Guidance for Foreign Financial Institutions on OFAC Sanctions Authorities Targeting Support to Russia’s Military-Industrial Base
December 22, 2023
In response to the Russian Federation’s continued use of its military-industrial base to support its aggression against Ukraine, the President has issued an Executive Order (E.O.) amending E.O. 14024 that provides the Office of Foreign Assets Control (OFAC) with new authorities to target foreign financial institutions for engaging in certain transactions. Foreign financial institutions that conduct or facilitate significant transactions or provide any service involving Russia’s military-industrial base run the risk of being sanctioned by OFAC.
The United States and partners have put in place a sanctions and export controls regime that has severely restricted Russia’s ability to import many of the items that directly support its brutal and unjustified war against Ukraine. As a result, Russia is increasingly using third countries to evade sanctions and continue...
1) Refer to comments to EO 14114 for more on section 11 of amended EO 14024, and see the list of “critical items” at Determination Pursuant to Section 11(a)(ii) of E.O. 14024, as amended by E.O. of December 22, 2023 (Effective December 22, 2023).
This guidance is unique insofar as the context is managing secondary sanctions risk, but it provides a level of “compliance”-related detail that is typical of a guidance document issued for compliance with primary sanctions prohibitions that operate on a strict liability basis. OFAC even goes as far to cross-reference its “A Framework for OFAC Compliance Commitments” guidance.
2) While this document and other related guidance do not provide a sweeping safe harbor stating that transactions are not sanctionable unless they would...