The announcement comes after an escalation in geopolitical tensions arising out of a culmination of events. Those events include the alleged interference by the Russian intelligence service in the 2020 US Presidential election and the alleged responsibility for a sophisticated cyberattack on the US Government; Russia’s occupation and annexation of Crimea region in the Ukraine; and alleged human rights violations related to the poisoning and imprisonment of Alexei Navalny (opposition leader).
In Europe, those measures align with the UK’s Foreign Affairs Committee recommendations to the UK Parliament for joint US, UK and European efforts to limit or prohibit the issuance of Russian debt on global markets, as reported in 2018.
With the likelihood of geopolitical tensions intensifying, firms could see the announcement of further and tougher measures. Those measures could be directed towards the trading of Russian government bonds in the secondary market, as the UK calls for efforts to prohibit or limit the purchase of bonds in which a sanctioned entity acts as a book runner, and the barring of European clearing houses from making available Russian sovereign debt.
Firms will want to continue to avoid the inadvertent breach of sanctions and should reflect on their approach to effective list management, sanctions screening with additional consideration given to the OFAC and EU 50% beneficial ownership rule on counterparties, and performing due diligence on third parties to avoid doing business with sanctioned entities or entities with controllers or beneficiaries who are sanctioned.