What is the status of the evolving international sanctions against Ukraine and Russia?

1. Since the recent escalation of the Ukraine crisis in March, there have been almost daily developments regarding economic sanctions – ranging from details of implementation to proposals for new or tougher measures.
2. This update is part of a series of snapshots of the current sanctions, how they apply to financial institutions doing business in or with Ukraine and Russia and their customers and counterparties, compliance requirements in different scenarios, and where sanctions might be headed in the near future.

Are there any exceptions or carve outs?

1. In the US, in limited circumstances, sanctions authorities might grant a license authorizing a party to engage in certain activities that otherwise would authorizations to wind down transactions involving designated parties pursuant to contractual commitments entered into prior to designation.
2. OFAC also potentially could authorize financial institutions to process otherwise prohibited payments where the underlying transaction meets certain criteria, e.g., food, medicine, or humanitarian goods.
3. The US may issue guidance on possible exceptions. Designated parties also can submit a written request to US authorities to be “delisted.
4. Under the EU sanctions, the competent authorities of the EU Member States can authorize derogations from asset freeze measures in certain specified, limited circumstances. For example, derogation from the asset freeze could be allowed if payments are intended exclusively for the payment of fees or service charges for routine holding or maintenance of frozen funds or economic resources, or where a payment by a designated party is due under a contract that pre-dates the asset freeze, provided the payment does not benefit that designated party.
5. Furthermore, the asset freeze will not prevent the crediting of frozen accounts by financial or credit institutions that receive funds from third parties, or the addition of interest or other earnings to frozen accounts.