Since the onset of Russia-Ukraine War in February 2022, the United States, acting in coordination with the G7 and other countries, has implemented myriad sanctions, export controls, and other economic measures intended to inhibit Russia’s access to capital, technology, and materials that could be used to support the war effort (see examples in KPMG Regulatory Alerts here and here). A fact sheet released by the Department of the Treasury (Treasury) highlights actions taken by the U.S. over the past year. Highlights of very recent measures follow.
In coordination with the G7, the Treasury’s Office of Foreign Assets and Control (OFAC) announced “expanded and intensified” sanctions against the Russian Federation, including:
In a joint statement, the G-7 leaders committed to strengthen the sanctions and other economic measures put in place as well as to adopt, as needed, “further measures to prevent Russia from accessing inputs that support its military and manufacturing sectors, including, among others, industrial machinery, tools, construction equipment, and other technology.”
In September 2022, the U.S., as part of a coalition of countries, announced plans to implement a policy to ban, subject to a price cap exception, a broad range of services (including trade finance, banking, brokering, and insurance) related to the maritime transportation of Russian Federation origin crude oil and petroleum products (see related KPMG Regulatory Alert). The ban on crude oil took effect on December 5, 2022, and the ban on petroleum products took effect on February 5, 2023. Failure to comply with the ban would result in a sanctions violation. The price caps are subject to ongoing review.
The FATF (Financial Action Task Force), an international standards setter focused on money laundering, terrorist financing, and other areas of illicit finance, has suspended the membership of the Russian Federation citing the country’s “attacks targeting critical infrastructure,” arms trade with United Nations sanctioned jurisdictions, and “malicious cyber-activities.” FATF notes, however, that the Russian Federation remains accountable for its obligation to implement the FATF Standards. It will also remain a member of the Global Network as an active member of the Eurasian Group on combatting Money Laundering (EAG) and retain its rights as an EAG member.
In response, the U.S. Secretary of the Treasury issued a statement applauding the FATF for taking this “unprecedented action.”