On Wednesday, July 16, 2014, President Obama announced new economic sanctions that restrict access by targeted companies in Russia’s financial and energy sectors to US capital markets. These sanctions are being implemented by the U.S. Department of the Treasury’s Office of Foreign Asset Control (“OFAC”), which issued a “Sectorial Sanctions Identification List” (“SSI List”) that identifies the targeted Russian companies. Prohibited transactions with the targeted companies are described in two directives issued by OFAC. Directive 1 prohibits US persons from transacting in, providing financing for, or otherwise dealing in debt issued on or after July 16, 2014 (“New Debt”) with a maturity of longer than 90 days or new equity issued on or after July 16, 2014 (“New Equity”) of targeted companies in Russia’s financial sector, their property, or their interests in property. Directive 2 prohibits US persons from transacting in, providing financing for, or otherwise dealing in New Debt of longer than 90 days’ maturity of targeted companies in Russia’s energy sector, their property, or their interests in property. New Equity is not included in Directive 2.
OFAC also issued General License 1 on July 16, 2014, authorizing certain transactions involving derivative products whose value is linked to an underlying asset that constitutes New Debt or New Equity. The general license, however, does not authorize the holding, purchasing, or selling of the underlying assets prohibited under Directive 1 and Directive 2.
In addition to issuance of the SSI List, OFAC announced on July 16, 2014 the addition of new individuals and entities to the List of Specially Designated Nationals and Blocked Persons List (SDN List). These entities and individuals include Russian weapon manufacturers and officials.