Companies will need to account for this change when implementing sanctions compliance programs. Recordkeeping policies should be updated to ensure that companies keep ten years’ worth of transactional and compliance data to navigate future enforcement cases. Although the Act did not explicitly change recordkeeping requirements in the law, in practice companies are wise to change internal recordkeeping because regulators can now ask about compliance going back ten years. Internal investigations and voluntary self-disclosures will need to expand to review ten years of compliance as a best practice to cover the broader statute of limitations. Given already significant costs for internal investigations looking back five years, the new ten-year statute of limitations may change the calculus for conducting and scoping internal reviews. Additionally, in the mergers and acquisitions context, acquirers will need to expand due diligence to look back further in time, and seek representations and warranties that account for the longer statute of limitations.

It remains to be seen whether a similar expansion of the statute of limitations is forthcoming under export controls, including the Export Administration Regulations, to align with the Act’s changes. Many companies treat export and sanctions compliance under the same policies and procedures based on significant overlap between compliance with such laws. As a result, companies implementing changes to their sanctions compliance practices to account for the Act may also want to consider extending such changes to export controls compliance as well.

Please contact our sanctions compliance team for any further questions.

Dual Use Export Controls

The UK updated its dual use export control regulations to remove Russia as a permitted destination from open general export licenses, including licenses involving the export of chemicals, cryptographic development, and oil and gas exploration. The UK has also suspended approval of new export licenses for exports of dual-use items to Russia. The moves align the UK’s approach with the broad dual use export control restrictions imposed by the United States, EU, and other allies in recent days.

Sanctions: Asset Freezes & Financial Restrictions

Matching sanctions imposed by other countries, the UK imposed asset freeze restrictions on the Russian Direct Investment Fund, its CEO, Kirill Alexandrovich Dmitriev, VEB.RF, Bank Otkritie, and Sovcombank in Russia. The UK also imposed sanctions on JSC 558 Aircraft Repair Plant and JSC Integral in Belarus and four Belarusian individuals. All accounts, and other funds or economic resources, and any funds owned or controlled by designated individuals and entities in the UK must be frozen and UK persons must refrain from dealing with frozen funds or assets unless authorized. As with U.S. blocking restrictions, reporting and anti-circumvention requirements apply.

The UK also imposed financial and investment restrictions on PJSC Sberbank limiting, among other things, the ability of UK credit or financial institutions to process sterling payments involving Sberbank.

The latest UK sanctions can be found here, here, here, and here.

The White House separately announced yesterday that the Russian Direct Investment Fund (RDIF) would be subject to full U.S. blocking sanctions. The RDIF operates as a sovereign wealth fund and holds stakes in an array of businesses in Russia.

The sanctions landscape continues to rapidly evolve. Companies with exposure to the Russian market should continue to monitor these developments.

Feb. 27, 2022 Update: Japan will also adopt these measures.

The full joint statement is below the break.

Joint Statement on further restrictive economic measures

This past week, alongside our diplomatic efforts and collective work to defend our own borders and to assist the Ukrainian government and people in their fight, we, as well as our other allies and partners around the world, imposed severe measures on key Russian institutions and banks, and on the architects of this war, including Russian President Vladimir Putin.

As Russian forces unleash their assault on Kyiv and other Ukrainian cities, we are resolved to continue imposing costs on Russia that will further isolate Russia from the international financial system and our economies. We will implement these measures within the coming days.

Specifically, we commit to undertake the following measures:

First, we commit to ensuring that selected Russian banks are removed from the SWIFT messaging system. This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally.

Second, we commit to imposing restrictive measures that will prevent the Russian Central Bank from deploying its international reserves in ways that undermine the impact of our sanctions.

Third, we commit to acting against the people and entities who facilitate the war in Ukraine and the harmful activities of the Russian government. Specifically, we commit to taking measures to limit the sale of citizenship—so called golden passports—that let wealthy Russians connected to the Russian government become citizens of our countries and gain access to our financial systems.

