Last week, the U.S. Department of Commerce removed the United Arab Emirates (“UAE”)  from its list of countries boycotting Israel in response to the formal termination of the UAE’s participation in the Arab League boycott of Israel.

Under Commerce’s updated rules, a request for information, action, or agreement from the UAE made after August 16, 2020 is no longer presumed to be boycott-related and, consequently, is not prohibited or reportable unless the request is facially boycott-related.  For example, if a UAE company requests that a U.S. company provide information on the nationality of its board members, that request is no longer presumed to be boycott-related – the U.S. company may respond to the request and does not need to report the receipt of the request to Commerce.  In contrast, if a request from the UAE (or any other country) references “blacklisted companies,” “Israel boycott list,” “non-Israeli goods,” or other phrases indicating a boycott purpose, compliance with that request generally remains prohibited and the request must be reported to the Commerce Department.  The updates to Commerce’s rules followed a similar change to the Treasury Department’s antiboycott regulations, which reduced reporting obligations related to the UAE for U.S. taxpayers.

While these updates represent a liberalization of U.S. antiboycott rules applicable to the UAE, U.S. companies and taxpayers must remain vigilant for requests that are facially boycott-related from the UAE and other countries, even if the countries do not officially participate in the Arab League boycott of Israel.

Please feel free to contact our Export Controls & Economic Sanctions team with any questions about compliance with U.S. antiboycott regulations.


Yesterday, President Biden signed an Executive Order (“E.O.”) that formally revokes and replaces three earlier E.O.s that aimed to restrict transactions with TikTok, WeChat, and other communications and Fintech applications and provides a new framework to address security concerns related to the information and communications technology and services (“ICTS”) supply chain.  The new E.O. was issued pursuant to the ongoing national emergency declared in the 2019 E.O. 13873 regarding ICTS in the United States that are controlled by persons within the jurisdiction of a “foreign adversary,” including China.

The new E.O. resets the U.S. government’s approach to ICTS by ordering a review of the national security threats posed by software applications that collect Americans’ sensitive personal and business data and by foreign adversaries’ access to large repositories of U.S. person data.  New restrictions are likely following that review, and companies that rely on software applications owned or managed by companies linked to China or other potential foreign adversaries, should closely watch developments in this space.

New reports on “unacceptable or undue risks” posed by foreign adversary-connected applications

The E.O. directs the Directors of National Intelligence and Homeland Security to provide threat and vulnerability assessments to the Secretary of Commerce.  In turn, the Commerce Department will draft two reports on foreign adversary-connected software, defined as software that has the ability to collect, process, or transmit data over the internet.  The reports will recommend actions to protect against harm from the sale of, transfer of, or access to U.S. persons’ sensitive data, including personally identifiable information, personal health information, and genetic information.  In addition, the Commerce Department will recommend additional actions to address risks associated with software applications that are designed, developed, manufactured, or supplied by persons owned or controlled by, or subject to the jurisdiction or direction of, a foreign adversary.

Several criteria indicate national security risk of ICTS applications

Building on the criteria to assess national security threats listed in E.O. 13873, the new E.O. lists several factors that will be considered when evaluating the risks posed by foreign adversary-connected software, including:

  • ownership, control, or management by persons that support a foreign adversary’s military, intelligence, or proliferation activities;
  • use of the connected software applications to conduct surveillance that enables espionage, including through a foreign adversary’s access to sensitive or confidential government or business information, or sensitive personal data;
  • ownership, control, or management of connected software applications by persons subject to coercion or cooption by a foreign adversary;
  • ownership, control, or management of connected software applications by persons involved in malicious cyber activities;
  • a lack of thorough and reliable third-party auditing of connected software applications;
  • the scope and sensitivity of the data collected; the number and sensitivity of the users of the connected software application; and
  • the extent to which identified risks have been or can be addressed by independently verifiable measures.

Consistent with other recent Biden Administration actions targeting China, the E.O. notes that the U.S. government may impose consequences on non-U.S. persons who own, control, or manage connected software applications that engage in serious human rights abuse or otherwise facilitate such abuse.

