On February 22, 2022, the US Government issued a number of additional sanctions measures against Russia in response to President Putin’s recognition of the independence of the “so-called Donetsk People’s Republic (DNR) and Luhansk People’s Republic in Ukraine (LNR)” and his request to deploy forces to those regions – with President Biden characterizing these developments as “the beginning of a Russian invasion of Ukraine.”  The new US sanctions measures build on the comprehensive region-wide sanctions imposed on the two territories of DNR and LNR on February 21, 2022, as reported in our prior blog here.  While these latest measures are still quite targeted, the White House Fact Sheet issued concurrent with these developments characterized these additional sanctions as the “first tranche” of sanctions, indicating that additional sanctions against Russia will be forthcoming “if Russia escalates”. 

The latest measures include:

  • the issuance of an amended Russia-related Directive 1A (“Directive 1A”) expanding restrictions on Russian sovereign debt under the April 2021 Executive Order 14024 (Prohibitions Related to Certain Sovereign Debt of the Russian Federation) (“EO 14024”) to include participation in secondary markets;
  • the blocking and addition of several parties, including two key Russian state-owned banks and their affiliates, as well as what the US Treasury Department characterized in a press release as “influential Russians and their family members in Putin’s inner circle,” to the Specially Designated Nationals and Blocked Persons List (“SDN List”) maintained by the US Treasury Department’s Office of Foreign Assets Control (“OFAC”);
  • the addition of three Russian government instrumentalities to the Non-SDN Menu-Based Sanctions List (“NS-List”); and
  • the addition of two additional new Frequently Asked Questions (“FAQs”) and updates to previously published FAQs.

Russia-Related Directive 1A and Additions to the NS-List

Executive Order 14024 and Directive 1 were previously issued on April 15, 2021, prohibiting certain dealings involving Russian sovereign debt.  Our blog post on these previous developments is available here. The amended Directive 1A replaces and supersedes Directive 1 in order to prevent Russia from raising funds or trading on US primary or secondary markets, and prohibits US financial institutions from:

  1. as of June 14, 2021, participating in the primary market for ruble or non-ruble denominated bonds issued after June 14, 2021 by the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation (“Directive 1A Entities”);
  2. as of June 14, 2021, lending ruble or non-ruble denominated funds to the Directive 1A Entities; and
  3. as of March 1, 2022, participating in the secondary market for ruble or non-ruble denominated bonds issued after March 1, 2022 by Directive 1A Entities. 

“US financial institution” is broadly defined to include, among other things, securities brokers and dealers, foreign exchange merchants, clearing corporations, investment companies and employee benefit plans, amongst others, including their US holding, affiliate or subsidiary companies.  

OFAC added the Directive 1A Entities to the NS-List, which identifies persons subject to certain non-blocking menu-based sanctions.  Importantly, as clarified by OFAC FAQ 891, the restrictions on Directive 1A Entities do not flow down to entities that are 50% or more owned by Directive 1A Entities. 

Additions to the SDN List and Issuance of General Licenses

OFAC also added a number of individuals, entities, and vessels to the SDN List, a full list of which is available here

Importantly, two major Russian state-owned financial institutions (State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (“VEB Bank”) and Promsvyazbank Public Joint Stock Company (“PSB”)) along with multiple affiliates were added to the SDN List. VEB Bank was previously subject to more limited new debt/equity restrictions under Directive 1‘s sectoral sanctions targeting Russia and PSB was sanctioned by the United Kingdom earlier in the day (see here).  The White House Fact Sheet explains that the US Government sanctioned such entities in particular because they are crucial to financing the Russian defense sector and economic development. 

OFAC also designated as SDNs several “Russian elites, their family members” and other persons under pre-existing sanctions authorities, including the cyber-related sanctions, WMD non-proliferation sanctions, electoral interference sanctions, and the Ukraine-related sanctions.

