June 12, 2024 | less than a minute read

New Sanctions Imposed by U.S. Department of Treasury and U.S. Department of State Target Russia's Financial System and Military-Industrial Base

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Joyce Adetutu

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Joyce Adetutu

The U.S. Department of the Treasury's Office of Foreign Assets Control and the U.S. Department of State issued over 300 new sanctions targeting, among other things, Russia's financial system. Treasury also broadened the definition of “Russia's military-industrial base” to include all persons blocked pursuant to Executive Order 14024 (including designated Russian banks), thereby increasing the secondary sanctions risks for foreign financial institutions that facilitate transactions involving Russia's military industrial base.

In addition, Treasury issued a new Determination Pursuant to Executive Order 14071 (effective September 12, 2024) to restrict Russian military access to software and IT related services including access to enterprise management software, design and manufacturing software, cloud-based services, IT support services, and IT consultancy and design services. This action could affect providers of software and IT related services if the benefit of their services could ultimately be received (whether directly or indirectly) by a person located in the Russian Federation.

As President Biden and Group of Seven (G7) Leaders prepare to meet this week in Italy, the U.S. Department of the Treasury is issuing sweeping new measures guided by G7 commitments to intensify the pressure on Russia for its continued cruel and unprovoked war against Ukraine. Today’s actions ratchet up the risk of secondary sanctions for foreign financial institutions that deal with Russia’s war economy; restrict the ability of Russian military-industrial base to take advantage of certain U.S. software and information technology (IT) services; and, together with the Department of State, target more than 300 individuals and entities both in Russia and outside its borders—including in Asia, the Middle East, Europe, Africa, Central Asia, and the Caribbean—whose products and services enable Russia to sustain its war effort and evade sanctions.

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