These criteria will inform the U.S. government’s decision-making framework to adopt a “rigorous, evidence-based” analysis to address risks posed by ICTS transactions involving foreign adversary-connected software.

Further action on ICTS applications likely

Although yesterday’s E.O. rescinds the previous E.O.s dealing with Chinese mobile applications, new restrictions on Chinese and other software that collect large amounts of sensitive U.S. person data are likely to flow from the Commerce Department’s forthcoming report and recommendations, which are expected within 180 days.  Furthermore, the E.O. provides the Commerce Department with authority to restrict transactions and business activities that may:

  • Pose a risk of sabotage or subversion of the design, integrity, manufacturing, production, distribution, installation, operation, or maintenance of ICTS in the United States;
  • Pose a risk of catastrophic effects on the security or resiliency of the critical infrastructure or digital economy of the United States; or
  • Otherwise pose an unacceptable risk to the national security of the United States or the security and safety of United States persons.

Our Export Controls and Sanctions team will be actively monitoring for any developments.

Yesterday morning, June 8, 2021, the Biden-Harris administration released a report including factual findings and recommendations concerning four critical supply chains.  The full 250-page report is available here and a White House fact sheet summarizing key findings and recommendations is available here.

The report stems from President Biden’s Executive Order 14017 (“EO 14017”), which established a wide-ranging whole-government evaluation of America’s supply chains.  The report and recommendation released today concerns 100-day reviews involving four specific supply chains:

  • semiconductors and advanced packaging;
  • high-capacity batteries;
  • critical minerals and other identified strategic materials; and
  • active pharmaceutical ingredients.

A few major themes can be gleaned from the report:

Trade Enforcement: A recurring theme throughout the document relates to the use of the trade enforcement toolkit, including the establishment of a U.S. Trade Representative-led trade strike force, to identify unfair foreign trade practices that have eroded U.S. critical supply chains and to recommend trade actions to address such practices. The report also specifically recommends a potential Section 232 investigation of neodymium permanent magnets, suggesting that the Biden Administration may use Section 232 as a vehicle to address critical supply chain issues, albeit in a more traditional national security context.

Global Nature of Supply Chains: While many of the reports’ recommendations focus on expanding domestic production and labor, the report also acknowledges the need for global supply chains, and the need to work with partners and allies to achieve resilient supply chains.

Leveraging the Government’s Purchasing Power:  The report proposes a number of ways the government can leverage its position as a buyer of critical materials to address supply chain concerns.  This includes purchasing materials from domestic sources but also developing standards that foreign materials must meet.  The report also suggests a strengthening of the National Defense Stockpile and the use of the Defense Production Act program as additional ways of addressing supply chain deficiencies.

Financing/Investment: A systemic lack of financing and a long-term shortfall in investments are identified as a key themes throughout the report.  The report makes several financing recommendations that may present domestic and foreign producers with opportunities to expand production capabilities domestically and also abroad.

Sustainability: Sustainability is a key theme throughout the report, both from developing sustainable production in the U.S., sourcing materials produced sustainably abroad, and encouraging allies and partners and partners to develop sustainable supply chains.

Labor: The report identifies a shortage of skilled labor as a significant supply chain issue and recommends investing in training and development programs to ensure the U.S. labor market can meet manufacturing needs.

The administration is also conducting year-long based supply chain reviews of the following six sectors:

  • defense industrial base;
  • public health and biological preparedness industrial base;
  • information and communications technology (ICT) industrial base;
  • energy sector industrial base;
  • transportation industrial base; and
  • agricultural commodities and food products.

Industry participants should be aware of additional opportunities to engage in shaping the administration’s policies through these reviews in the coming months.


Today, President Biden issued an Executive Order expanding U.S. restrictions on dealings in the publicly traded securities of Chinese companies.  Today’s move amends Executive Order 13959 to prohibit U.S. persons from buying or selling the publicly traded securities of listed companies operating in (1) the surveillance technology sector or (2) the defense and related material sector of the Chinese economy.  E.O. 13959 was previously limited to companies affiliated with the Chinese military.

