Today, President Biden signed a new Executive Order (E.O.) that strengthens U.S. sanctions authorities against financial facilitators of Russia’s war machine. The E.O. makes clear to foreign financial institutions that they risk losing access to the U.S. financial system if they facilitate significant transactions relating to Russia’s military industrial base. The E.O. also provides authority to broaden U.S. import bans on certain Russian goods.
In response to Russia’s unprovoked war on Ukraine, the Biden Administration has worked actively with our allies and partners around the world to hold Russia accountable for its brutal and unjust war and to undercut Russia’s efforts to ramp up its military capacity. The United States has imposed sanctions and export control measures against thousands of entities and individuals, including on multinational procurement networks that Russia uses to acquire key defense-related and goods from abroad. To counter evasion of these steps and degrade Putin’s war machine, the Biden Administration has coordinated with partners to target companies in third countries and has dispatched teams globally to engage directly with foreign governments, companies, and financial institutions to share information and highlight sanctions risks. The United States has been clear: those who are supplying goods or processing transactions that materially support Russia’s military industrial base are complicit in Russia’s brutal violation of Ukraine’s sovereignty and territorial integrity.
With this E.O., the United States is taking action consistent with the G7 Leaders’ statement of December 6, 2023, which warned that we will work to further curtail Russia’s efforts to use the international financial system to facilitate expansion of its military industrial base.
Targeting financial institutions that support Russia’s military industrial base
As Russia creates cutouts and front companies to circumvent our restrictions and uses both witting and unwitting financial intermediaries, the new E.O. provides additional tools to root out Russia’s procurement networks. This E.O. amends Executive Order 14024 to expand U.S. authority to sanction:
- Financial institutions determined to have conducted or facilitated any significant transaction for or on behalf of companies or individuals the United States has sanctioned for operating in sectors of the Russian economy that support its military industrial base; and
- Financial institutions determined to have conducted or facilitated any significant transaction, or provided any service, involving Russia’s military industrial base, including the sale, supply, or transfer to Russia of certain critical items.
The Department of the Treasury will issue a determination that includes a list of critical items. A financial institution sanctioned under one of these criteria will face either full blocking sanctions or the loss of, or strict conditions on, their U.S. correspondent accounts.
To curtail Russia’s revenue from other sectors, the E.O. will also make it more difficult for specific Russian goods to enter the United States after being modified in a third country. In the coming months, the United States and our partners intend to introduce import restrictions on certain diamonds mined, processed, or produced in Russia, building on an existing U.S. ban on the importation of Russian-origin diamonds. Today’s E.O. amends Executive Order 14068 to provide the authority to ban, following a determination from appropriate U.S. departments and agencies, the importation of certain products mined, extracted, produced, or manufactured wholly or in part in Russia, even if these products are then transformed in a third country.
Similarly, the amendment to E.O. 14068 provides the authority to ban, following a determination from appropriate U.S. departments and agencies, the importation of certain products harvested in Russian waters or by Russia-flagged vessels, even if these products are then transformed in a third country. The Department of the Treasury intends to issue a determination identifying specific types of seafood that will be subject to this prohibition.