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DECEMBER 22, 2014

SANCTIONS UPDATE

U.S. Bans Trade and Investment with Crimea On December 19, 2014, President Obama imposed further sanctions in relation to Russia’s attempted annexation of Crimea. These most recent sanctions ban new investment by U.S. persons in Crimea, and prohibit all imports from and exports to Crimea of goods, services or technology. U.S. persons are also prohibited from financing, facilitating or guaranteeing any transaction by a foreign person that could not be undertaken directly by a U.S. person. The Executive Order imposing these additional sanctions does not grandfather existing contracts, although the Treasury Department’s Office of Foreign Assets Control (OFAC) simultaneously issued a general license authorizing the exportation or reexportation to Crimea of agricultural commodities, medicine, medical supplies and replacement parts for medical devices (hereinafter “humanitarian trade”).

The Executive Order also delegated to the Secretary of the Treasury the authority to block the property of persons determined:

• to operate in Crimea;

• to be a leader of an entity operating in Crimea;

• to be owned or controlled by, or acting on behalf of, any person blocked pursuant to the Executive Order; or

• to have materially assisted, sponsored, supported or provided goods or services to any person blocked pursuant to the Executive Order.

On the same day, Treasury Secretary Lew designated over 20 individuals and entities in Russia and Ukraine under Executive Order 13660 of March 10, 2014. All property interests of these parties are now blocked and the individuals are barred from traveling to the United States.

In light of these new sanctions, U.S. financial institutions must cease providing financial services to persons in Crimea and must suspend all trade finance and other financial services related to imports from or exports to Crimea, except for humanitarian trade. They must also cease providing financing for any new investment in Crimea. U.S. financial institutions are also barred from honoring guarantees (e.g., stand-by letters of credit) that relate to newly prohibited activities in Crimea, such as new investment. U.S. financial institutions must also block and report to OFAC any accounts held by the newly named Specially Designated Nationals.

U.S. Customs and Border Protection is expected to begin enforcing the import/export ban immediately. U.S. importers awaiting shipments of goods from Crimea will now need a license from the Office of Foreign Assets Control to import such goods into the United States. Any goods destined for export to Crimea on vessels that have not yet left U.S. ports may be detained.

SANCTIONS UPDATE Page 2

U.S. insurance companies must cease providing cargo insurance for exports to, or imports from, Crimea (except for authorized humanitarian trade), as well as insurance or reinsurance related to new investment in Crimea.

The export ban will also affect other U.S. service providers such as law, accounting and engineering firms. All U.S. service providers will now need an OFAC license to provide services to parties in Crimea. They will also need an OFAC license to provide services in relation to new investment in Crimea.

If you have any questions regarding this update, please contact the Sidley lawyer with whom you usually work or

Lisa Crosby Partner

lcrosby@sidley.com +1.202.736.8754

Andrew W. Shoyer Partner

ashoyer@sidley.com +1.202.736.8326

Robert Torresen Partner

rtorresen@sidley.com +1.202.736.8570

Sidley Economic Sanctions Practice Lawyers in our Sanctions Practice advise companies on the applicability of U.S. sanctions programs to corporate and banking transactions, insurance contracts and the sale of goods and services. We handle license applications for agricultural commodities, medical devices and medicines under the Trade Sanctions Reform and Export Enhancement Act of 2000. We also represent companies in enforcement actions involving U.S. sanctions, assist with internal investigations and the development of compliance programs, and counsel clients on voluntary disclosures. For more information about our Sanctions Practice please contact Lisa Crosby (lcrosby@sidley.com, +1.202.736.8754) or Robert Torresen (rtorresen@sidley.com, +1.202.736.8570)

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