Fourth, we commit to launching this coming week a transatlantic task force that will ensure the effective implementation of our financial sanctions by identifying and freezing the assets of sanctioned individuals and companies that exist within our jurisdictions. As a part of this effort we are committed to employing sanctions and other financial and enforcement measures on additional Russian officials and elites close to the Russian government, as well as their families, and their enablers to identify and freeze the assets they hold in our jurisdictions. We will also engage other governments and work to detect and disrupt the movement of ill-gotten gains, and to deny these individuals the ability to hide their assets in jurisdictions across the world.

Finally, we will step up or coordination against disinformation and other forms of hybrid warfare.

We stand with the Ukrainian people in this dark hour. Even beyond the measures we are announcing today, we are prepared to take further measures to hold Russia to account for its attack on Ukraine.

Pursuant to Executive Order 13959, as amended by E.O. 14032, the Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned eight additional Chinese companies for operating as part of the Chinese Military-Industrial Complex (CMIC) and supporting human rights abuses against the Uyghur population in Xinjiang under China’s biometric surveillance apparatus. The Commerce Department’s Bureau of Industry (BIS) imposed corresponding Entity List sanctions on 34 parties in China and six companies in other countries.

The following Chinese technology companies were added to OFAC’s “Non-SDN Chinese Military-Industrial Complex Companies List” (“NS-CMIC List”):

• Cloudwalk Technology Co., Ltd.;
• Dawning Information Industry Co., Ltd.;
• Leon Technology Company Limited;
• Megvii Technology Limited;
• Netposa Technologies Limited;
• SZ DJI Technology Co., Ltd.;
• Xiamen Meiya Pico Information Co., Ltd.; and
• Yitu Limited.

The NS-CMIC sanctions restrict the ability of U.S. persons to purchase or sell publicly traded securities or derivatives in the above entities. Note that the 50 percent rule does not apply to entities on OFAC’s NS-CMIC List, meaning that only named entities are subject to these restrictions.

Of the 40 new entries to BIS’s Entity List, 34 pertain to entities located in China, three to entities located in Georgia, one to an entity located in Malaysia, and two to an entity located in Turkey, with three of the entities being located in multiple destinations. The eight Chinese firms listed above are on BIS’s Entity List, and the final rule adds the following four Chinese entities previously identified under E.O. 13959:

• Aerosun Corporation;
• Changsha Jingjia Microelectronics Company Limited;
• Fujian Torch Electron Technology Co., Ltd.; and
• Inner Mongolia First Machinery Group Co., Ltd.

Citing national security and foreign policy concerns, BIS’s Entity List additions target an array of firms determined to have made efforts to support the modernization and enhancement of Chinese and Iranian military capabilities. Such efforts include the purported use of biotechnology processes to support China’s development of brain-control weaponry, as well as the actual or attempted provision of U.S.-origin items to China and Iran. Notably, BIS’s final rule also revises Huawei Technologies Co., Ltd.’s entry to add three additional aliases under one of its affiliated entities, Huawei Marine Networks:

• HMN Technologies;
• Huahai Zhihui Technology Co., Ltd.; and
• HMN Tech.

U.S. and non-U.S. exporters are generally prohibited from transferring goods, software, or technology subject to the U.S. Export Administration Regulations to listed entities without first obtaining a U.S. export license. BIS will review such requests under a “presumption of denial” licensing policy.

Please contact our sanctions and export control team with any questions about ensuring compliance with these latest developments.

The amended order reflects a growing emphasis on human rights and “democratic values” in U.S. sanctions policy related to China. The White House fact sheet announcing today’s amendment indicated that the Order is intended to prevent the flow of U.S. capital to companies that develop or use surveillance technology to facilitate repression or serious human rights abuse in and outside of China, including technology used to surveil religious or ethnic minorities. Other recent moves, including those in response to Chinese government policies in the Xinjiang region and Hong Kong, have similar human rights policy motivations. The administration may cite to security and adherence to democratic values in imposing future sanctions.

