Administers sanctions, SDN List, licenses.

Block property, dealings under IEEPA/CAATSA.

Blocked persons, property frozen.

U.S. persons, goods, financial system.

Non-U.S. persons, significant deals.

License needed for blocked/Crimea.

Compliance yes, facilitation no.

General or specific authorization.

Petition changed circumstances.

U.S. Tax Attorney

Viacheslav Kutuzov, Esq.

U.S. Sanctions Against Russia
Legal Guidance & Compliance | New York Attorney

Q: Significant transaction?

Size, deception, military impact.

CONTACT

As a New York-based attorney, I provide specialized legal services on U.S. sanctions targeting Russia. These sanctions are among the most powerful tools of U.S. foreign policy and national security. Mistakes in interpretation or compliance can result in severe civil and criminal penalties, including multi-million-dollar fines. Many violations are strict-liability offenses, meaning intent is not required to establish liability. Ensuring full compliance is therefore essential for both individuals and companies.

General Principles of U.S. Sanctions

U.S. sanctions are high‑stakes foreign policy and national security instruments designed to restrict—and, in many cases, completely sever—targets’ access to the global financial system and international commerce. They are primarily administered and enforced by the Office of Foreign Assets Control (OFAC) within the U.S. Department of the Treasury, and operate as a complex overlay of statutory law, executive mandates, and administrative guidance that applies to U.S. persons worldwide.

1. Statutory and Executive Architecture

The legal architecture of the Russia-related sanctions regime rests on several reinforcing layers of authority:

IEEPA (International Emergency Economic Powers Act): The foundational statute (50 U.S.C. §§ 1701–1706) that allows the President, upon declaring a national emergency, to “block” property and regulate or prohibit transactions involving designated persons, sectors, or regions.
CAATSA (Countering America’s Adversaries Through Sanctions Act): A central legislative pillar (P.L. 115-44) that codified key Russia-related executive orders into statute and expanded the reach of “secondary” sanctions tools.
Executive Orders (E.O.): Core instruments such as E.O. 14024 (the primary blocking authority) and E.O. 14114(which targets foreign financial institutions supporting the Russian military-industrial base).
Regulatory Implementation: These authorities are operationalized through the Code of Federal Regulations, specifically 31 C.F.R. Part 587 (Russian Harmful Foreign Activities Sanctions Regulations) and 31 C.F.R. Part 589 (Ukraine-/Russia-Related Sanctions Regulations).

2. The Strict Liability Standard

From a compliance and litigation perspective, U.S. sanctions are governed by a Strict Liability Standard for civil violations.

No Intent Required: OFAC does not need to prove that a party intended to violate the law for a violation to occur; if a prohibited transaction takes place, a violation exists as a matter of law.
Mitigation vs. Defense: While a robust Sanctions Compliance Program can mitigate penalties, it is not a legal defense. Willful violations may be referred to the Department of Justice for criminal prosecution.

3. Taxonomy of Restrictions: Comprehensive vs. Targeted

The United States applies a dual‑track structure to exert pressure on the Russian state and its economic base:

Comprehensive Sanctions (Regional Embargoes): Status‑based prohibitions that apply to specific geographic territories, including Crimea and specified areas of Donetsk and Luhansk.
Targeted Sanctions (List‑based measures): Focused on specific actors in the Specially Designated Nationals (SDN) List, requiring a full asset freeze of all property and interests in property within U.S. jurisdiction.

4. The 50 Percent Rule and Aggregation

A frequent source of inadvertent exposure is OFAC’s 50 Percent Rule, which extends blocking to entities that may not appear by name on any list.

Aggregation of Ownership: An entity is “blocked” if it is owned, directly or indirectly, 50 percent or more in the aggregate by one or more blocked persons (See FAQ 399).
Indirect Ownership: This includes stakes held through intermediate entities. OFAC provides detailed examples of these complex structures in FAQ 401.
Due Diligence Expectations: OFAC expects “look‑through” due diligence on Ultimate Beneficial Ownership(UBO) before onboarding or transacting with counterparties.

Primary U.S. Sanctions

Primary sanctions are mandatory prohibitions that apply whenever a “U.S. nexus” is present, and in the current enforcement climate that nexus is interpreted broadly. Transactions that appear foreign on their face can fall within U.S. jurisdiction if they involve U.S. persons, U.S.‑origin items, or the U.S. financial system, particularly U.S.‑dollar clearing.

