On March 11, 2015, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed new Ukraine-related targeted sanctions on several Russian and Ukrainian individuals and entities in response to Russian violations of the ceasefire brokered in February 2015 between the parties associated with separatist violence in Ukraine. The newest measures add 14 specific individuals and two entities to OFAC’s list of Specially Designated Nationals (SDN). The list of newly-designated individuals includes several Ukrainian separatists, and the list of newly-designated entities includes the Russian National Commercial Bank, a Russian bank operating in the Crimea region of Ukraine.
1) Description of the New Sanctions
The new U.S. sanctions block the property of 16 specially designated individuals and entities. Such designated individuals and entities have been added to the OFAC SDN List. U.S. persons are prohibited from engaging in all transactions, including donating, contributing, providing, or receiving funds, goods, or services by, to, from, or for the benefit of any designated person. Furthermore, the new measures suspend entry of any designated persons into the United States.
The measures apply to “U.S. persons,” meaning U.S. citizens and U.S. permanent residents (wherever located), any entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), and any person in the United States. “U.S. person” for purposes of the Ukraine-related Sanctions does not include non-U.S. subsidiaries of U.S. companies.
The complete list of the newly added SDNs is available at the following link: http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20150311.aspx.
2) How to Comply with the New Measures
Anyone who may be subject to U.S. law should assess, in conjunction with counsel, their existing and proposed international transactions to determine whether they are permissible under U.S. sanctions and export control measures. They may also review and consider enhancing commercial contract terms to provide expressly for termination without penalty if economic sanctions would prohibit performance of the contract. This may help to protect the individual or company doing business with Russian or Ukrainian entities or individuals from contractual claims by a counterparty if one party ceases performance of the contract due to restrictions dictated by economic sanctions.