraine Invasion

March 8, 2024
Mark Thurber

Responding to both the two-year anniversary of Russia’s invasion of Ukraine and the February 16, 2024, death of Russian opposition leader Aleksei Navalny, the United States on February 23, 2024, imposed new sanctions and export control designations on Russia.

The over 500 new sanctions against Russia targets individuals associated with Navalny’s imprisonment, as well as Russia’s financial sector, defense industrial base, procurement networks, and sanctions evaders across multiple continents. The new export restrictions target approximately 100 entities that provided “backdoor support for Russia’s war machine.”

These latest U.S. sanctions follow the sanctions issued by the EU and the U.K. the day before targeting, among others, companies within Russia’s energy, metals, diamond, and weapons industries, and Russian individuals reportedly linked to the deportation of Ukrainian children.


Overview of new OFAC & State Department sanctions

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the U.S. Department of State added 500 parties to OFAC’s Specially Designated Nationals and Blocked Persons (SDN) List, in accordance with Executive Order 14024.

These sanctions take aim at hundreds of companies with connections to Russia’s military-industrial base, parties involved in supporting Russian future energy revenue sources, parties supporting Russia’s financial infrastructure, and over two dozen third-country sanctions evaders in East Asia, Central Asia, Europe, and the Middle East.

OFAC’s sanctions target several key categories, including:

  • Entities that make up Russia’s financial infrastructure, including NSPK, the state-owned operator of Russia’s Mir National Payment System; regional financial institutions; investment and venture capital funds that seek to underwrite Russia’s development of advanced and next-generation technology and industry, and which inject domestic and foreign investment into Russian companies; and six financial technology companies providing software and IT solutions for Russian financial institutions;
  • Sanctions evasion, circumvention, and backfill, including companies across the world that facilitate, orchestrate, engage in, and otherwise support the transfer of critical technology and equipment to Russia’s military-industrial base;
  • Entities that contribute to Russia’s military-industrial base, including Russian entities involved in weapons production; additive manufacturing; production of machine tools and other manufacturing and metalworking equipment; semiconductor and electronics manufacturing; military-industrial base information technology and energy storage and supply; logistics; and Russia’s aerospace sector;
  • Entities involved in financing, constructing, and developing energy projects, like the Arctic LNG 2 project;
  • Entities involved in the piping and mining industries, including gold mining and aluminum production companies; and
  • Government officials who were deemed responsible for Navalny’s death while in Russian custody.

The State Department also began to impose visa restrictions on authorities involved in the transfer, deportation, and confinement of Ukraine’s children.


Overview of new BIS actions

Additionally, the Commerce Department’s Bureau of Industry and Security (BIS) imposed additional export restrictions on 93 entities, adding them to its Entity List. Those entities are in several countries, including Russia, China, Turkey, United Arab Emirates, India, and South Korea. The entities were added to the Entity List for their activities supporting “Russia’s defense-industrial sector and war effort.” Over 50 of the entities will be designated as Russian-Belarusian military end users, which will subject them to severe restrictions under the Export Administration Regulations (EAR).


The continued risks of doing business in Russia

Finally, the U.S. Department of State, the U.S. Department of the Treasury, the U.S. Department of Commerce, and the U.S. Department of Labor issued a joint business advisory in connection with these new sanctions. The advisory highlighted three categories of risks for businesses and individuals regarding Russia and its invasion and occupation of Ukraine:

  1. The risk of businesses and individuals becoming exposed to sanctions, export controls, import prohibitions, money laundering vulnerabilities, and corruption;
  2. The risk of businesses and individuals being implicated in the Russian government’s violations of international law, including war crimes and crimes against humanity, and human rights abuses; and
  3. The risk to businesses and individuals of Russia’s repressive laws, including measures authorizing expropriation in certain instances or detentions based on questionable grounds.

The advisory urged individuals and entities to undertake “rigorous” and “heightened” due diligence to both determine whether their activities in Russia or links to Russian parties subject them to the above risks, and to attempt to mitigate these risks, though substantial risk is likely to remain for the foreseeable future.

Perhaps now more than ever before, individuals and entities with business affairs in Russia or with Russian entities, or that are contemplating engaging in such affairs, should invest significant time and resources assessing the legal, financial, business, and reputational risks that come with those activities, and determining whether taking those risks can be justified by the expected business and financial gains from those activities. In particular, companies owned by U.S. private persons, or entities based elsewhere or having jurisdictional ties to countries where similar restrictions have been imposed, such as the EU and the UK, should be even more cognizant of their enhanced legal obligations. The standard of risk assessment and mitigation associated with the latest round of sanctions has clearly increased over previous levels, and the range of affected entities dealing with the sanctions has been broadened.