1. Jurisdictional scope: the “U.S. person” standard

Primary sanctions govern the conduct of all “U.S. persons,” a defined term that captures multiple jurisdictional hooks.

Personal jurisdiction: U.S. citizens and lawful permanent residents (Green Card holders) remain subject to OFAC rules worldwide, regardless of where they are physically located or which currency they use.
Entity jurisdiction: All entities organized under U.S. law, including their foreign branches (for example, a London branch of a New York bank), are U.S. persons for sanctions purposes.
Territorial jurisdiction: Any individual or entity physically present in the United States, even temporarily, is subject to primary sanctions obligations for conduct in U.S. territory.

A key compliance risk is the “inadvertent nexus” created by the U.S. financial system: because most U.S. dollar transactions ultimately clear through U.S. correspondent banks, an otherwise foreign‑to‑foreign USD trade can “export” U.S. jurisdiction into the transaction and expose the parties to primary sanctions enforcement. This risk extends to internal approvals, centralized treasury functions, and shared IT systems located in the United States that touch Russia‑related activity.

2. The SDN List: comprehensive blocking sanctions

Designation on the Specially Designated Nationals and Blocked Persons (SDN) List is the most severe administrative action OFAC can impose. For a U.S. person, an SDN designation triggers three immediate obligations:

Asset freezing: All property and “interests in property” of the SDN that come within U.S. jurisdiction or the control of any U.S. person must be blocked, including bank accounts, securities, real estate, and digital assets.
Prohibition on dealings: U.S. persons are strictly prohibited from engaging in any transaction—directly or indirectly—with an SDN, including providing or receiving funds, goods, services, or other value, and from approving or facilitating such dealings by non‑U.S. persons.
Reporting duty: Blocked property must be reported to OFAC within 10 business days and annually thereafter, using OFAC's blocking and reject report procedures.

Because blocking sanctions cut designated persons off from the U.S. financial system and most legitimate commerce, OFAC treats SDN‑related violations as among the most serious, and they regularly feature in high‑value civil enforcement actions and, in willful cases, criminal referrals.

3. Sectoral sanctions (SSI List): activity‑based restrictions

Sectoral sanctions, administered through the Sectoral Sanctions Identifications (SSI) List and related directives, are designed to degrade targeted capabilities in Russia's finance, energy, and defense sectors without imposing full blocking.

Directives 1, 2, and 3: These restrict U.S. persons from transacting in, providing financing for, or otherwise dealing in certain “new debt” or “new equity” of designated Russian financial and energy firms, subject to maturity limits (for many covered banks under Directive 1, new debt with a maturity longer than 14 days is prohibited; for many energy companies under Directive 2, the typical limit is 60 days).
Directive 4 (“deepwater” restriction): This prohibits U.S. persons from providing, exporting, or reexporting goods, services (other than financial services), or technology in support of exploration or production for specified Russian deepwater, Arctic offshore, or shale oil projects.

Because sectoral sanctions turn on the precise maturity, purpose, and structure of a transaction, they require granular, deal‑by‑deal analysis, and they remain a frequent source of inadvertent violations where front‑office teams treat SSI‑listed entities as if they were unrestricted counterparties.

4. Russian Harmful Foreign Activities (RuHSR) and E.O. 14024

The Russian Harmful Foreign Activities Sanctions Regulations, implemented under Executive Order 14024, provide a flexible framework for targeting a broad range of Russian conduct and supporting actors. Under this authority, the United States has identified entire sectors of the Russian economy—such as technology, defense, aerospace, manufacturing, and certain management and corporate services—as eligible bases for blocking sanctions and related measures.

RuHSR also includes targeted financial and services restrictions:

Sovereign debt restrictions: U.S. financial institutions are prohibited from participating in specified primary and secondary market transactions involving ruble‑ and non‑ruble‑denominated bonds and certain other debt instruments issued by the Central Bank of Russia, National Wealth Fund, or Ministry of Finance, significantly constraining Russia's access to global capital markets.
Service bans: Successive actions under Executive Order 14024 have barred U.S. persons from providing categories of professional services—including certain accounting, trust and corporate formation, management consulting, and more recently specified IT and design‑related services—to persons located in the Russian Federation, sharply narrowing the scope for permissible cross‑border advisory and technical work.

