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In Russia, US Reframes Secondary Sanctions to Suit Allies


The focus on business intermediaries in the latest round of U.S. sanctions against Russia bears striking similarities to secondary sanctions that force foreigners into doing business with one country or the other, but key tweaks have made the new approach more palatable to allies.


Despite that intent, the shifting nature of Russia sanctions, which continue to be issued in waves and cover many, but not all, sectors of the country's economy — unlike Iran's blanket embargo — threatens to swallow even companies working to stay on the right side of international sanctions if they remain active in Russia without keeping their compliance programs up-to-the-minute, practitioners say.

Blank Rome LLP partner Anthony Rapa compared the scope of permitted business dealings involving Russia to a "shrinking island," one where even the most above-board transaction touching the world's largest country could be halted because banks are unwilling to process it.

"At this stage, any type of Russia questions that come are not questions that lend themselves to quick, easy answers. Unless you find out it's an easy no," Rapa said. "But anything that seems like it is on that island that remains permissible is not something that lends itself to a quick and easy answer because there are a lot of vectors of risk to think about."

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"In Russia, US Reframes Secondary Sanctions to Suit Allies," by Jennifer Doherty was published in Law360 on May 23, 2023.