The United States, the European Union and the United Kingdom, along with a number of other jurisdictions, have responded to the ongoing military conflict in Ukraine by adopting new, additional and/or enhanced economic sanctions, trade restrictions and other restrictive measures targeting, in different ways, Russia, Belarus, and the so-called Donetsk People’s Republic and Luhansk People’s Republic, which Russia has purported to recognize as independent states.  Russia, in turn, has responded to these restrictive measures by adopting its own countermeasures and related regulations affecting, for example, certain dealings involving non-Russians in Russia.
Continue Reading Sanctions Developments Resulting From the Conflict in Ukraine

On 4 April 2022, the German Federal Ministry of Economic Affairs and Climate Protection (Bundesministerium für Wirtschaft und Klimaschutz – “BMWK“) seized control over Gazprom Germania GmbH (“Gazprom Germany“) by implementing measures under the German FDI rules. The decision was executed by way of a publicly issued administrative act, based on grounds of imminent danger for public order and security.
Continue Reading Germany Takes Over Control of German Gazprom Subsidiary by Using Unprecedented Measures Under Germany’s FDI Regime

On April 6, 2022, the European Commission (“EC”) issued a communication calling for greater vigilance towards foreign direct investment (“FDI”) from Russia and Belarus, and guiding Member States on how best to screen and examine these investments going forward.[1]  The EU FDI alert follows the recently adopted EU sanctions package against both countries.[2]
Continue Reading EU On Alert Towards Russian FDI

U.S. Secretary of Commerce Gina Raimondo recently expressed support for a screening regime to review outbound investments.[1]  This, as well as similar statements from the White House and the passage of legislation calling for such a process earlier this year, signals that certain outbound investments could be subject to U.S. regulatory review and approval in the near future.[2]
Continue Reading Support for “Reverse CFIUS” Outbound Investment Screening Regime Grows

On March 21, 2022, the Italian Government enacted a law-decree (“Decree”) to address the economic and humanitarian effects of the ongoing Ukraine crisis.[1]

The Decree further broadens Italy’s foreign direct investments (“FDI”) regime, by  giving the Government the permanent power to review (a) acquisitions of controlling stakes by European Economic

U.S. federal and state authorities recently announced actions that are designed to give effect to economic measures taken against Russia and hold accountable those who violate U.S. laws.  These developments suggest that U.S. authorities’ focus on enforcing U.S. sanctions and export controls, anticorruption and anti-money laundering laws, and the growing scrutiny of cryptocurrency, will continue.  They also point to further coordination and cooperation between authorities in the U.S. and other jurisdictions in investigating and prosecuting violations of their respective laws.
Continue Reading Authorities in U.S. Take Steps to Strengthen Enforcement of U.S. Measures Against Russia

On February 10, 2022, the United Kingdom published new legislation (the “Amendment”) significantly expanding the scope of targets on which the UK government may impose sanctions relating to Russia.[1]  The Amendment, which was issued in response to the current situation in Ukraine and takes immediate effect, broadens the designation criteria of the existing Russia (Sanctions) (EU Exit) Regulations 2019.[2]  Whereas the existing provisions were limited to persons directly engaged in activities relating to the “destabilisation” of Ukraine,[3] the Amendment further authorizes sanctions against:

  • any “Government of Russia-affiliated entity,” defined as entities:
    • directly or indirectly owned or controlled by the Russian government;
    • in which the Russian government directly or indirectly holds a minority interest;
    • that receive or have received financing directly or indirectly from the Russian Direct Investment Fund or the National Wealth Fund; or
    • which “otherwise obtain a financial benefit or other material benefit” from the Russian government;
  • individuals or entities carrying on business of “economic significance” (which is not further defined) to the Russian government;
  • individuals or entities carrying on business in a sector of “strategic significance” to the Russian government, defined as the Russian chemicals, construction, defence, electronics, energy, extractives, financial services, information, communications and digital technology, and transport sectors; and
  • individuals or entities that directly or indirectly own or control or work as a director (whether executive or non-executive), trustee, or equivalent of any entity in the above categories.

As before, sanctions imposed under the United Kingdom’s Russia sanctions program include an asset freeze, travel ban (for individuals), prohibition on making funds or economic resources available to or for the benefit of the designated party, and prohibition on dealing with funds or economic resources of the designated party (as well as entities owned or controlled by the designated party).

Continue Reading United Kingdom Broadens Scope of Potential Russian Sanctions Targets

U.S. sanctions policy in the first year of the Biden administration saw both change and continuity. As expected, the administration sought to cooperate with allies to impose multilateral (rather than unilateral) sanctions, focused on human rights abuses and opened the door for a new nuclear deal with Iran. At the same time, the administration continued to focus on virtual currencies and on combating illicit cyber activities relating to ransomware, and clarified (and in some respects expanded) sanctions issued under the Trump administration targeting Chinese companies deemed to be part of the Chinese military-industrial complex.
Continue Reading Economic Sanctions: Developments and Considerations

On April 15, 2021, the Biden administration issued a new executive order (the New EO) creating broad authority to impose blocking sanctions against a wide range of individuals and entities determined to be engaged in “harmful foreign activities” of the Russian Federation.[1]  In parallel with and under the authority of the New EO, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) issued a new directive (Directive 1) prohibiting U.S. financial institutions from participating in the primary market for ruble-denominated sovereign debt or from otherwise lending funds to the Russian Federation, effective June 14, 2021.[2]  (Non-ruble Russian sovereign debt and funding have been prohibited under an existing 2019 ban, described in our previous post and below.)  As part of “a new U.S. campaign against Russian malign behavior” under the New EO and existing authorities, OFAC also designated over 40 individuals and entities alleged to have attempted to influence the 2020 U.S. presidential election or to be operating in the Crimea region.[3]
Continue Reading Biden Administration Imposes New Restrictions on Russian Sovereign Debt, Authorizes Additional Sanctions

Yesterday, updated guidance from the U.S. Department of State relating to Section 232 of the Countering America’s Adversaries Through Sanctions Act of 2017 (“CAATSA”) was published in the Federal Register.[1]  The updated guidance, which became effective on July 15, 2020, expands the potential applicability of secondary sanctions pursuant to Section 232 with respect to Nord Stream 2 and the second line of TurkStream.  Any work on or financial involvement in NordStream 2 or the second line of TurkStream will now be sanctionable, even if undertaken pursuant to an existing contract.  This could affect, among other things, lending and other financing to companies (including European companies) with any connection to either project.

Continue Reading Updated Guidance for Section 232 of CAATSA Published