Secondary Sanctions & Significant Transactions

Secondary U.S. sanctions stand as the most potent weapon in America's economic toolkit against Russia, reaching far beyond traditional borders to influence behavior worldwide. Unlike primary sanctions, which hinge on a U.S. nexus, these measures do not technically "outlaw" an activity for a foreign person—since the U.S. lacks direct jurisdiction over, say, a French bank trading with a Russian firm in euros. Instead, they deliver a stark commercial ultimatum: "you may do business with the sanctioned target, or you may do business with the United States (the U.S. financial system and the U.S. dollar), but you cannot do both." This extraterritorial reach has reshaped global trade patterns, forcing non-U.S. firms to weigh Russian opportunities against the irreplaceable value of U.S. market access.

In an era of interconnected finance, secondary sanctions transform U.S. foreign policy into a force that non-U.S. persons ignore at their peril. These measures compel banks, corporations, and service providers in Europe, Asia, and beyond to enforce American restrictions on their own soil, often using non-dollar currencies, simply to avoid the devastating fallout of U.S. reprisal. The result? A de facto global compliance regime where foreign entities adopt U.S.-style due diligence, leading to widespread "over-compliance" and the swift abandonment of Russia-linked deals to protect vital correspondent banking ties.

Significant transaction standard

At the heart of this system lies the "significant transaction" standard, a flexible trigger refined through OFAC guidance and executive actions like E.O. 14114. Rather than a rigid dollar threshold, OFAC applies a holistic "totality of circumstances" evaluation, scrutinizing the transaction's size, frequency, and complexity alongside its role in bolstering Russia's military-industrial base. For instance, amendments in 2024 under E.O. 14024 lowered the bar for dealings in critical items—think microelectronics, sensors, or specialized machinery—that indirectly fuel Russian defense production, while deceptive tactics like shell companies or obfuscated payments almost guarantee a finding of significance. This approach ensures that even subtle support for Russia's war machine draws swift U.S. attention.

The landscape intensified further in 2025, marking new frontiers in enforcement. October designations swept major energy players like Rosneft and Lukoil onto the SDN List, instantly exposing foreign buyers, insurers, and shippers to secondary risks as grave as those tied to Russia's Ministry of Defense. Meanwhile, OFAC sharpened its focus on foreign financial institutions through CAPTA sanctions, which can sever a bank's U.S. correspondent accounts for facilitating military-related flows—effectively halting its international dollar operations and rippling through global markets.

The consequences for those who cross this line are nothing short of catastrophic, often proving irreversible. A secondary violation can culminate in full SDN designation, freezing assets worldwide and rendering the entity radioactive to any counterparty with U.S. exposure. CAATSAempowers a "menu" of tailored penalties, from export license denials and investment bans to visa restrictions on executives, while the reputational shockwave triggers immediate cuts to insurance, shipping, and credit lines as third parties flee "facilitation" liability. For New York practitioners counseling multinational clients, this underscores a critical truth: in the shadow of secondary sanctions, ignorance of Russian ties is no defense—proactive risk mapping is the only safeguard.

Services, Offshore Operations, and Charitable Contributions

U.S. sanctions reach far beyond physical goods or funds, imposing stringent controls on intangible services, offshore activities, and even humanitarian efforts that might otherwise seem benign. For New York-based professionals—attorneys, accountants, consultants, and financial advisors—this means everyday client work can inadvertently cross into prohibited territory, triggering strict liability penalties without regard for intent.

Services Prohibitions: A Broad Net on Professional Engagement

At the core of these restrictions lies a comprehensive ban on U.S. persons providing any services to blocked persons, entities caught by the 50 Percent Rule, or regions under comprehensive embargo, such as Crimea and certain areas of Donetsk and Luhansk. The term "services" sweeps broadly, encompassing legal advice, accounting and audit work, financial consulting, public relations, transportation logistics, management advisory, IT support, architectural design, and even marketing or recruitment assistance—provided directly, indirectly, or "for the benefit of" a sanctioned target.

Consider a New York law firm drafting contracts for a client that turns out to be 51% owned by an SDN: this constitutes a prohibited service, even if the firm never contacts the SDN directly. The same holds for accounting firms preparing financial statements or consultants optimizing supply chains that touch restricted sectors. Absent a specific or general OFAC license, such engagements must cease immediately, and "wind-down" periods are narrow, often limited to existing contracts with no new performance allowed. Violations here are common pitfalls for professional services firms, as they frequently arise from incomplete due diligence on client ownership or end-use.

