OFAC Targets Russia's Financial and Energy Sectors in New Sectoral Sanctions

As a result of the ongoing Crimea conflict, the U.S. Treasury Department's Office of Foreign Assets Control ("OFAC") has issued new sanctions targeting Russian banks and energy companies. This week, OFAC issued a Ukraine-related Sectoral Sanctions Identifications List ("SSI List") and Directives 1 and 2 pursuant to Executive Order 13662 (the "Directives") that provide two lists of sectoral sanctions designations. On or after July 16, 2014, the Directives, generally, prohibit U.S. persons – wherever located – from entering into "new debt" transactions, including "transacting in, providing financing for, or otherwise dealing in debt with a maturity of longer than 90 days...on behalf of, or for the benefit of the entities listed on the SSI List, their property, or their interests in property." Directive 1 entities are also prohibited from entering into "new equity" transactions meeting the definition above. Entities included on the list are Russian banks and energy sector entities; the Directives also extend prohibitions to entities owned 50 percent or more by an entity designated on the SSI List. According to OFAC's website, transactions that will be caught under the "new debt" and "new equity" prohibitions include:

Debt defined as "bonds, loans, extensions of credit, loan guarantees, letters of credit, drafts...