Below, we summarize the key features of the new restrictions and guidance issued by the Office of Foreign Assets Control (“OFAC”).

Companies targeted

The Biden administration indicated that it expects to add additional parties to the NS-CIMC List in the future.

Relevant securities

Wind-down period

Guidance for U.S. financial service companies and investors

• U.S. financial service companies that provide clearing, execution, settlement, and related services can continue to deal in CMIC securities so long as they do not facilitate prohibited transactions by U.S. persons.
• Securities exchanges operated by U.S. persons, along with market makers, market intermediaries and other participants, are not prohibited from effecting U.S. persons’ divesture of publicly traded securities in the listed CMICs during the wind-down period.
• U.S. persons employed by non-U.S. entities are not prohibited from facilitating purchases or sales related to a CMIC security on behalf of their non-U.S. employer or providing investment management or similar services to a non-U.S. person.
• U.S. financial service companies can rely on “information available to them in the ordinary course of business” in conducting due diligence on whether an underlying purchase or sale is prohibited under the amended E.O

* * * * *

Additions to NS-CMIC List

“Delisted” Companies

AEROSPACE CH UAV CO., LTD AEROSPACE COMMUNICATIONS HOLDINGS GROUP COMPANY LIMITED AEROSUN CORPORATION ANHUI GREATWALL MILITARY INDUSTRY COMPANY LIMITED AVIATION INDUSTRY CORPORATION OF CHINA, LTD. AVIC AVIATION HIGH-TECHNOLOGY COMPANY LIMITED AVIC HEAVY MACHINERY COMPANY LIMITED AVIC JONHON OPTRONIC TECHNOLOGY CO., LTD. AVIC SHENYANG AIRCRAFT COMPANY LIMITED AVIC XI’AN AIRCRAFT INDUSTRY GROUP COMPANY LTD. CHANGSHA JINGJIA MICROELECTRONICS COMPANY LIMITED CHINA AEROSPACE TIMES ELECTRONICS CO., LTD CHINA AVIONICS SYSTEMS COMPANY LIMITED CHINA MARINE INFORMATION ELECTRONICS COMPANY LIMITED CHINA COMMUNICATIONS CONSTRUCTION GROUP (LIMITED) CHINA MOBILE LIMITED CHINA NUCLEAR ENGINEERING CORPORATION LIMITED CHINA SHIPBUILDING INDUSTRY COMPANY LIMITED CHINA SHIPBUILDING INDUSTRY GROUP POWER COMPANY LIMITED CHINA STATE SHIPBUILDING CORPORATION LIMITED CHINA TELECOM CORPORATION LIMITED CNOOC LIMITED COSTAR GROUP CO., LTD. CSSC OFFSHORE & MARINE ENGINEERING (GROUP) COMPANY LIMITED FUJIAN TORCH ELECTRON TECHNOLOGY CO., LTD. GUIZHOU SPACE APPLIANCE CO., LTD HUAWEI TECHNOLOGIES CO., LTD. INNER MONGOLIA FIRST MACHINERY GROUP CO., LTD. JIANGXI HONGDU AVIATION INDUSTRY CO., LTD. NANJING PANDA ELECTRONICS COMPANY LIMITED NORTH NAVIGATION CONTROL TECHNOLOGY CO., LTD. PROVEN GLORY CAPITAL LIMITED PROVEN HONOUR CAPITAL LIMITED SHAANXI ZHONGTIAN ROCKET TECHNOLOGY COMPANY LIMITED ZHONGHANG ELECTRONIC MEASURING INSTRUMENTS COMPANY LIMITED

