March 18, 2014
In continued response to the ongoing crisis in Ukraine, on March 17, 2014, President Obama signed an Executive Order "Blocking Property of Additional Persons Contributing to the Situation in Ukraine." ("Second Ukraine E.O." or "E.O."). The text of the E.O. is available here. The Second Ukraine E.O. expands on Executive Order 13660, signed on March 6, 2014, which targets persons threatening the peace, sovereignty, and territorial integrity of Ukraine. President Obama issued both Executive Orders in response to the recent political upheaval in Ukraine, including Russia’s movement of troops into the Crimea and the March 16, 2014 Crimean referendum on seceding from Ukraine. The Second Ukraine E.O. expands the scope of Executive Order 13660 by providing the authority to block the property of officials of the Government of the Russian Federation and persons who operate in the Russian arms sector.
In addition, the Office of Foreign Assets Control ("OFAC") at the U.S. Department of the Treasury also designated eleven individuals found to threaten the peace, sovereignty, and territorial integrity of Ukraine, including former officials from Ukraine and current officials from the Russian Federation. Four individuals were designated pursuant to Executive Order 13660, and seven individuals were designated pursuant to the Second Ukraine E.O. Notable persons designated include former Ukrainian President Viktor Yanukovych. It is now unlawful for any U.S. person or company to do business with the designated parties, and any property in which the designated parties have an interest must be blocked.
Depending on how the crisis in Ukraine continues to unfold, OFAC may designate more persons and undertake enforcement actions against U.S. companies who violate the prohibitions set forth in both Executive Orders. U.S. companies should pay close attention to further announcements by OFAC and ensure that they comply with the requirements of the Executive Orders.
The European Union (EU) also issued a list of twenty-one individuals it has identified as responsible for actions which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine, as well as persons and entities associated with them. These individuals have been targeted with a travel ban and a freeze with respect to their EU assets. Although the list of EU targets overlaps in part with the list of sanctioned individuals identified in today’s announcement by the U.S. government, it also contains names that are not included in the U.S. designations. Likewise, the U.S. target list also includes individuals who have not yet been sanctioned by the EU. U.S. persons with operations in Europe or who are otherwise subject to EU legal authority should take care to comply with the new EU sanctions regarding Ukraine, in addition to screening for individuals designated pursuant to the two U.S. Executive Orders.
Key Provisions of the Executive Order
The Second Ukraine E.O. expands the President’s authority to target persons who undermine the democratic institutions and the peace and stability of Ukraine.
Most notably, the E.O. blocks all property and interests in property in the United States, or in the possession or control of any U.S. person or company, of any person listed in the annex to the E.O., or determined by the Secretary of the Treasury to be an official of the Government of the Russian Federation or to operate in the arms or related sector in the Russian Federation. It also blocks the property of any person determined to be owned or controlled by–or to have acted or purported to act for or on behalf of–a senior official of the Government of the Russian Federation or a person whose property and interests in property are blocked pursuant to the E.O. In addition, it blocks the property of any person determined to have materially assisted, sponsored, or provided financial, material, or technological support for–or goods or services to or in support of–a senior official of the Government of the Russian Federation or a person whose property and interests in property are blocked pursuant to the E.O.
The E.O. defines the term "Government of the Russian Federation" as "the Government of the Russian Federation, any political subdivision, agency, or instrumentality thereof, including the Central Bank of the Government of the Russian Federation, and any person owned, or controlled by, or acting for or on behalf of, the Government of the Russian Federation." Notably, the E.O. does not define who a senior official of the Government of the Russian Federation is, or what constitutes the arms or a related sector.
In addition, the E.O. suspends entry into the United States of persons designated pursuant to this Executive Order.
The Second Ukraine E.O. and the EU listings are further steps by the United States and the European Union to bring economic pressure to bear in helping resolve the political crisis in Ukraine. As we noted in our recent client alert on this matter, whether the crisis deepens or relaxes will likely determine whether the United States and the European Union take additional steps to impose economic sanctions on Russia. Looking ahead, U.S. companies should be aware of at least two potential developments.
First, U.S. companies should ensure that they are in compliance with these new Executive Orders and have blocked the property of any designated persons. U.S. companies should also closely monitor any additional designations, Executive Orders, legislation, or regulations.
Second, Russia has indicated that it may penalize U.S. businesses following the imposition of U.S. sanctions. Given the designation of officials of the Government of the Russian Federation, Russian economic retaliation against U.S. businesses is now substantially more likely.
Gibson, Dunn & Crutcher attorneys stand ready to assist our clients and friends with any issues they may face related to these developments.
 Exec. Order No. _____ of March 17, 2014, Blocking Property of Additional Persons Contributing to the Situation in Ukraine, 79 Fed. Reg. ______, available at http://www.treasury.gov/resource-center/sanctions/Programs/Documents/ukraine_eo2.pdf.
 Exec. Order No. 13,660 of March 6, 2014, Blocking Property of Certain Persons Contributing to the Situation in Ukraine, 79 Fed. Reg. 13,491 (Mar. 10, 2014), available at https://federalregister.gov/a/2014-05323. For a more in-depth discussion of that Executive Order, see Client Alert, Gibson, Dunn & Crutcher, LLP, President Obama Signs Executive Order Targeting Persons Threatening Peace, Sovereignty, and Territorial Integrity of Ukraine; European Union Sanctions Former Ukrainian Leaders (Mar. 10, 2014), http://www.gibsondunn.com/wp-content/uploads/documents/publications/President-Obama-Signs-Executive-Order-Targeting-Persons-Threatening-Peace-Territorial-Integrity-of-Ukraine.pdf .
 For a background briefing on the Second Ukraine E.O. and associated U.S. actions, see Background Briefing by Senior Administration Officials on Ukraine (Mar. 17, 2014), http://www.whitehouse.gov/the-press-office/2014/03/17/background-briefing-senior-administration-officials-ukraine.
 Office of Foreign Assets Control, Issuance of a new Ukraine-related Executive Order; Ukraine-related Designations (Mar. 17, 2014), available at http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/pages/20140317.aspx.
 Council Regulation (EU) No 269/2014 of 17 March 2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine, 2014 O.J. (L 78) 6, 11, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2014:078:0006:0015:EN:PDF.
 Client Alert, Gibson, Dunn & Crutcher, LLP, President Obama Signs Executive Order Targeting Persons Threatening Peace, Sovereignty, and Territorial Integrity of Ukraine; European Union Sanctions Former Ukrainian Leaders.
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