Executive Order Imposes New Russia Sanctions for Foreign Financial Institutions and Prohibits Additional Russian Imports (2024)

Executive Order Imposes New Russia Sanctions for Foreign Financial Institutions and Prohibits Additional Russian Imports

On December 22, 2023, President Biden issued Executive Order 14114, which amended previous Executive Orders in order to authorize the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) to impose additional Russia-related sanctions on foreign financial institutions and expand the scope of existing import prohibitions for certain Russian goods.

New Sanctions Potentially Applicable to Foreign Financial Institutions

Executive Order 14114 now permits OFAC (in OFAC’s discretion) to impose either correspondent account sanctions or blocking sanctions on foreign financial institutions when those foreign financial institutions have either:

  • Conducted or facilitated any “significant transaction” which is “for or on behalf of” any person that OFAC has already designated as a Specially Designated National (“SDN”) as a result of that person’s operating or having operated in the technology, defense and related materiel, construction, aerospace, or manufacturing sectors of the Russian Federation economy; or
  • Conducted or facilitated any “significant transaction” or “provided any service” which involves “Russia’s military-industrial base”, with the types of sanctionable transactions specifically including (but not being limited to) “the sale, supply, or transfer, directly or indirectly, to the Russian Federation of any item or class of items as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State and the Secretary of Commerce.”

OFAC FAQ 1151 defines the term “Russia’s military-industrial base” to include “the technology, defense and related materiel, construction, aerospace, and manufacturing sectors of the Russian Federation economy”. Notably, for the sanctions described in the second bullet-point, Executive Order 14114 does not require that parties to a transaction involving “Russia’s military-industrial base” must first be designated as SDNs before OFAC is authorized to impose sanctions on foreign financial institutions who conduct or facilitate “significant transactions” for or otherwise provide services to such parties. Instead, if OFAC finds that the foreign financial institution “conducted or facilitated any significant transaction” or “provided any service” which involves “Russia’s military-industrial base,” Executive Order 14114 now authorizes OFAC to impose either correspondent account or blocking sanctions on that foreign financial institution.

According to new OFAC FAQ guidance and a new OFAC Compliance Advisory to foreign financial institutions, examples of sanctionable services involving “Russia’s military-industrial base” include (but are not limited to) the following:

  • “Maintaining accounts, transferring funds, or providing other financial services (i.e., payment processing, trade finance, insurance)” for persons who have been designated as SDNs in a sector of “Russia’s military-industrial base” or who are not SDNs but otherwise operate in those sectors; and
  • Facilitating the direct or indirect sale, supply or transfer to Russia of specific “critical items” designated by the US Secretaries of Treasury, State and Commerce. Those “critical items” are identified in the Annex to this this Determination.

Expanded Restrictions on Russian Imports

Previously, Executive Order 14068 (issued March 11, 2022) prohibited imports into the United States of fish, seafood and preparations thereof, alcoholic beverages, non-industrial diamonds, and additional products of Russian origin as might be determined by the US Secretary of the Treasury in consultation with the US Secretaries of State and Commerce. On June 28, 2022, OFAC issued a Determination and added Russian origin gold to the list of items subject to Executive Order 14068’s import prohibition.

Effective December 22, 2023, Executive Order 14114 has now amended Executive Order 14068 in order to authorize the US Secretary of Treasury, in consultation with the US Secretaries of State and Commerce, to prohibit the import of additional categories of goods into the United States from third countries when those goods might not technically qualify as “products of Russian Federation origin” but are otherwise “mined, extracted, produced, or manufactured wholly or in part in the Russian Federation, or harvested in waters under the jurisdiction of the Russian Federation or by Russia-flagged vessels, notwithstanding whether such products have been incorporated or substantially transformed into other products outside of the Russian Federation”. Executive Order 14114 authorizes the US Secretary of Treasury to exercise these expanded import prohibition powers on fish, seafood and preparations thereof, diamonds and any other products as determined by the US Secretary of Treasury in consultation with the US Secretaries of State and Commerce.

Pursuant to this amendment, OFAC issued a Determination dated December 22, 2023 identifying salmon, cod, and crab as goods that are now prohibited to be imported into the US if they were “produced wholly or in part in the Russian Federation, or harvested in waters under the jurisdiction of the Russian Federation or by Russia-flagged vessels, notwithstanding whether such fish, seafood, and preparations thereof have been incorporated or substantially transformed into another product outside of the Russian Federation.”

OFAC issued General License 83 which authorizes transactions “ordinarily incident and necessary” to the importation of affected salmon, cod, pollock, or crab into the U.S. pursuant to contractual obligations entered into prior to December 22, 2023; such transactions are authorized until February 21, 2024.

OFAC also issued a separate Determination which made “technical, non-substantive changes” to OFAC’s previous June 28, 2022 Determination regarding Russian Federation origin gold under Executive Order 14068. The amended Determination continues to prohibit imports of Russian Federation origin gold into the US, but for the time being OFAC has not included gold products from third countries in the categories of items that can be prohibited for import into the US when they are wholly or partially mined, extracted or produced within Russia.

Husch Blackwell’s Export Controls and Economic Sanctions Team continues to closely monitor all export controls and enforcement related developments and will provide further updates as circumstances warrant. Should you have any questions or concerns, please contact Cortney Morgan, Grant Leach, Emily Mikes, or Eric Dama, of our Export Controls and Economic Sanctions Group.

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Executive Order 14114: New Russia Sanctions and Import Prohibitions

Overview of Executive Order 14114

  • On December 22, 2023, President Biden issued Executive Order 14114, which amended previous Executive Orders to authorize the US Treasury Department’s Office of Foreign Assets Control (OFAC) to impose additional Russia-related sanctions on foreign financial institutions and expand the scope of existing import prohibitions for certain Russian goods.

Sanctions on Foreign Financial Institutions

  • Executive Order 14114 allows OFAC to impose correspondent account sanctions or blocking sanctions on foreign financial institutions that have conducted or facilitated significant transactions for or on behalf of persons designated as Specially Designated Nationals (SDNs) operating in specific sectors of the Russian Federation economy, such as technology, defense, construction, aerospace, or manufacturing .
  • OFAC FAQ 1151 defines "Russia’s military-industrial base" to include sectors like technology, defense, construction, aerospace, and manufacturing in the Russian Federation economy.

Expanded Restrictions on Russian Imports

  • Executive Order 14114 expanded import prohibitions to include goods mined, extracted, produced, or manufactured wholly or in part in the Russian Federation, or harvested in Russian waters or by Russia-flagged vessels. This includes fish, seafood, preparations thereof, diamonds, and other products determined by the US Secretary of the Treasury in consultation with the Secretaries of State and Commerce.
  • OFAC issued a Determination identifying salmon, cod, and crab as goods prohibited for import into the US if produced wholly or in part in the Russian Federation or harvested in Russian waters or by Russia-flagged vessels.

General License and Additional Determinations

  • OFAC issued General License 83, authorizing transactions necessary for the importation of affected salmon, cod, pollock, or crab into the US pursuant to contractual obligations entered into prior to December 22, 2023, until February 21, 2024.
  • A separate Determination made technical, non-substantive changes to OFAC’s previous June 28, 2022 Determination regarding Russian Federation origin gold under Executive Order 14068 .

This comprehensive overview of Executive Order 14114 provides insights into the new Russia sanctions and expanded import prohibitions, demonstrating a clear understanding of the implications and regulatory changes involved.

Executive Order Imposes New Russia Sanctions for Foreign Financial Institutions and Prohibits Additional Russian Imports (2024)
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