CHINA INTERNATIONAL ENGINEERING CONSULTING CORP. CHINA NATIONAL CHEMICAL CORPORATION (CHEMCHINA) CHINA NATIONAL CHEMICAL ENGINEERING GROUP CO., LTD. (CNCEC) CHINA NUCLEAR ENGINEERING & CONSTRUCTION CORPORATION (CNECC) CHINA SHIPBUILDING INDUSTRY CORPORATION (CSIC) CHINA THREE GORGES CORPORATION LIMITED CRRC CORP. DAWNING INFORMATION INDUSTRY CO (SUGON) INSPUR GROUP SINOCHEM GROUP CO LTD

The addition of Vassil Kroumov Bojk, Delyan Slavchev Peevski, Ilko Dimitrov Zhelyazkov and their companies to the List of Specially Designated Nationals (“SDN List”) effectively cuts the sanctioned parties off from the U.S. financial system and U.S. market. U.S. persons are broadly prohibited from conducting business with the sanctioned parties and with any entities owned 50 percent or more, directly or indirectly, by the SDNs. Further, any property or interests in property within the possession or control of U.S. persons must be formally “blocked” (or frozen) and reported to OFAC.

Companies that do business in Bulgaria should carefully review the new additions to the SDN List, as many of the sanctioned entities are prominent in the local media and entertainment sectors. Further developments are possible with upcoming elections in Bulgaria.

BitGo processes digital currency transactions on behalf of users with “hot wallet” accounts, the company’s secure digital wallet service. Prior to 2018, users could open a BitGo digital wallet account by providing only a name and an email address. In April 2018, BitGo began requiring new accountholders to self-report their location to the company. Throughout this period, BitGo also tracked users’ IP addresses and related geolocation data for account security purposes, but did not use that information to identify users who may be located in sanctioned jurisdictions.

OFAC concluded that BitGo had reason to know that users were located in sanctioned jurisdictions based on the collected IP address data, even though the data was not actively screened by the company for sanctions compliance purposes. Based on the IP address data, OFAC found that BitGo failed to prevent users in Crimea, Cuba, Iran, Sudan, and Syria from accessing its services in 183 instances and facilitated transactions with those users worth $9,127.79.

The maximum penalty in this case, which was not voluntarily self-disclosed to the agency, was over $53 million. However, OFAC determined that the violations were “non-egregious” in nature (e.g., they did not involve willful or reckless conduct and did not present serious harm to sanctions program objectives) and that substantial mitigating factors, including the adoption of a robust compliance program, warranted a settlement amount of $93,380. OFAC specifically cited BitGo’s implementation of IP address blocking, email-related restrictions, and batch screening of users against the SDN List as sanctions compliance measures adopted by the company.

The BitGo settlement is another example in an emerging pattern of enforcement actions against companies – like Amazon – that fail to use all collected data, like IP addresses, as part of their sanctions compliance programs. Fintech and other companies that conduct transactions online are on notice that reliance on self-reported location is not sufficient to identify users subject to sanctions.

Please contact our export control and sanctions team if you have any questions about developing a sanctions compliance program for online transactions.

Subject to certain limitations, the general license authorizes U.S. persons to engage in activities that are ordinarily incident and necessary to:

• Wind down transactions involving any entity in which XPCC owns a 50% or greater interest;
• Divest or transfer of debt, equity ,or other holdings in an XPCC subsidiary to a non-U.S. person; or
• Facilitate the transfer of debt, equity, or other holdings in an XPCC subsidiary by a non-U.S. person to another non-U.S. person.

This action is the most recent in a series of confrontational U.S. trade control measures targeting China. An unnamed senior U.S. official described CCCC as “the Huawei of infrastructure.”

BIS added 36 other companies to the list, including parties in France, Hong Kong, Indonesia, Malaysia, Oman, Pakistan, Switzerland, and the UAE for activities deemed contrary to U.S. national security or foreign policy interests.

