Client Alert 28 Dec. 2023

U.S. to Impose Secondary Sanctions on Non-U.S. Banks For Financing Russia’s Defense Industry

President Biden issued an executive order on December 22, 2023 that provides the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) with new authorities to target foreign financial institutions that continue to process transactions to Russia. In public remarks, Deputy Treasury Secretary Wally Adeyemo identified banks in China, Turkey and the United Arab Emirates as potential sanctions targets.

To mitigate secondary sanctions risks, foreign banks will have to step up compliance efforts to identify and restrict transactions that support Russia’s “military-industrial base.” U.S. financial institutions must also update compliance protocols to target correspondent banking transactions by covered foreign financial institutions.

Secondary Sanctions on Foreign Financial Institutions

The Executive Order of December 22, 2023 amends Executive Order 14024 to authorize sanctions on foreign financial institutions that conduct or facilitate significant transactions that support Russia’s military-industrial base.

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