Russia Sanctions Update – February 28, 2022: U.S. Imposes Sanctions on Central Bank of Russia, Ministry of Finance, and Sovereign Wealth Funds; Switzerland and Monaco Impose Unprecedented Sanctions

Key Takeaways:

  • New Directive 4 prohibits transactions with Russian Central Bank, National Wealth Fund, and Ministry of Finance
  • Full blocking sanctions on Russian Direct Investment Fund and affiliates
  • Multi-lateral response to Russia’s invasion continues with unprecedented imposition of sanctions by Switzerland and Monaco


On February 28, 2022, the U.S. government announced new sanctions on the Central Bank of Russia, National Wealth Fund, Ministry of Finance, and Russian Direct Investment Fund, dramatically increasing the economic impact of existing sanctions imposed on Russia in response to the invasion of Ukraine. As described in our prior Client Alert, these actions continue the “drum beat” approach of steadily escalating sanctions and export controls already imposed on Russia by the U.S., EU member states, the UK, and numerous other countries.

In a move targeting Russia’s capacity to make use of its foreign currency reserves to blunt the impact of sanctions, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) issued Directive 4, which prohibits U.S. persons from engaging in any transactions involving the Russian Federation’s Central Bank, National Wealth Fund, or Ministry of Finance, including asset transfers and foreign exchange transactions. These restrictions, which were implemented under Executive Order (“E.O.”) 14024, “Blocking Property With Respect To Specified Harmful Foreign Activities of the Government of the Russian Federation,” take effect immediately on February 28, 2022. As a result of Directive 4, the Central Bank, National Wealth Fund, and Ministry of Finance have been added to OFAC’s Non-SDN Menu-Based Sanctions (“NS-MBS”) List.

In addition to the NS-MBS List designations pursuant to Directive 4, the Russian Direct Investment Fund – a key Russian sovereign wealth fund – and its affiliated entities were added to the Specially Designated Nationals and Blocked Persons List (“SDN List”), along with Kirill Aleksandrovich Dmitriev, the CEO of the Russian Direct Investment Fund and close associate of Russian President Vladimir Putin. U.S. persons are generally prohibited from engaging in most transactions with SDNs, absent a specific or general license, and all U.S. assets of SDNs are “blocked” and must be reported to OFAC. In addition, any person, including a non-U.S. person, may be designated for materially assisting, sponsoring, or providing financial, material, or technological support for, or goods or services to or in support of, these SDNs.

Alongside these new restrictions, OFAC updated a prior general license that authorizes certain transactions involving energy. General License 8A (replacing General License 8), adds the Russian Central Bank to the list of financial institutions with which transactions “related to energy” are permitted. However, the following transactions remain prohibited: (1) transactions prohibited by Directive 1A under E.O. 14024; (2) the opening or maintaining of a correspondent account or payable-through account for or on behalf of any entity subject to Directive 2 under E.O. 14024; (3) any debit to an account on the books of a U.S. financial institution of the Central Bank of the Russian Federation; and (4) any transactions involving any person blocked pursuant to E.O. 14024 other than those listed in the general license.

On the same day, OFAC also issued new regulations (Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587), to implement E.O. 14024, which was issued by President Biden on April 15, 2021. The regulations codify all of the prohibitions in E.O. 14024. In addition to the existing prohibitions, the regulations add exemptions from the scope of E.O. 14024 for personal communications and for official U.S. government and UN business, along with several general licenses authorizing certain transactions, including a general license for the provision of certain legal services.

In a historic departure from the country’s tradition of strict neutrality, on February 28, 2022, Switzerland announced that it will adopt full EU sanctions against Russia. Russian oligarchs are widely believed to have many assets held by Swiss banks, which could result in a severe financial impact if such assets are frozen. Monaco, which has a reputation as a tax haven for the ultra-wealthy and also likely holds the financial assets of many Russian oligarchs, also announced on February 28, 2022, that it will implement asset-freezing restrictions and economic sanctions similar to those imposed by the EU.

Foley Hoag will continue to provide updates as the situation develops. Companies with questions about these actions or how to ensure compliance with U.S. sanctions and export control regulations should contact a member of Foley Hoag’s Trade Sanctions & Export Controls practice.

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