OFAC added 11 current and former Hong Kong government officials, including Carrie Lam, Hong Kong’s Chief Executive, to its List of Specially Designated Nationals (SDN List). As a result, all property and interests in property of the designated officials in the United States or within the possession or control of U.S. persons must be blocked and reported to OFAC. U.S. persons, companies, and financial institutions are also broadly prohibited from conducting business dealings with the designated officials.

U.S. companies that do business with Hong Kong’s government should ensure that they do not engage in direct or indirect business dealings with the sanctioned officials, which OFAC is likely to view as a violation of the E.O. Foreign financial institutions that provide services to the officials should also examine their institutions’ potential exposure under U.S. secondary sanctions authorized under the Hong Kong Autonomy Act of 2020 (HKAA).

The new general license is valid until April 26, 2021. The prior General License 2F was set to expire on October 25, 2019.

While the sanctions are currently narrowly targeted, the E.O. authorizes a broad array of future possible sanctions against other parties connected to the Turkish government and companies operating in Turkey. Whether and to what extent sanctions are expanded on Turkey will depend on developments on the ground in Syria and U.S. domestic politics. Various groups, including prominent voices in Congress, are pushing the administration for more aggressive action against Turkey, which could portend an expansion of sanctions against the Ankara government.

Blocking sanctions

The October 14, 2019 E.O. authorizes the U.S. government to block any person (e.g., designate that person as a Specially Designated National (SDN)) that the Secretary of the Treasury determines to:

• Be engaged in activities related to undermining peace or security in Syria or the commission of serious human rights abuses;
• Be a current or former official of the Government of Turkey (GoT)
• Be a subdivision of instrumentality of the GoT;
• Operate in certain sectors of the Turkish economy that have yet to be specified by the Secretary of Treasury;
• Materially assist or provide support for persons blocked pursuant to the Executive Order; or
• Owned or controlled by a person blocked pursuant to the Executive Order.

Menu-based sanctions

The E.O. also authorizes the U.S. State Department to issue a menu of sanctions against non-U.S. persons that are:

• Responsible for, complicit in, or financed any of the following:
  1. The prevention of a ceasefire in Syria;
  2. Preventing persons from voluntarily returning to Syria or forcibly repatriating refugees to Syria; or
  3. Preventing a political solution to the conflict in Syria;
• An adult family member of a person engaged in the foregoing; or
• Engaged in the expropriation of property in Syria for personal gain or political purposes.

• Bar on U.S. government procurement from that party;
• Denial of visas to that party and to corporate officers, principals, or controlling shareholdings of that party;
• Prohibit U.S. financial institutions from making loans to that party totaling more than $10 million in a 12-month period, except for certain humanitarian-related loans;
• Prohibit transactions in foreign exchange subject to U.S. jurisdiction;
• Prohibit transfers of credit or payment subject to U.S. jurisdiction through any financial institution;
• Block the property or interests in property of that party (i.e., add the party to the SDN List);
• Prohibit investments in or purchases of significant amounts of debt or equity of that party;
• Restrict imports to the United States from that party; and/or
• Impose certain sanctions on principal executive officers of that party.

The E.O. authorizes the U.S. government to impose the menu-based sanctions described above against any non-U.S. financial institution that knowingly conducts or facilitates a significant financial transaction for or on behalf of a person blocked pursuant to the E.O. The U.S. Treasury Department may also prohibit such financial institutions from opening a correspondent account or payable-through account in the United States and may prohibit or impose strict conditions on such financial institutions maintaining accounts in the United States.

General Licenses

OFAC issued three general licenses authorizing certain, limited activities involving the newly blocked parties. General License 1 authorizes transactions and activities that are for the conduct of the official business of the U.S. government by its employees, grantees, and contractors.