Offshore Operations: No Safe Harbor Abroad

U.S. sanctions follow U.S. persons wherever they operate, closing off popular circumvention routes through foreign affiliates or subsidiaries. A U.S. citizen expatriate in London directing a UK entity to service a Russian SDN, or a multinational rerouting payments through a Cayman holding company, creates direct liability—the facilitating U.S. person faces the full spectrum of civil and criminal penalties.

Facilitation prohibitions amplify this risk: U.S. persons may not approve, refer, or otherwise enable non-U.S. affiliates to perform what would be prohibited activities if done by the U.S. parent. Practical examples abound, from a New York headquarters signing off on a Singapore subsidiary's consulting contract with a Crimea-based NGO, to policy tweaks allowing foreign branches to ignore SDN screening. Internal emails, board approvals, or shared compliance platforms that touch prohibited deals all count as facilitation, underscoring the need for ring-fenced operations and robust training for global teams.

Charitable Contributions: Humanitarian Intent Is Not Enough

Even well-meaning philanthropy falls under sanctions scrutiny. U.S. persons, including businesses, NGOs, and individuals, require OFAC authorization for any charitable contribution—cash, goods, or services—to blocked persons, regions, or entities owned 50% or more by SDNs, regardless of humanitarian purpose. A donation drive for Ukrainian refugees that inadvertently funnels aid through a Donetsk-based intermediary, or corporate sponsorship of a Russian cultural event tied to an SDN founder, demands pre-approval via specific license application.

Due diligence is paramount: donors must screen recipients, trace fund flows, and ensure no benefit accrues to sanctioned parties, even indirectly through sub-grantees or local partners. General Licenses occasionally authorize certain humanitarian activities, such as medicine or agricultural support, but they are narrowly tailored and do not cover cash transfers or regional embargoes like Crimea. For New York nonprofits and corporate social responsibility programs, this means embedding sanctions checks into grant-making protocols to avoid enforcement actions that could dwarf the donation's value.

In practice, these interconnected prohibitions demand proactive compliance architecture: automated screening tools, ownership mapping, licensed transaction logging, and regular audits. For businesses with international footprints, failure to implement these controls transforms routine operations into multimillion-dollar risks, highlighting why specialized counsel is essential to navigate the sanctions maze without halting legitimate pursuits.

Licenses, Amendments, and Practical Considerations

OFAC licenses serve as critical lifelines amid the rigid prohibitions of U.S. sanctions, offering narrow authorizations for otherwise blocked activities while demanding meticulous adherence to evolving rules. For New York businesses and professionals entangled in Russia-related dealings, understanding these mechanisms is not optional—it's a matter of survival against strict liability enforcement that spares no room for oversight or outdated assumptions.

Navigating OFAC Licenses: Authorization Amid Prohibition

At its core, the Office of Foreign Assets Control issues two main license types: general licenses, published in the Federal Register and automatically applicable to qualifying transactions (such as certain humanitarian aid or divestitures from Crimea), and specific licenses, granted case-by-case through formal applications for unique circumstances like legal settlements or wind-downs of pre-existing contracts. References to sanctions regulations invariably point to their current, amended versions—meaning companies cannot rely on historical interpretations; ongoing monitoring of OFAC's website, Federal Register notices, and advisory updates is mandatory to avoid violations from regulatory drift.

A pivotal practical rule governs property dynamics: assets transferred pursuant to a valid OFAC license lose their blocked status, freeing them for use, but any transfer to or from a blocked person without authorization instantly renders the property blocked itself. Imagine a New York firm shipping goods to a Russian client under a specific license, only for a mid-stream ownership change to an SDN: failure to verify and halt the transfer converts legitimate inventory into frozen assets, exposing the sender to immediate blocking obligations and penalties. This underscores the non-negotiable need for real-time counterparty screening and license condition audits before any movement of funds, goods, or intellectual property.

Amendments to regulations or lists compound these challenges, as they apply prospectively without retroactive forgiveness for past conduct—prior violations remain actionable regardless of subsequent clarifications. In practice, this mandates robust recordkeeping: transaction logs, license copies, due diligence files, and change monitoring reports must span at least five years to demonstrate compliance during OFAC inquiries, which often scrutinize historical patterns rather than isolated events.

