Following Russia’s recognition of the Donetsk and Luhansk regions as independent, the United States and the United Kingdom moved quickly to impose further sanctions on Russia in reaction to its alleged worsening of the continuing situation along the Russia-Ukraine border:
- On February 21, 2022, the United States issued an Executive Order barring a wide range of transactions relating to the Donetsk and Luhansk Regions and permitting the United States to impose further penalties on those individuals determined to be operating in either region;
- The UK added five Russian banks and three Russian businessmen (Boris Rotenberg, Igor Arkadyevich Rotenberg, and Gennady Timchenko) to its asset freeze list on February 22, 2022.
In reaction to the new developments, the EU has proposed a package of measures, which should be formally agreed upon in the coming days.
Executive Decisions on the Donetsk and Luhansk Regions of the USA
President Biden signed an Executive Order (EO) on February 21, 2022, prohibiting a wide range of transactions related to the Donetsk and Luhansk Regions (the Covered Regions) and authorizing the United States to impose additional sanctions on certain persons determined to be operating in either region.
In line with this move, the US Department of Treasury granted six general licenses, including a brief wind-down period until 12:01 a.m. EDT on March 23, 2022, that enables some previously forbidden operations.
The Executive Order
The following transactions are prohibited under the EO:
- New investment by a US person2 in the Covered Regions (or any other location identified by the Secretary of the Treasury in conjunction with the Secretary of State), wherever situated;
- The direct or indirect importation of any goods, services, or technology from the Covered Regions into the United States;
- Any approval, funding, facilitation, or guarantee of a transaction by a foreign person would be forbidden by the EO if conducted by a US person, regardless of location.
This EO, like other sanctions EOs, also bans transactions that dodge or avoid, have the intent to evade or avoid, cause a violation of, or seek to violate any of the EO’s prohibitions, including any conspiracy to violate any of the prohibitions.
The EO also allows for the seizure of any person’s property or interests in the property who is found to be:
- To be operating, or to have been operating, in any of the Covered Regions since 21 February 2022;
- To be a leader, official, senior executive officer, or member of the board of directors of a company doing business in the Covered Regions;
- To have substantially helped, sponsored, or provided financial, material, or technological assistance for, or products or services to or in support of, any individual whose property and interests in property have been blocked in accordance with the EO.
This EO, like most blocking EOs, empowers the US Department of State to deny visas to people whose property and interests in property are banned as a result of the EO.
On the same day, the Department of the Treasury granted six general licenses permitting transactions that would otherwise be forbidden under the new EO. The following limited authorizations are included in the general licenses:
- Winding down of now-prohibited operations until 12:01 a.m. EDT on March 23, 2022; exports or reexports of agricultural commodities, food, medicine, and medical equipment, as well as certain COVID-19 transactions;
- Transactions involving the reception or delivery of telecommunications and mail;
- Processing of noncommercial, personal remittances and management of personal accounts;
- Exports of certain services and software associated with internet-based communications.