General License 2 allows parties to engage in transactions and activities that are ordinarily incident and necessary to wind down operations, contracts, or other agreements involving the Turkish Ministry of Energy and Natural Resources and the Turkish Ministry of National Defense or involving entities owned 50 percent or more by those ministries. Authorized wind down activities must be completed by 12:01 am EST on November 13, 2019. The wind down general license does not authorize debits from blocked accounts held by U.S. financial institutions.

General License 3 authorizes transactions and activities involving the Turkish Ministry of Energy and Natural Resources or the Turkish Ministry of National Defense and entities owned 50 percent or more by those ministries for the official business of the United Nations, its Programmes and Funds, and its Specialized Agencies and Related Organizations, including twelve specifically listed organizations.

Please contact our sanctions team with any questions or concerns related to these developments.

The first round of sanctions, which are expected to come into force on or around August 22, will prohibit many exports and reexports of goods, software, or technology to Russia controlled for national security reasons under the dual use Export Administration Regulations. Such items include gas turbine engines, encryption items, electronics components, optical equipment, lasers, sensors, electronic components, materials, and certain unmanned systems, among many others. National security controlled items currently require a license to be exported to Russia, but the new rules will require the Commerce Department to apply a ‘presumption of denial’ to future license requests in many instances. In a briefing announcing the new sanctions, the State Department indicated that certain exceptions will be made, including those related to joint space activities, aviation safety, and the activities of U.S. and other foreign companies in Russia. While the scope of the sanctions has yet to finalized, the State Department suggested that up to half of all licensed exports to Russia are controlled for national security reasons. If the sanctions are fully enforced, the impact could be substantial – based on 2016 figures over $1 billion in trade could be impacted.

The first round of sanctions will also include limitations on U.S. foreign aid, arms sales, and U.S. government credit and financial assistance.

A second round of much broader sanctions is also possible if Russia is unable to provide certain assurances within three months. If the President does not certify to Russia’s compliance, the CBW Act requires the application of at least three of the following sanctions:

• A bar on financial assistance to Russia by international financial institutions;
• A bar on U.S. banks making any loans or providing credit to the Russian government, with limited exceptions;
• An export embargo, prohibiting the export of all other goods and technology to Russia;
• An import ban on Russian origin articles;
• A downgrade in diplomatic relations; and/or
• Limitations on air travel between Russia and the United States.

Companies doing business in Russia should carefully monitor developments in this area and consider their exposure under the first and second rounds of sanctions.

The primary purpose of the rule changes is to prevent commerce between the U.S. and Cuba from benefiting the Cuban military. The State Department’s regulation includes a new Cuba Restricted List, which lists parties deemed to be under control of or acting on behalf of the Cuban military, intelligence, or security services personnel. Parties on the Cuba Restricted List include government ministries (MININT and MINFAR), holding companies (GAESA, Gaviota, and Cimex, among others, as well as sub-entities thereof), more than 30 entities directly serving the defense and security sectors, and hotels and other entities involved in tourism. Persons subject to U.S. jurisdiction are generally prohibited from engaging in certain financial transactions with entities on the Cuba Restricted List.

To soften the blow, U.S. businesses may continue direct financial transactions with listed entities provided that they are made pursuant to commercial engagements prior to the date of listing (i.e., November 9 for the currently listed entities, and Federal Register publication date for any subsequently listed entities). This carve out includes transactions provided for in contingent or other contractual arrangements, provided that they are consistent with other OFAC authorizations. Other exceptions, including the remittance exception, remain largely in effect if the remittances do not involve “prohibited officials of the Government of Cuba,” as defined in the updated OFAC regulations. This revised definition reinstates the definition of “prohibited officials of the Government of Cuba” in place prior to an October 17, 2016 amendment.

The new regulations will also affect travel to Cuba, partially rolling back some of the Obama-era changes. In general, travel will only be permitted for sponsored groups, and engaging in financial transactions with hotels and other listed entities will not be permitted.

