Biden Signs Foreign Aid Bill with Unexpected Regulatory Implications for Companies Navigating Russia Sanctions

President Joe Biden has signed a comprehensive foreign aid bill that introduces new risks for companies navigating U.S. sanctions on Russia and other adversaries. The bill expands the scope of sanctions and increases compliance requirements for businesses operating in or with countries subject to U.S. sanctions.

The legislation grants the U.S. government broader authority to monitor and restrict financial transactions related to sanctioned entities, potentially creating new challenges for companies as they will need to carefully review their activities and ensure full compliance with the updated regulations. The bill also doubles the amount of time that regulators and prosecutors have to investigate sanctions violations, a key change that could have significant implications for businesses trying to navigate the U.S.'s far-reaching sanctions on Russia and other foreign adversaries.

In addition to the regulatory changes, the bill provides a $1 billion military aid package for Ukraine, including vehicles, Stinger air defense munitions, and other weapons. However, the bill must still be approved by the Senate before the aid can be sent. Russia has responded by stating it will increase the intensity of attacks on logistics centers and storage bases for Western weapons in Ukraine.

The bill also gives U.S. officials new powers to locate and seize Russian assets in the U.S., as well as obtain Russian state assets from European allies to use as aid for Ukraine. This has already led to a Russian court ordering the seizure of $439.5 million in funds from JPMorgan Chase's bank accounts in Russia, which the bank had frozen after the Ukraine invasion.

Why this matters: The foreign aid bill's unexpected regulatory implications highlight the complex challenges companies face when navigating U.S. sanctions on Russia and other adversaries. The expanded scope of sanctions and increased compliance requirements emphasize the need for businesses to remain vigilant and proactive in ensuring they operate within the bounds of the law.

The bill requires companies to take certain steps when investigating potential sanctions violations, such as containing the damage, determining the scope of potential violations, and preserving documents and data. Steptoe's cross-border team is closely following these developments and providing updates to help clients navigate the rapidly changing sanctions and export controls environment.

"The United States has issued further sanctions on Iran, targeting Iranian drones, including their use by Russia in the war in Ukraine," according to the article. The sanctions, coordinated with the United Kingdom and Canada, target over one dozen entities, individuals, and vessels accused of playing a key role in facilitating and financing the sale of Iranian unmanned aerial vehicles to Iran's Ministry of Defense and Armed Forces Logistics (MODAFL), which supports Iran's Revolutionary Guards and Russia's war in Ukraine.

Key Takeaways

• Biden signed a foreign aid bill expanding U.S. sanctions on Russia and other adversaries.
• The bill increases compliance requirements and monitoring of financial transactions for companies.
• It doubles the time for regulators to investigate sanctions violations, impacting businesses.
• The bill provides $1B in military aid to Ukraine, pending Senate approval.
• U.S. can now seize Russian assets in the U.S. and from European allies to aid Ukraine.