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United States and Europe Ramp Up Sanctions Against Russia and Target Sberbank, Alfa Bank and “New Investments”

On April 6, 2022, the United States and Europe announced new sanctions on Russian banks – Sberbank, the largest bank in Russia, and Alfa Bank, another large financial institution.  The new Executive Order imposes full blocking restrictions on the two banks.

Sanctions were also imposed against additional Russian government officials, security officials. oligarchs and their family members. The new sanctions designated Russian President Putin’s two daughters.

Significantly, the expanded sanctions also include a total block on “new investments” in Russia by U.S. Persons.  The Executive Order does not define the term “new investments.”

Sberbank controls one-third of all bank assets in Russia.  Alfa Bank is Russia’s largest private bank, and Russia’s fourth largest bank. 

As a possible indication of future sanctions, the new Executive Order permits expansion of authority to impose sanctions against “any category of services” as determined by the U.S. Department of Treasury.  The intent behind a prohibition against new investments is to constrict Russia’s private sector.

OFAC’s Specially Designated Nationals List increased by 18 individuals, 50 entities and five vessels.  OFAC also issued new General Licenses 8B, 9B, 10B, 21, 22 and 23.  These licenses allow interactions with Russian banks  for the purposes of energy transactions until June 24, 2022, as well as financial transactions with Sberbank.

The new sanctions expand the prohibition against Sberbank from handling dollar transactions for U.S. Persons to “any transaction in any currency with” any U.S. Person.

The new sanctions against Sberbank include its 42 subsidiaries, and Alf Bank and its six subsidiaries.  The Alfa Bank prohibition extends to five vessels owned by Alfa Bank.

In addition to the designation of President Putin’s two daughters, the new Executive Order includes the wife and daughter of Russian Foreign Minister Sergey Lavrov.

The new sanctions also include members of the Russia’s Security Council, which is responsible for Russia’s foreign policy, injcluing its war against Ukraine. These members include: Defense Minister Sergey Shoigu, Chief of the General Staff of the Russian Armed Forces Valery Gerasimov, Federal Security Service (FSB) Director Alexander Bortnikov, Special Presidential Representative for Environmental Protection, Ecology, and Transport Sergei Ivanov, Federation Council secretary Nikolai Patrushev, National Guard commander-in-chief Viktor Zolotov, and State Duma deputy Vyacheslav Volodin.

Many of these individuals were also sanctionsed by other countries, including Canada, the European Union (EU), Japan, New Zealand, Australia, and the United Kingdom (UK).

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