Incidental Transactions: The Narrow Path of Permitted Support

Even licensed activities permit only strictly "incidental" transactions—those necessary and proportionate to executing the authorized deal, such as broker fees, bank processing charges, or shipping costs for a licensed export. However, these carve-outs evaporate if they touch other blocked parties, property, or unrelated sanctions programs; a licensed sale to a Russian energy firm cannot justify payments routing through an SDN-owned bank, no matter how efficient.

This precision requirement highlights why superficial license reviews invite disaster: general licenses often cap durations (e.g., 45-90 days for wind-downs), exclude certain sectors like defense, and demand no new binding commitments. For multinational operations, coordinating licensed activities across affiliates demands ironclad internal protocols—pre-approval workflows, license trackers, and legal sign-off—to prevent incidental steps from morphing into standalone violations.

Ultimately, effective license management transforms from a bureaucratic checkbox into a strategic compliance pillar. New York counsel routinely assist clients in drafting persuasive specific license applications, decoding general license scopes, and building audit-ready systems that align business continuity with regulatory reality. In a landscape where one unchecked amendment or unverified transfer can cascade into multimillion-dollar fines, proactive license stewardship separates compliant operators from enforcement targets.

Jurisdiction and Enforcement Risks

U.S. sanctions cast a wide jurisdictional net that captures not just domestic actors but global operations with even fleeting U.S. touchpoints, turning routine international business into a minefield of enforcement risks. For New York attorneys advising clients—from startups to multinationals—these rules demand a paradigm shift: compliance is no longer a back-office function but a core strategic imperative that reshapes partnerships, supply chains, and market access worldwide.

Broad Jurisdiction: Who Falls Under U.S. Control

The sanctions regime applies comprehensively to all "U.S. persons," a category that extends OFAC's reach across borders with surgical precision. This includes U.S. citizens and lawful permanent residents no matter where they reside or work, entities incorporated under U.S. law (along with their foreign branches and subsidiaries), and any individual or entity physically present on U.S. soil at the time of the offending conduct. A U.S. expat in Dubai approving a deal from afar, or a foreign visitor sealing a transaction during a New York layover, both trigger full liability—highlighting how personal mobility amplifies exposure in a mobile world.

Beyond this, certain prohibitions stretch extraterritorially, barring even non-U.S. entities from "facilitating" transactions that a U.S. person could not lawfully perform, such as approving a foreign subsidiary's SDN payment or routing funds through deceptive structures. Critically, no de minimis threshold exists: a $100 wire to a blocked account, an overlooked email referral, or a minor consulting invoice can ignite civil penalties up to $1 million+ per violation or twice the transaction value, with willful cases escalating to criminal fines and imprisonment. This zero-tolerance stance levels the playing field, ensuring that small oversights compound into existential threats for under-resourced firms.

Essential Compliance Pillars: From Screening to Surveillance

Navigating these risks demands a layered, proactive compliance architecture that embeds sanctions awareness into every business decision. At the foundation lies rigorous screening of clients, partners, vendors, and transactions against OFAC's SDN, SSI, and other lists, coupled with dynamic ownership mapping to apply the 50 Percent Rule and sectoral aggregation thresholds—uncovering "hidden" blocks buried in complex corporate veils.

Geographic vigilance follows closely: continuous monitoring flags exposure to embargoed zones like Crimea, Donetsk, or Luhansk, where even passive investments or remote services can violate comprehensive bans. For global enterprises, the real challenge intensifies offshore: U.S. persons must police foreign affiliates and subsidiaries to prevent them from serving as conduits, enforcing "no facilitation" policies through contractual controls, training mandates, and audit rights that block bypass attempts at their root.

Underpinning it all is meticulous recordkeeping – five years minimum – of licenses, transaction ledgers, due diligence reports, and monitoring logs, ready to withstand OFAC subpoenas or voluntary disclosures that can mitigate penalties but demand ironclad proof of good faith.

The Global Business Imperative: Compliance as Competitive Edge

Ultimately, U.S. sanctions do not merely dictate who you can work with; they redefine how your entire operation functions across borders, from deal structuring to treasury management. Vigilant internal controls—automated screening platforms, cross-functional compliance committees, and real-time regulatory alerts—transform potential liabilities into defensible strengths, shielding legal standing while preserving reputational capital in an era where one viral enforcement headline can evaporate client trust overnight.