According to State Department guidance, whether a transaction is “significant” will depend on a number of factors, including the significance of the transaction to U.S. national security and foreign policy interests, the nature and magnitude of the transaction, and the relation and significance of the transaction to the Russian defense or intelligence sector. During the initial phase of implementation, enforcement will apparently focus on parties that conduct transactions of a “defense or intelligence” nature with the listed firms. For now the State Department does not expect to sanction parties that conduct transactions related to goods or services with purely civilian end uses and/or end users that do not relate the Russian intelligence sector.

Secondary sanction penalties could include restrictions on accessing the U.S. financial system, seizure and blocking of a sanctioned party’s property, barring the entry of corporate officers to the United States, sanctions on principal executive officers, U.S. government procurement restrictions, and export licensing restrictions, among other penalties.

List regarding the Russian defense sector:

• Admiralty Shipyard JSC
• Almaz-Antey Air and Space Defense Corporation JSC
• Dolgoprudny Research Production JSC
• Federal Research and Production Center Titan Barrikady JSC (Titan Design Bureau)
• Izhevsk Mechanical Plant (Baikal)
• Izhmash Concern JSC
• Kalashnikov Concern JSC
• Kalinin Machine Building Plant JSC (KMZ)
• KBP Instrument Design Bureau
• MIC NPO Mashinostroyenia
• Molot Oruzhie
• Mytishchinski Mashinostroitelny Zavod
• Novator Experimental Design Bureau
• NPO High Precision Systems JSC
• NPO Splav JSC
• Oboronprom OJSC
• Radio-Electronic Technologies (KRET)
• Radiotechnical and Information Systems (RTI) Concern
• Research and Production Corporation Uralvagonzavod JSC
• Rosoboronexport OJSC (ROE)
• Rostec (Russian Technologies State Corporation)
• Russian Aircraft Corporation MiG
• Russian Helicopters JSC
• Sozvezdie Concern JSC
• State Research and Production Enterprise Bazalt JSC
• Sukhoi Aviation JSC
• Tactical Missiles Corporation JSC
• Tikhomirov Scientific Research Institute JSC
• Tupolev JSC
• United Aircraft Corporation
• United Engine Corporation
• United Instrument Manufacturing Corporation
• United Shipbuilding Corporation

• Autonomous Noncommercial Professional Organization/Professional Association of Designers of Data Processing (ANO PO KSI)
• Federal Security Service (FSB)
• Foreign Intelligence Service (SVR)
• Main Intelligence Directorate of the General Staff of the Russian Armed Forces (GRU)
• Special Technology Center
• Zorsecurity

The legislation would make several big changes. First, the package would codify existing sanctions on Russia, which were imposed in the wake of the invasion of Crimea, into law. Codifying the sanctions would prevent the White House from unilaterally easing or lifting the sanctions, which the administration could do under current law without obtaining approval from Congress.

Second, the new legislation, if enacted into law, would require tough new sanctions on a variety of Russian actors, including those involved in corruption, evading sanctions, doing business with Russia’s defense or intelligence sectors, or cyber operations on behalf of the Russian government, among others. The bill would also authorize more sweeping economic sanctions against Russia’s economy, targeting state-owned mining, metals, shipping, and railroad industries. Implementing the broader economic sanctions would require action by the administration, so it is unclear whether they would ultimately be imposed.

Overall, the bill is an effort to assert more Congressional control over the United States relationship with Russia. The Senate bill does provide the President with discretion over certain aspects of the sanctions, but would mandate Congressional review if the White House tried to suspend or relax sanctions on Russia. In a Congressional hearing the day before the bill’s passage, Secretary of State Tillerson urged Congress “to ensure any legislation allows the president to have the flexibility to adjust sanctions to meet the needs of what is always an evolving diplomatic situation.”

The Russia sanctions, developed by a bipartisan group of Senators, were added to an Iran sanctions bill. The bill now goes to the House, where the timing and prospects for passage remain uncertain. If approved by the House, the bill would be sent to the President for signature.