March 15, 2018

Treasury Department Releases Sanctions on Russian Cyber Actors

Yevgeniy Viktorovich Prigozhin

The Treasury Department imposes sanctions on five entities and 19 individuals, including numerous Russian cyber actors, for their interference in the 2016 elections and for engaging in malicious cyber activities. According to the Department, the sanctions are meant to counter “Russian cyber activity, including their attempted interference in U.S. elections, destructive cyber-attacks, and intrusions targeting critical infrastructure.” Many of the sanctioned Russian individuals and entities were previously indicted by the Special Counsel, including the Internet Research Agency and Yevgeniy Prigozhin.

Despite the Trump team’s efforts to lift US sanctions on Russia, including former National Security Adviser Michael Flynn’s comment about the sanctions being “ripped up” once Trump took office, the House and Senate passed a bipartisan Russia sanctions bill in July 2017. This bill imposed new sanctions on Russia, and restricted the White House’s ability to remove existing sanctions. In retaliation, Putin ordered the U.S. to drastically cut its diplomatic staff in Moscow by 755 employees. Trump signed the new sanctions bill into law in August, but called the bill flawed and stated that it includes “unconstitutional provisions.” He also thanked Putin for slashing U.S. diplomatic staff, saying that doing so would “save a lot of money.”

The U.S. government has historically used sanctions as a tactic against Russia; one notable example is  the 2012 Magnitsky Act. Named for Sergei Magnitsky, a Russian lawyer who died in jail after uncovering a tax fraud scheme involving “a total of $230 million linked to the Kremlin and individuals close to the government.” Magnitsky was beaten, isolated, and denied access to lawyers and medical assistance. In response to this abuse, President Obama signed the Magnitsky Act, which sanctioned various Russian government officials and businessmen; the sanctions banned these individuals from entering the U.S. and froze any assets they had in U.S. banks. Russia responded by banning all U.S. adoptions of Russian children. Russian lobbyists have since lobbied heavily against the act; most significantly, Russian lawyer Natalia Veselnitskaya has claimed that she attended the infamous June 9, 2016 meeting in Trump Tower to discuss the Magnitsky Act and the Russian adoption ban. President Obama signed a second round of sanctions in 2014, after Russia’s annexation of Crimea. These sanctions further targeted individuals within Putin’s inner circle, including high-ranking officials in the Russian oil and finance sectors. In December 2016, in response to Russian interference in the U.S. election, President Obama “expelled 35 Russian diplomats and closed two Russian compounds” in the U.S.

This newest round of sanctions targets people and entities linked to Russian military/intelligence agencies, the Russian oil and gas industries, and any entity linked to Russian cyberattacks. In what some have considered to be a response to Trump’s pro-Russian rhetoric, the bill also “established a review process that allows Congress to block any effort by Trump to ease or lift [the] sanctions.” Although Trump signed the bill into law, the deadline for implementing the sanctions passed on October 1, 2017, without any guidance from the Trump administration on how to proceed with implementing the signed bill. After missing the first deadline, the State Department issued guidelines about which individuals and entities would ultimately be sanctioned on October 26, 2017.

 The Trump administration’s eventual rollout of the sanctions again indicated their lack of interest in meaningfully implementing CAATSA. On January 29, the administration announced that it would not be instituting any new sanctions under the law, asserting—without evidence—that the mere passage of the bill had achieved the desired outcome. The next day, the Treasury Department released a list of oligarchs and Kremlin-linked figures intended to comply with CAATSA; however, subsequent reporting revealed that the lists were copied from a Forbes list of Russian billionaires and the Kremlin’s own website, respectively. When the administration finally announced new sanctions on March 15, 2018, the list of sanctioned individuals mainly comprised hackers already under indictment thanks to the Special Counsel investigation and oligarchs already under sanctions.

The administration did, however, respond to Russia’s suspected role in the attempted assassination of a former Russian spy in the United Kingdom in March 2018, expelling 60 Russian diplomats and closing the Russian consulate in Seattle. However, Trump was reportedly furious that other individual countries expelled fewer diplomats than the United States, fueling a perception in the media that the US was taking the toughest stance on Russia.

On April 15, following a chemical weapons attack from Russia-supported President Bashar al-Assad in Syria, Nikki Haley, the United States’ Ambassador to the United Nations announced that the Trump administration would announce additional sanctions against Russia. However, Trump reportedly personally reversed Haley’s public position, having a senior State Department official call the Russian embassy to reassure them that Haley’s statements were incorrect.

Trump Administration