For New York practices, this landscape elevates counsel from reactive advisors to architects of resilient strategies: conducting ownership audits, drafting affiliate compliance clauses, and simulating OFAC exams to fortify clients against the inevitable scrutiny. In a world where sanctions evolve weekly, proactive mastery is not just essential—it's the dividing line between thriving enterprises and enforcement casualties.

My services

I provide comprehensive legal support for U.S. sanctions compliance, helping businesses and individuals navigate the complex regulatory landscape while minimizing legal and operational risk. My services combine deep technical expertise with practical guidance to ensure that compliance is not just theoretical, but actionable in day-to-day business operations.

Due Diligence and Counterparty Screening. Effective compliance begins with understanding who you are doing business with. I assist clients in conducting robust due diligence, including screening counterparties against OFAC’s SDN (Specially Designated Nationals), SSI (Sectoral Sanctions Identifications), and other sanctions lists. This includes analyzing ownership chains, identifying beneficial owners, and applying the 50% rule to determine whether an entity is indirectly blocked. The goal is to prevent inadvertent dealings with sanctioned persons or entities, and to help you make informed decisions about partnerships, transactions, and investments.

OFAC Licensing. Many transactions that would otherwise be prohibited can be authorized under General or Specific Licenses issued by OFAC. I guide clients through the preparation and filing of license requests, ensuring compliance with OFAC requirements while making a persuasive case for approval. This includes drafting detailed justifications for transactions involving humanitarian aid, legal services, or other essential activities. By handling the complex procedural requirements, I help clients pursue lawful transactions without running afoul of sanctions regulations.

Compliance Program Development. A strong sanctions compliance program is essential for reducing risk and demonstrating good faith to regulators. I work with clients to develop and implement tailored internal policies and procedures, including employee training, transaction monitoring systems, and reporting mechanisms. This encompasses practical steps to monitor ongoing operations, screen new counterparties, and maintain documentation sufficient to withstand OFAC scrutiny. I also advise on global operations to ensure that foreign affiliates and subsidiaries do not inadvertently facilitate prohibited transactions.

Delisting and Remediation. Being listed on a sanctions list can have profound operational and reputational consequences. I represent clients in delisting and remediation processes, preparing submissions to remove entities or individuals from OFAC lists, including SDN and SSI. This involves gathering evidence of changed circumstances, demonstrating compliance efforts, and crafting persuasive legal arguments. Effective delisting can restore access to financial systems, trade, and commercial opportunities.

Enforcement Defense. In the event of enforcement actions, I provide strategic representation to protect client interests. This includes responding to Pre-Penalty Notices, coordinating communications with OFAC, and developing a comprehensive defense strategy. My approach focuses on mitigating civil or criminal liability, demonstrating proactive compliance efforts, and achieving the most favorable outcomes under the law.

Additional Practical Services

Advising on provision and receipt of services to ensure compliance with prohibitions relating to blocked persons or restricted regions.
Structuring offshore and cross-border transactions to avoid inadvertent facilitation of prohibited activities.
Reviewing and advising on charitable contributions and humanitarian aid involving potentially blocked recipients.
Assessing ownership structures and joint ventures for sanctions exposure, including projects with multiple stakeholders subject to sectoral sanctions.
Monitoring and evaluating significant transactions for size, frequency, and potential deceptive practices under OFAC rules.

By combining legal expertise with practical, operational guidance, I help clients not only comply with U.S. sanctions but also confidently pursue legitimate business opportunities without unnecessary risk. Whether you need preventive compliance, licensing support, or defense against enforcement actions, my services are designed to address the full spectrum of U.S. sanctions challenges.

FAQ: U.S. Sanctions Against Russia

What is the Office of Foreign Assets Control (OFAC)? OFAC, part of the U.S. Department of the Treasury, administers and enforces sanctions, maintains lists like the SDN List, and issues licenses for authorized transactions.

What are U.S. sanctions against Russia? U.S. sanctions against Russia are economic restrictions under IEEPA and CAATSA that block property, prohibit dealings with designated persons, and limit activities in sectors and regions like Crimea.

Who administers U.S. sanctions? Sanctions are primarily administered and enforced by the Office of Foreign Assets Control (OFAC) within the U.S. Department of the Treasury.

What is the SDN List? The SDN List designates blocked persons whose property U.S. persons must freeze and with whom they may not transact absent a license.

What does “blocking” mean under sanctions? Blocking requires U.S. persons to freeze all property and interests in property of designated persons within U.S. jurisdiction or their control.

