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FINRA Alerts Broker-Dealers to Russia Sanctions

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What You Need to Know

  • FINRA issued two sanctions alerts, one on Feb. 25 and the other on Monday.
  • Broker-dealers should monitor Treasury’s Office of Foreign Asset Control website.

The Financial Industry Regulatory Authority is urging broker-dealers to review the various sanctions issued against Russian financial institutions, debt and equity offerings and leaders, and to monitor the Treasury Department’s Office of Foreign Asset Control (OFAC) website for more developments.

FINRA issued two alerts, one on Feb. 25 and the other on Monday.

As FINRA notes, the United States’ first action came on Feb. 21 when President Joe Biden issued an executive order titled “Blocking Property of Certain Persons and Prohibiting Certain Transactions With Respect to Continued Russian Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine.”

The next day, Treasury announced sanctions under Executive Order 14024 “in response to actions in the Donetsk and Luhansk regions” of Russia.

Treasury stated that the sanctions target “Russia’s ability to finance aggression against its neighbors by sanctioning the Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB) and Promsvyazbank Public Joint Stock Company (PSB), along with 42 of their subsidiaries.”

Treasury also announced the same day “increased restrictions on dealings in Russia’s sovereign debt” pursuant to Executive Order 14024 that extend “existing sovereign debt prohibitions to cover participation in the secondary market for bonds issued after March 1, 2022 by the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation.”

On Feb. 24, Treasury announced additional sanctions against Russia, with OFAC issuing Directive 2 Under Executive Order 14024: Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions involving Certain Foreign Financial Institutions, as well as Directive 3 Under Executive Order 14024: Prohibitions Related to New Debt and Equity of Certain Russia-related Entities.

Treasury stated the OFAC measures target “Russia’s two largest financial institutions, Public Joint Stock Company Sberbank of Russia (Sberbank) and VTB Bank Public Joint Stock Company (VTB Bank),” as well as three other major Russian financial institutions.

OFAC also “expanded Russia-related debt and equity restrictions to additional key aspects of Russia’s economy” and issued Directive 3 “to prohibit transactions and dealings by U.S. persons or within the United States in new debt of longer than 14 days maturity and new equity of Russian state-owned enterprises, entities that operate in the financial services sector of the Russian Federation economy, and other entities determined to be subject to the prohibitions” in the directive.

On Feb. 26, the White House released a joint statement with leaders of the European Commission, France, Germany, Italy, the United Kingdom, and Canada that, among other things, stated, “we commit to ensuring that selected Russian banks are removed” from the Society for Worldwide Interbank Financial Telecommunications (SWIFT) messaging system.

On Monday, OFAC prohibited U.S. persons from engaging in transactions with the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation, and added the Russian Direct Investment Fund, its CEO, Kirill Aleksandrovich Dmitriev, its management company, and one of the managing company’s subsidiaries to the Specially Designated Nationals and Blocked Persons (SDN) List.


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