Today, March 6, 2014, President Obama signed a new Executive Order in response to the threats Ukraine is facing to its peace and stability. The Executive Order addresses attempts to assert governmental authority in the Crimean region without the approval of the Ukrainian government and authorizes sanctions against any individual or entity that the Secretary of the Treasury and the Secretary of State determine:

• Is responsible for, or complicit in, actions or policies that undermine democratic processes or institutions in Ukraine;

• Threatens the peace, security, stability, sovereignty, or territorial integrity of Ukraine;

• Is involved in the misappropriation of state assets of Ukraine; or

• Has asserted governmental authority over any part or region of Ukraine without the authorization of the Government of Ukraine.

After an individual or entity is identified by Treasury and State, the Executive Order blocks all of the individual or entity’s property and interest in property in the United States or in the control of a U.S. person.  The Executive Order appears to target officials in Crimea who claim they have broken free of Ukraine and are seeking Russian protection, although no individuals or entities have been designated at this time and the ultimate scope of the order may be broader.

This morning, the European Union also announced it has frozen the assets of the ousted former president Viktor Yanucovich, former prime minister Mykola Azarov, and 16 other senior Ukrainian officials. The EU froze only the assets of those officials suspected of misusing state funds and violating human rights. Currently, there is no indication the EU will adopt broader sanctions during its emergency summit in Brussels.

Companies should take steps to assess their risk as the United States continues to refine its sanctions surrounding the conflict in Ukraine.  Such sanctions may remain focused on persons or may be expanded to include broader restrictions, such as enhanced licensing obligation.  Sanctions may take effect immediately on their publication in the Federal Register; therefore, it is important to have appropriate review and screening processes in place to avoid inadvertent violations.