Broader Than They Look: New OFAC Sanctions on Russian Oligarchs, Government Officials, and Associated Entities Will Likely Have Wide-Ranging Implications for the International Financial Sector
On Friday, April 6, 2018, the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”) designated certain individuals and entities connected to the Russian government and Vladimir Putin as Specially Designated Nationals (“SDNs”). Despite the relatively small number of additions to the SDN List, these new designations will likely have a broad impact on the international financial community. Both U.S. and non-U.S. clients should evaluate their portfolios and dealings for relationships with the newly-designated individuals and entities and with any entity owned 50% or more by the designees. U.S. persons must cease dealings with SDNs and entities owned or controlled by these SDNs, although wind-downs have been licensed for a limited period of time. Non-U.S. persons may face secondary sanctions for engaging in significant transactions with or for the benefit of the SDNs (or entities they own or control) and should carefully consider any dealings with these newly-designated SDNs. Foreign financial institutions (“FFIs”) are likely to reject any “significant transaction” with the SDNs regardless of whether there is a U.S. nexus and may refuse to process any transaction involving an SDN.