US Treasury announces expanded sanctions with Russian companies

US Treasury Secretary Jacob J. Lew has announced that persons operating within Russia’s defense and related materiel sector may now be subject to targeted sanctions under Executive Order 13662. He cited continued Russian efforts to destabilize eastern Ukraine in this announcement. In addition, the US Department of the Treasury has extended targeted financial sanctions to Russia’s largest bank, deepened existing sanctions on Russian financial institutions, expanded sanctions in Russia’s energy sector, and increased the number of sanctioned Russian entities in the energy and defense sectors.

The Treasury has imposed sanctions that prohibit transactions by US persons or within the United States involving new debt of greater than 30 days maturity issued by Rostec, a major Russian conglomerate that operates in the defense and related materiel sector.

Other actions that were taken by the Treasury are:

• The Treasury has added Russia’s largest bank, Sberbank of Russia, to the existing prohibitions on US persons providing equity or certain long-term debt financing.  In addition, debt financing restrictions have been tightened by reducing from 90 days to 30 days the maturity period for new debt issued by the six Russian banks subject to this restriction.  These banks are Bank of Moscow, Gazprombank OAO, Russian Agricultural Bank, Sberbank, VEB and VTB Bank.

• The Treasury has designated and blocked the assets of five Russian state-owned defense technology firms – OAO “Dolgoprudny Research Production Enterprise,” Mytishchinski Mashinostroitelny Zavod OAO, Kalinin Machine Plant JSC, Almaz-Antey GSKB, and JSC NIIP – for operating in the arms or related materiel sector in Russia.

• The Treasury has imposed sanctions that prohibit the exportation of goods, services (not including financial services), or technology in support of exploration or production for Russian deepwater, Arctic offshore or shale projects that have the potential to produce oil, to five Russian energy companies – Gazprom, Gazprom Neft, Lukoil, Surgutneftegas and Rosneft – involved in these types of projects.  This measure complements restrictions administered by the Commerce Department and is similar to new EU measures that have been published. US persons have until 26 September 2014 to wind down applicable transactions with these entities pursuant to a general license that Treasury’s Office of Foreign Assets Control that has also been issued.

• The Treasury has also imposed sanctions that prohibit transactions in, provision of financing for, or other dealings in new debt of greater than 90 days maturity issued by two additional Russian energy companies – Gazprom Neft and Transneft.

“Today’s actions demonstrate our determination to increase the costs on Russia as long as it continues to violate Ukraine’s territorial integrity and sovereignty,” said David S. Cohen, Under Secretary for Terrorism and Financial Intelligence, said. “The United States, in close cooperation with the European Union, will impose ever-increasing sanctions that further Russia’s isolation from the global financial system unless Russia abandons its current path and genuinely works toward a negotiated diplomatic resolution to the crisis.”

Despite the severity of these actions, the Treasury maintains significant scope to expand these sanctions and impose additional sanctions against individuals and entities under the authorities of Executive Orders (E.O.) 13660, 13661 and 13662 if the Russian Government does not take steps to de-escalate the situation in Ukraine.

For identifying information on the entities named in this release, please click here

For links to the Directives referenced in this release, please click here