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 amended E.O. initially applies to the 59 Chinese companies listed in the annex to the E.O.  The companies are also included on OFAC’s new “Non-SDN Chinese Military-Industrial Complex Companies List” (“NS-CMIC List”), which replaces the previous “Communist Chinese Military Company” (“CCMC”) list.  The NS-CMIC List includes a number of new Chinese companies that did not appear in the prior CCMC list and excludes a handful of companies that were on the prior list. (A table summarizing the list changes is below the break.)  Notably, the NS-CMIC List captures companies operating in the defense sector, subsidiaries and affiliates of companies on the CCMC list, and two companies operating in the surveillance technology sector.

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

Relevant securities

As in the original E.O. 13959, the prohibition on purchasing and selling publicly traded securities also applies to derivatives and securities designed to provide investment exposure to such securities, including ADRs, GDRs, ETFs, index funds, and mutual funds.  Restrictions apply regardless of the CMIC securities’ share of the underlying index fund, ETF, or derivative.  The amended E.O. defines “securities” as those specified in Section 3(a)(10) of the Securities Exchange Act of 1934.

Wind-down period

The amended E.O.’s prohibitions come into effect on August 2, 2021 for the 59 companies currently on the NS-CMIC List, and U.S. persons are permitted to divest holdings in those securities until June 3, 2022.  The amended E.O. also provides for a 365-day divestment period for CMICs that are designated in the future.

Guidance for U.S. financial service companies and investors

OFAC guidance issued today explains how the agency will apply the new E.O. to broker-dealers, market intermediates, and other market participants.  In particular:

  • 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

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Our team is actively monitoring developments in this area, please contact us with questions on how the new rules may apply to your business.

Continue Reading New Executive Order Targets Investments in Chinese Surveillance and Military Companies

Yesterday, the Office of Foreign Assets Control (“OFAC”) announced sanctions against three prominent Bulgarian individuals and 64 related companies for corruption.  The designations are the largest action in the history of Executive Order 13818, which implements the Global Magnitsky Human Rights Accountability Act and authorizes sanctions on parties that engage in significant corruption or human rights abuses overseas.  According to OFAC, the newly designated individuals and entities abused public institutions and government for personal profit.

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.

The United States International Trade Commission (“USITC”) has finalized recommended modifications to the Harmonized Tariff Schedule of the United States (“HTSUS”). The revisions, which are set to go into effect on January 1, 2022, conform the HTSUS with World Customs Organization (“WCO”) amendments to the Harmonized System commodity codes.  A detailed report of all changes is available here at the USITC’s website.

The Harmonized System is an international nomenclature that classifies products using six-digit codes.  Signatories to the Harmonized System Convention, including the United States, agree to classify imported goods using the same six-digit codes in an effort to facilitate trade between countries.  Signatories are permitted to further define products beyond six-digits, as the United States does using eight- and ten-digit codes.  However, all signatory countries classify merchandise using the same six-digit codes.  As a result, while the USITC employs a separate process that allows interested parties to advocate for more specific 10-digit statistical breakouts for classification of merchandise entering the United States, any changes above the 10-digit level, which would impact all signatory countries, must begin with advocacy through the WCO.

There are several potential benefits for having more specific classifications of products.  Specific tariff classifications can allow companies and industries to better track trade flows helping to combat trade fraud and facilitate trade enforcement.  For companies and industries that sell products globally, a single clear tariff classification can also have substantial trade facilitation benefits.

The WCO’s modifications to the Harmonized System are the culmination of a multi-year process (that repeats every five years) and accommodates products of new or emerging commercial significance.  In particular, the changes that will take effect in January 2022, include new codes for flat panel display modules, smart phones, 3D printers, and unmanned aircraft.  Overall, the USITC implementation of the WCO’s modifications will impact the classifications of more than 350 products relevant to a wide-range of industries.

