US escalates sanctions targeting Russian evasion networks, tech companies and cyber actors; signals more sanctions are on the way

The US and its allies continue to escalate blocking sanctions and other economic measures imposed on the Russian Federation and those supporting Russia in the ongoing war in Ukraine. On March 31, 2022, the Department of State, Department of the Treasury, and OFAC announced a new set of measures targeting Russia’s efforts to evade multilateral sanctions, as well as new measures against certain Russian technology companies and cyber actors.

These new measures supplement the extensive measures previously announced by the US government and described in our prior client alerts published on February 23,  February 25, February 28, March 4, March 9, March 16, and March 29, 2022.   

US targets sanctions evasion networks

The US designated 10 individuals and 17 entities for being part of alleged sanctions evasion networks to procure western technology. One of these entities, OOO Serniya Engineering, was described by the Treasury Department as being “at the center of a procurement network engaged in proliferation activities at the direction of Russian Intelligence Services” to support the Russian military, which is “reliant on key Western technologies for its defense-industrial base to function.”

Significantly, these new blocking sanctions reflect a detailed understanding of these complex procurement networks, which extend far beyond Russia, including targeted entities that were part of the alleged evasion network located in Singapore, Spain, the United Kingdom, Malta, and Finland.

New sanctions against the Russian technology sector and cyber actors

In addition to blocking procurement of Western technology by closing sanctions evasion networks, OFAC also announced blocking sanctions under Executive Order 14024 against four major Russian technology companies:

• AO NII-Vektor: A software and communications technology company that has produced technical analysis and reports in support of the production stage of Liana constellation satellites for the Russian Federation.
• T-Platforms: A computer hardware company in the Russian supercomputer industry and the leading domestic developer of original computing equipment for the mass information technology market.
• Mikron: The largest Russian manufacturer and exporter of microelectronics.
• Molecular Electronics Research Institute (MERI): A research institute that manufactures computers, search and navigation equipment, and conducts research and development.

Together with these blocking sanctions against major Russian technology companies, the US also announced additional blocking sanctions under Section 224(a)(1)(B) of the Countering America’s Adversaries Through Sanctions Act (CAATSA) against three members of the senior leadership of the Russian Central Scientific Research Institute of Chemistry and Mechanics (TsNIIKhM), which was previously designated on October 23, 2020 for engaging in cyber-attacks, including against critical infrastructure facilities. The US Department of Justice also announced indictments against four TsNIIKhM employees for cybercrimes.

Expansion of authority under Executive Order 14024 to include Russian aerospace, marine, and electronics sectors

Together with the imposition of these new sanctions, Secretary of the Treasury Janet Yellen also announced the addition of the aerospace, electronics, and marine sectors to the list of sectors of the Russian economy which may be subject to sanctions under Section 1(a) of Executive Order 14024 of April 15, 2022. Although no sanctions have yet been imposed under this new authority, this announcement opens the way for additional designations and other sanctions targeting persons or entities acting in these sectors in the future.

Prior to the addition of these three new sectors, as explained in our February 23 alert, the Russian technology, defense, and financial services sectors were previously subject to Executive Order 14024, and extensive designations have been announced in connection with this authority.

Going forward

Our global team continues to monitor developments as they arise and will update this alert as changes take place. To learn more about these developments, please contact any of the authors or your usual DLA Piper relationship attorney.