What are primary sanctions? Primary sanctions prohibit U.S. persons, U.S.-origin goods, and U.S. financial system use in dealings with sanctioned targets.

Who is considered a U.S. person for sanctions purposes? U.S. persons include citizens, permanent residents, U.S.-organized entities and their foreign branches, and anyone physically in the U.S.

Who is considered a "U.S. Person" under these regulations? The term includes U.S. citizens and permanent residents (wherever located), entities organized under U.S. law, and any person physically present in the United States.

What are sectoral sanctions? Sectoral sanctions impose activity-based limits on dealings with Russian finance, energy, and defense via the SSI List and directives.

What is the difference between blocking sanctions and sectoral sanctions? Blocking sanctions freeze all assets and ban all dealings, whereas sectoral sanctions only prohibit specific activities, such as new debt or investment, within designated industries.

What are secondary sanctions? Secondary sanctions target non-U.S. persons for significant transactions with sanctioned Russians, risking SDN status or U.S. market exclusion.

What is the 50% rule? Entities owned 50% or more, directly or indirectly, by blocked persons are themselves blocked under OFAC's 50 Percent Rule.

How does the "50% Rule" affect non-listed entities? Any entity owned 50% or more by one or more blocked persons is automatically considered blocked, even if that entity is not specifically named on a sanctions list.

Are sanctions violations strict liability? Yes, most civil violations are strict liability, imposing penalties without requiring proof of intent.

What is the liability standard for U.S. sanctions violations? U.S. sanctions operate under a strict liability standard, meaning an individual or company can be penalized regardless of whether they intended to violate the law.

Can U.S. persons provide services to Russia? No, U.S. persons cannot provide services like legal or consulting to blocked persons or Crimea without a license.

Can a U.S. person provide services to a blocked individual or region? Providing services—including legal, accounting, or consulting—to blocked persons or restricted regions like Crimea is prohibited unless specifically authorized by an OFAC license.

Can lawyers advise sanctioned entities? Lawyers may provide compliance advice to sanctioned clients but cannot facilitate prohibited transactions.

What constitutes "facilitation" in a sanctions context? Facilitation occurs when a U.S. person assists, refers, or approves a transaction for a foreign affiliate that the U.S. person could not lawfully perform themselves.

Do payments from blocked persons require a license? Yes, receiving payments from blocked persons generally requires an OFAC license to avoid blocking the funds.

What happens if sanctions are violated? Violations trigger civil penalties up to $377,000, criminal charges, and U.S. financial system exclusion.

What are the primary consequences of being placed on the SDN List? Designation on the SDN List results in an immediate freeze of all U.S.-based assets and a total ban on all direct or indirect dealings with the listed party.

What is required for charitable donations? Charitable contributions to blocked persons or regions need OFAC authorization, even for humanitarian aid.

Are charitable contributions exempt from sanctions? No, charitable and humanitarian contributions to blocked persons or regions require specific authorization from OFAC to ensure funds do not benefit sanctioned parties.

What factors determine if a transaction is "significant" for secondary sanctions? OFAC evaluates significance based on the transaction’s size, frequency, nature, and whether deceptive practices were used to hide the involvement of sanctioned parties.

How do OFAC licenses work? General licenses authorize qualifying activities; specific licenses, via application, unblock compliant property transfers.

Is there a de minimis exception? No, even small or indirect transactions can lead to civil or criminal penalties.

How are sanctions enforced internationally? Enforcement leverages secondary sanctions on global intermediaries and coordination with allied governments.

Why are U.S. sanctions against Russia so expansive? Sanctions aim to curb Russia's military-industrial base, war funding, and harmful activities like the Ukraine invasion.

Can foreign companies be sanctioned? Yes, non-U.S. companies risk secondary sanctions or SDN designation for significant dealings with sanctioned Russians.

Do sanctions apply offshore? Yes, U.S. persons face liability worldwide and cannot facilitate prohibited acts by foreign affiliates.

How can a person or entity be removed from a sanctions list? Removal typically requires a formal delisting and remediation process, where the party must provide evidence of changed circumstances or demonstrate a commitment to compliance.

What compliance steps are essential? Essential steps include OFAC screening, ownership mapping, regional monitoring, affiliate controls, and recordkeeping.

What services does Viacheslav Kutuzov offer? Viacheslav Kutuzov, Esq., provides New York-based sanctions due diligence, licensing, compliance programs, delisting, and enforcement defense.

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