The modifications will not have a tariff impact per se, but importers and customs brokers should nevertheless be aware of the changes to ensure they continue to identify the appropriate classification for all imports.

If you have any questions regarding the appropriate classification for a particular article of commerce, or require assistance in achieving more specific or harmonized classifications for your products, don’t hesitate to contact Kelley Drye’s international trade team for assistance.

The Office of Foreign Assets Control (“OFAC”) recently tightened sanctions on Belarus by revoking and replacing General License 2G with General License 2H. General License 2H now requires U.S. persons to wind down transactions involving the following Belarusian Specially Designated Nationals and their subsidiaries by June 3, 2021:

  • Belarusian Oil Trade House
  • Belneftekhim
  • Belneftekhim USA, Inc.
  • Belshina OAO
  • Grodno Azot OAO
  • Grodno Khimvolokno OAO
  • Lakokraska OAO
  • Naftan OAO
  • Polotsk Steklovolokno OAO

Wind down transactions in excess of $50,000 must be reported to the U.S. Department of State no later than 30 days after executing the transaction.

Under the previous General License 2G and its predecessors, most business with these companies was authorized by OFAC.  Given this change, and the prominence of these state-owned entities in Belarus’s economy, U.S. companies that do business in Belarus should carefully review their business relationships to ensure that any dealings involving these nine entities and their subsidiaries are wound down prior to June 3, 2021.

Last week, three U.S. agencies – the Office of Foreign Assets Control (“OFAC”), the U.S. Department of Commerce (“Commerce”), and the U.S. Department of Justice (“DOJ”) – announced the global resolution of apparent U.S. sanctions violations by SAP SE (“SAP”), a German software company.

The settlement agreements with OFAC and Commerce, and the non-prosecution agreement with DOJ, highlight sanctions risks specific to the cloud and software industry and provide insight on the U.S. government’s compliance program expectations for companies that sell software and services online.

What happened

According to the agency notices, between 2010 and 2018, SAP supplied software and cloud-based services from the United States to third parties with reason to know that the offerings would be provided to users or customers in Iran.  The violations transpired in two ways:

  • Sales of software through “pass through” entities –  SAP sold software licenses and maintenance services to SAP resellers located in Turkey, the UAE, Germany, and Malaysia, which in turn, sold the licenses and services to third parties for end use in Iran.  Iranian end-users then downloaded SAP software, updates, or patches from the company’s servers in the United States.  The agencies noted that SAP failed to prevent downloads of its software from IP addresses associated with Iran, even though internal audits recommended the adoption of IP address geolocation screening.  SAP also failed to conduct sufficient due diligence on its resellers, many of which publicized ties with Iranian companies on their websites.
  • Cloud services – SAP’s Cloud Business Group subsidiaries allowed 2,360 users in Iran to access U.S.-based cloud services.  SAP became aware, through due diligence and audits, that its subsidiaries lacked adequate compliance controls over its cloud offerings, but did not take appropriate or timely remedial action.

SAP voluntarily disclosed the issues to the three agencies, cooperated with investigators, and made significant changes to its export controls and sanctions compliance program by (1) implementing an IP-based geoblock, (2) deactivating user accounts of cloud-based services in Iran, (3) auditing and suspending resellers that sold to Iranian entities, and (4) involving the export compliance team in any new acquisitions, among other improvements.

Compliance expectations & lessons learned

The SAP case is the latest sanctions enforcement action dealing with the provision of goods or services over the internet.  As with prior announcements, we can glean a few lessons for the technology industry and for companies that conduct business online:

