Careers

Diversity, Equity & Inclusion

Experience

Innovation

Interactive Maps

Locations

About

Pages

Meet our team of innovators
Ask us how we do it

Professionals

Insights

Services

Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 11 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

Home | Thompson Hine LLP

Atlanta

Chicago

Cincinnati

Cleveland

Columbus

Dayton

Los Angeles

Minneapolis

New York

Silicon Valley

Washington, D.C.

On April 15, 2021, President Biden issued an&nbsp;<a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2021/04/15/executive-order-on-blocking-property-with-respect-to-specified-harmful-foreign-activities-of-the-government-of-the-russian-federation/">Executive Order</a> (&ldquo;E.O.&rdquo;) on &ldquo;Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation.&rdquo; &nbsp;The E.O. &nbsp;establishes a new national emergency under which sanctions may be imposed against individuals and entities furthering specified harmful foreign activities of Russia against the United States and others, including: undermining free and fair elections; malicious cyber-enabled activities; transnational corruption; extraterritorial activities targeting dissidents or journalists; undermining security, international law and the territorial integrity of states. &nbsp;Pursuant to the E.O., the U.S. Department of the Treasury&rsquo;s Office of Foreign Assets Control (OFAC) issued <a href="https://home.treasury.gov/system/files/126/sovereign_debt_prohibition_directive_1.pdf">Directive 1</a> and has published the following new FAQs:&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/faqs/886">886</a>,&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/faqs/887">887</a>,&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/faqs/888">888</a>,&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/faqs/889">889</a>,&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/faqs/890">890</a>,&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/faqs/891">891</a>, and updated FAQs&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/faqs/673">673</a>,&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/faqs/674">674</a>,&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/faqs/675">675</a>,&nbsp;<a href="https://home.treasury.gov/policy-issues/financial-sanctions/faqs/676">676</a>.&nbsp; These actions are part of an ongoing U.S. government effort to increase sanctions and export controls pressure on Russia, see Updates for <a href="https://www.thompsonhinesmartrade.com/2021/03/united-states-implements-multiple-sanctions-and-export-restrictions-on-russia/">March 8, 2021</a>, <a href="https://www.thompsonhinesmartrade.com/2021/03/updated-united-states-implements-multiple-sanctions-and-export-restrictions-on-russia/">March 19, 2021</a> and <a href="https://www.thompsonhinesmartrade.com/2021/04/ddtc-issues-guidance-regarding-restrictions-on-exports-to-russia/">April 14, 2021</a>.
The E.O. provides for blocking sanctions on persons operating in the technology, defense and related material sectors of the Russian economy, and any other sectors determined by Secretaries of State and Treasury. &nbsp;Persons designated pursuant to the E.O. for operating in these sectors and fostering or engaging in the specified harmful activities are subject to blocking sanctions and will appear on the Blocked Entities and Specially Designated Nationals List (&ldquo;SDN List&rdquo;). The following tech companies were designated pursuant to the E.O.:
<ul>
<li>ERA Technopolis;</li>
<li>Pasit, AO (Pasit);</li>
<li>Federal State Autonomous Scientific Establishment Scientific Research Institute Specialized Security Computing Devices and Automation (SVA);</li>
<li>Neobit, OOO (Neobit);</li>
<li>Advanced System Technology, AO (AST); and</li>
<li>Pozitiv Teknolodzhiz, AO (Positive Technologies).</li>
</ul>
Further, Directive 1 was issued by OFAC to expand certain sovereign debt prohibitions previously issued pursuant to the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 related <a href="https://home.treasury.gov/system/files/126/13883.pdf">Executive Order 13883</a> and <a href="https://home.treasury.gov/system/files/126/fr84_48704.pdf">Russia&ndash;Related Directive</a> issued in August 2019 (&ldquo;CBW Act E.O. and Directive&rdquo;) to cover certain activities related to non-ruble denominated bonds and funds. &nbsp;Specifically, as of June 14, 2021, U.S. financial institutions and their foreign branches are prohibited from engaging in the primary market for ruble or non-ruble denominated bonds issued by, or lending ruble or non-ruble denominated funds from, the following:
<ul>
<li>Central Bank of the Russian Federation;</li>
<li>National Wealth Fun of the Russian Federation; and</li>
<li>The Ministry of Finance of the Russian Federation (collectively, the &ldquo;Russian Financial Institutions&rdquo;).</li>
</ul>
Directive 1 defines U.S. financial institutions broadly to include, among others, securities brokers and dealers, clearing corporations, investment companies employee benefits plans, and U.S. affiliates, subsidiaries and holding companies of any of&nbsp;the foregoing. &nbsp;The Directive also prohibits transactions that evade or cause a violation of the Directive and any conspiracy to violate the Directive.&nbsp; All other activities with these Russian Financial Institutions are permitted.
OFAC FAQs 887-891 explain these prohibitions and makes two notable clarifications: (1) E.O. Directive 1 does not prohibit U.S. financial institutions from participating in the secondary market for bonds issued by the Russian Financial Institutions (see FAQ 889); and (2) the 50 percent rule does not apply, such that the prohibitions set forth in Directive 1 apply only to certain bonds issued by, or loans made to, the Russian Financial Institutions but not to any entity that is owned, directly or indirectly, 50 percent or more by one or more of these three entities, whether individually or in the aggregate (see FAQ 891). Updates to FAQs 673-676 relate to the CBW Act E.O. and Directive and note differences or similarities with respect to the new E.O. and Directive 1.

core/freeform

SmarTrade

Senior Legislative and Regulatory Policy Advisor

Scott E. Diamond

International Trade

OFAC Imposes New Sanctions on Russia’s Technology, Defense and Financial Sectors