As a result of these designations, US Persons (i.e., entities incorporated under US laws and their non-US branches; parties physically located in the United States; US citizens and permanent resident aliens wherever located or employed) are generally prohibited from dealing directly or indirectly with SDNs, entities that are owned 50% or more by one or more SDNs, and their property or property interests.  Non-US persons can be held liable for causing violations by US Persons involving SDNs and can also be subject to secondary sanctions risks (which would include, in particular, the risk of designation as an SDN themselves) for providing “material support” to SDNs.

Concurrent with the additions to the SDN List, OFAC issued two General Licenses:

  • General License No. 2 authorizes transactions otherwise now prohibited by EO 14024 involving VEB Bank or any entity owned 50% or more by VEB Bank (collectively “VEB Entities”) that are ordinarily incident and necessary to the servicing of Russian bonds issued before March 1, 2022 by Directive 1A Entities.  This general license does not authorize any transaction prohibited by Directive 1A or any transactions involving SDNs blocked pursuant to EO 14024 other than VEB Entities.
  • General License No. 3 is a one-month wind-down authorization for all transactions now prohibited by EO 14024 that are ordinarily incident and necessary to the wind down of other transactions involving VEB Entities prior to March 24, 2022. No reporting is required unlike with prior wind-down general licenses.

OFAC also published a determination that the financial services sector of the Russian economy may be targeted under Executive Order 14024.  This will facilitate OFAC’s future efforts to impose sanctions on parties in that sector.  The technology sector and defense and related materiel sector of the Russian economy are already subject to similar determinations under Executive Order 14024.

Newly Issued and Updated FAQs

Lastly, OFAC published two new FAQs.  OFAC FAQ 964 clarifies, among other things, that EO 14024 does not designate all banks in the Russian financial sector as SDN, only those that OFAC specifically designates or are 50% or more owned by SDNs.

OFAC FAQ 965 clarifies the scope and target of Directive 1A. 

OFAC also updated existing FAQs 678, 888, 889, 890 and 891 to conform with these developments.

We anticipate further developments in the coming days and will continue our reports.


Ms Stafford Powell advises on all aspects of outbound trade compliance, including compliance planning, risk assessments, licensing, regulatory interpretations, voluntary disclosures, enforcement actions, internal investigations and audits, mergers and acquisitions and other cross-border activities. She develops compliance training, codes of conduct, compliance procedures and policies. She has particular experience in the financial services, technology/IT services, travel/hospitality, telecommunications, and manufacturing sectors.


Alex advises clients on compliance with US export controls, trade and economic sanctions, export controls (Export Administration Regulations (EAR); International Traffic in Arms Regulations (ITAR)) and antiboycott controls. He counsels on and prepares filings to submit to the US Government's Committee on Foreign Investment in the United States (CFIUS) with respect to the acquisition of US enterprises by non-US interests. Moreover, Alex advises US and non-US companies in the context of licensing, enforcement actions, internal investigations, compliance audits, mergers and acquisitions and other cross-border transactions, and the design, implementation, and administration of compliance programs. He has negotiated enforcement settlements related to both US sanctions and the EAR.


Meg's practice involves assisting multinational companies with export compliance related matters, specifically trade sanctions and export control classifications. Additionally, she assists companies with respect to customs laws, anti-boycott laws and other trade regulation issues in the US and abroad. She also helps obtain authorizations from the US government for activities subject to sanctions regulations and US export control regulations, including the Export Administration Regulations and the International Traffic in Arms Regulations. Meg's practice extends to assistance in internal compliance reviews as well as enforcement actions and disclosures necessitated by US government action.


Taylor Parker is an associate at Baker McKenzie's Chicago office and a member of the International Commercial group. Taylor leverages her background in governmental affairs, public health and the private business sector to provide global clients with coordinated solutions to international transactions and issues. Taylor advises clients on various international commercial matters, including domestic and cross-border mergers and acquisitions, economic and trade sanctions, export controls, and customs and import laws.