  • Geo-blocking (again): The SAP case is the latest reminder that the U.S. government expects technology companies to adopt effective geo-blocking from IP addresses associated with sanctioned jurisdictions.  In its case summary, OFAC called out the particular need for an effective blocking solution when providing services indirectly through third parties.
  • U.S.-based servers are subject to U.S. rules:  U.S. sanctions and export control laws have broad extraterritorial reach.  This case highlights the fact that the provision of services and the download of software from U.S. servers are considered “exports” and may require approval from OFAC and/or Commerce.  Non-U.S. companies should take note and consider their use of U.S. servers when assessing business opportunities that implicate destinations subject to U.S. sanctions.  U.S.-based platforms should also consider whether customers’ use of their services in sanctioned jurisdictions could create liability for the U.S. company providing the service.
  • Due diligence on intermediaries: The SAP case exemplifies how intermediary parties can create liability for a company under U.S. sanctions and export control rules.  Appropriate due diligence, controls, and monitoring of distributers and resellers is a must in any industry, particularly when a U.S. company does not have full insight into the identity of the end users of its goods or services.
  • Intercompany business is not risk-free: SAP allowed its subsidiaries to operate independently, although SAP knew, based on pre- and post-acquisition due diligence and notification by SAP’s U.S. compliance team, that those subsidiaries had insufficient sanctions compliance programs.  Companies need to ensure that non-U.S. affiliates dealing in U.S. origin services or software maintain appropriate controls, especially after acquiring new entities.
  • Resourcing export and sanctions compliance teams: SAP relied on its U.S.-based compliance team to oversee the compliance of all of its Cloud Business Group subsidiaries.  However, the team received inadequate resources, lacked authority to manage the processes, and encountered resistance from the subsidiaries.  In its notice, OFAC emphasized that compliance teams must be resourced and empowered to implement compliance controls, when risks are identified.
  • Training is key: According to OFAC, SAP employees outside of the United States oversaw the sale of U.S.-based offerings to Iran, and even traveled to Iran on a sales trip.  Multinational companies with a U.S. presence should train all relevant employees on U.S. sanctions red flags so that these types of issues are spotted and appropriately reported.
  • Don’t ignore audit findings:  SAP auditors highlighted the company’s lack of IP address geoblocking as a sanctions compliance risk as early as 2006, but the company did not implement effective controls until 2015.  By failing to act in response to the audit findings, OFAC indicated that SAP “demonstrated reckless disregard and failed to exercise a minimal degree of caution or care” for U.S. economic sanctions and cited this failure as an aggravating factor in the case.

Over $8 million in fines and $27 million in remediation

All told, SAP paid $8.3 million in penalties and fines to resolve these cases, including a $3.2 million fine to Commerce and the disgorgement of $5.1 million in ill-gotten proceeds to DOJ.  OFAC suspended its separate penalty of $2.1 million.

Of course, those figures do not reflect the full cost of investigating and remediating the issues at hand.  According to DOJ, SAP spent over $27 million on remediation, which was noted as an important mitigating factor in the case.  SAP also agreed to three years of third-party compliance audits following the agreements with the U.S. government.


The United States Department of Agriculture (“USDA”) is now seeking comments from the public in connection with the Biden administration’s wide-ranging review of America’s supply chains.  USDA’s request is the first to address the administration’s year-long sectoral supply chain evaluations –  in this case agricultural commodities and food products.

Several agencies have already requested comments in connection with 100-day reviews of the supply chains for: semiconductors and advanced packaging; high-capacity batteries; and critical minerals and other identified strategic materials.

USDA’s notice requests comments and information on a wide-range of issues relating to labor acquisition and training, technology, climate and environment, transportation, storage and distribution, research and development, and financing.

The notice specifically calls out the following goods and materials as “critical and essential” that should be addressed in industry comments:

seed, fertilizer, pesticides, livestock/animal health, feed and feed additives, plant health, soil health, water (availability, quality, access, infrastructure), energy (availability, access, infrastructure), viability of pollinators, the agricultural workforce (sufficiency, reliability, documentation, health and well-being), access to capital/financing, access to farm production tools (including for farmers interested in value-added agriculture such as USDA organic certification), access to critical food distribution assets (shipping containers, cold chain equipment, and materials such as packaging) and technology, access to food processing and markets (including traceability and transparency), and access to training, education, and technical assistance.

Commenters should also consider providing recommendations on how USDA should use funding and programs arising out of the Consolidated Appropriations Act, 2021 (“CAA”) and American Rescue Plant Act of 2021 (“ARPA”) to increase durability and resilience within the U.S. food supply.

