The Office of Foreign Assets Control (OFAC) imposes and enforces economic sanctions against countries and individuals involved in human rights abuses, terrorism, narcotics trafficking, the proliferation of weapons of mass destruction, and other acts which threaten the national security, foreign policy, and economic security of the United States.
Often, the sanctions imposed against a nation or regime are broad and all-inclusive, with the prohibition of trade with the targeted country, the ban of all exportation of financial services to the targeted nation, and a prohibition against new investments in the area. Trade and the ability to do business may be severely restricted, if not outright banned.
In some cases, however, prohibited transactions do not apply to the country or nation as a whole, but rather to specified individuals, organizations, or entities involved in activities that are considered to put the peace and stability of the United States or its allies at risk.
Such is the case with the OFAC Ukraine-Related Sanctions program, which does not prohibit all transactions with the Ukraine, but rather with certain entities involved in the Ukraine crisis, with particular regard to Russia’s annexation of Crimea.
Russia’s Occupation of Ukraine
Russia’s deployment of military forces into the Ukraine and the Crimean peninsula are said to undermine democracy and threaten peace, stability, and sovereignty of the nation. In an effort to support the United States foreign policy regarding the unrest in the Ukraine, economic sanctions have been imposed against those who are identified as contributing to the unrest or supporting the Russian occupation of Crimea and other areas of the Ukraine.
Rather than completely prohibiting transactions with the Ukraine, the sanctions are imposed against designated officials, individuals, and companies involved in Russia’s occupation and annexation of Crimea and unrest in the Donbass region and other areas of the Ukraine.
Violating OFAC sanctions and attempting to help blocked persons evade OFAC sanctions can lead to heavy civil and criminal penalties. Any property involved in these transactions may be blocked, or frozen, under the mandated of the United States government, and thus inaccessible to its beneficiaries. Consulting an OFAC lawyer before engaging in transactions with Russia, Crimea, or the Ukraine can help individuals and corporations avoid OFAC violations. If, however, a violation is made, a sanctions lawyer can help with voluntary self-disclosures and other remedies for dealing with OFAC enforcement.
Ukraine Sanctions Laws
The earliest Ukraine-related sanctions by the United States were enacted in March 2014 in response to the Russian annexation of Crimea. These sanctions were limited, blocking the property of Russian and Crimean politicians, businessmen, and government officials and placing travel restrictions on them to prevent them from traveling to the United States. Soon, new sanctions included the prohibition of business transactions with seven specified individuals and more than a dozen Russian businesses.
Executive Order 13660 – Blocking Property of Certain Persons Contributing to the Situation in the Ukraine was soon followed by Executive Orders 13661 and 13662 – Blocking Property of Additional Persons Contributing to the Situation in Ukraine. Four directives under EO 13662 prohibit transactions involving new debt and the provision of goods, services, and technology in support of “deepwater, Arctic offshore, or shale projects that have the potential to produce oil” for the Russian Federation or that involve any blocked persons.
In December 2014, United States President Barack Obama issued Executive Order 13685 – Blocking Property of Certain Persons and Prohibiting Certain Transactions with Respect to the Crimea Region of Ukraine, further strengthening sanctions against Russia and those accused of contributing to unrest in the Ukraine. This latest order imposed broader country-based style sanctions upon the entire Crimean region. Blocked persons are listed on the Specially Designated Nationals (SDN) list. However, individuals and companies targeted with narrower sanctions pursuant to the four directives issued under Executive Order 13662 are identified on the Sectoral Sanctions Identification (SSI) List.
OFAC’s Ukraine-Related Sanctions Regulations are codified in 31 C.F.R. Part 589. Prohibited transactions include all transactions identified in Executive Orders 13660, 13661, 13662, and 13685 and those involving persons and organizations identified on the SSI list or SDN list as contributing to unrest in the Ukraine.
Consulting a Knowledgeable Ukraine Sanctions Attorney
Over the past two years, there have been a number of Executive Orders issued under the International Emergency Executive Powers Act (IEEPA) in regards to political unrest and Russian military occupation in Crimea, Donbass, and other areas of the Ukraine. Until the turmoil is resolved, there are likely to be continual changes to the OFAC Ukraine/Russia-Related Sanctions program and regulations. If you have business dealings in Russia and Ukraine, it is imperative to keep abreast of regulation changes and to check the SSI and SDN lists prior to engaging in transactions or providing financial services. If you are accused of violating any OFAC sanctions program, consult an attorney for help.
Below are several links to question-and-answer pages with an OFAC Attorney in which he discusses Ukraine-related sanctions.