On July 16, the U.S. Department of Treasury, Office of Foreign Assets Control (OFAC) imposed new sanctions against Russia, which target the country’s financial, energy and defense sectors.  In a parallel action, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) added 11 parties to its Entity List based on their role in the destabilization of eastern Ukraine and the ongoing occupation of Crimea and Sevastopol.

The sanctions prohibit U.S. persons from providing new financing to two major Russian financial institutions (Gazprombank OAO and VEB) and two Russian energy firms (OAO Novatek and Rosneft).  Under the new measures, U.S. persons (including any person, regardless of nationality, within the United States) may not transact in, provide financing for, or otherwise deal in new debt of longer than 90 days maturity or new equity for Gazprombank OAO, VEB, OAO Novatek, Rosneft, or their property or interests in property.

Beyond these specific restrictions, OFAC has not otherwise blocked these entities’ property or prohibited transactions with them.  But the scope of prohibited transactions and the number of targets could be expanded in the future.  Amid the international outcry over the downing of a Malaysian passenger plane over Ukraine yesterday, such an expansion seems likely.

To implement these sanctions, OFAC introduced the new Sectoral Sanctions List, which identifies persons operating in the sectors of the Russian economy subject to U.S. sanctions and describes the particular prohibitions on dealings with them.

OFAC also designated on its Specially Designated Nationals List eight Russian arms firms; the “Luhansk People’s Republic” and the “Donetsk People’s Republic,” which the United States claims have asserted governmental authority over parts of Ukraine without the authorization of the Ukrainian Government; Aleksandr Borodai, the self-declared “prime minister” of the Donetsk People’s Republic; Feodosiya Enterprises, a key shipping facility in the Crimean peninsula; and four Russian government officials, including Sergey Beseda, a senior Russian Federal Security Service official.

The move freezes the assets of, and generally prohibits transactions by U.S. persons or persons within the United States involving, the designated entities or individuals.

The corresponding addition of many of the same parties to the Entity List subjects those parties to specific license requirements for the export, reexport and/or transfer (in-country) of specified items.

This is just the latest effort by the U.S. government to ratchet up pressure on Russia, and particularly Russian President Vladimir Putin, to end actions Russia has taken to destabilize eastern Ukraine.  Given how little Russia has done in response to prior sanctions, it remains to be seen whether these new steps will have any effect.  Regardless of how these measures impact Russia, however, U.S. companies will bear the burden of understanding and complying with them.