The deadline to file comments is Friday, May 21, 2021.

Additional notices concerning the administration’s sectoral supply chain evaluations will likely be forthcoming in the coming weeks.  Stay tuned to Kelley Drye’s Trade and Manufacturing Monitor for future updates.

Today, the United States announced new sanctions on Russia in response to a widespread hacking campaign targeting the United States, alleged interference in U.S. elections, and other “malign” actions carried out by the Russian government.  Today’s actions include sanctions on transactions in the primary market for Russian sovereign debt, Russian technology firms, parties involved in election interference, and parties involved in the Russian administration of the Crimea region.  Importantly, the new measures include an Executive Order (E.O.) that authorizes OFAC and other U.S. government agencies to impose additional significant sanctions on Russia in the future, if found to be necessary.  The E.O. is designed, in part, to deter future actions by the Russian government that are inimical to U.S. interests.

New Executive Order

Today’s E.O. provides OFAC with broad authority to impose substantial new sanctions on Russia in the future, should relations between the United States and Russia continue to deteriorate.  The E.O. allows OFAC, in consultation with the Secretary of State, to impose sanctions on a wide range of persons and sectors of the Russian economy, including:

  • Parties that operate in the Russian technology sector;
  • Parties that operate in the Russian defense or related materiel sector;
  • Parties that operate in any other sector of the Russian economy identified by the Secretary of the Treasury in the future;
  • Parties that are involved in Russian government activities related to:
    • Cyber-attacks;
    • Interference in U.S. or foreign government elections;
    • Actions that undermine democratic process in the United States or abroad;
    • Transactional corruption;
    • The assassination or targeting of U.S. persons or the nationals of U.S. allies and partners;
    • Undermining the peace, security, stability or territorial integrity of the U.S., its allies, or partners; or
    • Deceptive or structured transactions, including through the use of digital currency or other assets, to circumvent U.S. sanctions;
  • Leaders, officials, senior executive officers, or members of the board of directors of the Russian government, or entities engaged in the activities above, or other sanctioned entities;
  • Political subdivisions, agencies, or instrumentalities of the Russian government;
  • Any party owned or controlled by, or that has acted on behalf of, the Russian government or any party subject to sanctions under the new E.O.;
  • Any Russian citizen, national, or company, that has materially supported governments that are subject to U.S. blocking sanctions; and
  • Russian persons that disrupt natural gas supplies to Europe, the Caucasus, or Asia.

Additions to the SDN List: Technology companies, Crimea, and election interference

Pursuant to the new E.O. and existing sanctions authorities, OFAC added a number of individuals and entities to its List of Specially Designated Nationals (SDN List).   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.  In addition, any property or interests in property within the possession or control of U.S. persons must be formally “blocked” and reported to OFAC.

Today’s designations included:

  • Six technology companies that support Russian government intelligence operations;
  • Eight parties involved in the construction of the bridge connecting Crimea with the Russian mainland and/or involved for asserting Russian governmental authority over the region; and
  • 16 parties involved in election interference.

Sanctions on the primary Russian sovereign debt market

Today OFAC also issued a directive that prohibits U.S. financial institutions from participating in the primary market for ruble or non-ruble denominated bonds issued after June 14, 2021 by Russia’s central bank, finance ministry, or sovereign wealth fund.  The directive also prohibits U.S. financial institutions from lending ruble or non-ruble funds to those entities.  These sanctions expand existing sovereign debt restrictions imposed in 2019 under the Chemical and Biological Weapons Act.

Notably, the prohibitions do not apply to any entity that is owned, directly or indirectly, 50 percent or more by the three named Russian entities and do not apply to dealings in the secondary bond market.

What does it mean?

Companies with operations in or exposure to the Russian market should continue to carefully watch this space.  Today’s action, while significant in its own right, is a calibrated move designed to signal that the United States has tools available to escalate sanctions on the Russian government and economy.  Further developments are likely during this period of heightened tensions between the two countries.