EO 13662 Sectoral Sanctions: Directives, Penalties, and Licenses

Executive Order 13662 authorizes sectoral sanctions against parts of Russia’s economy, letting the Treasury Department restrict how U.S. persons finance or supply technology to listed Russian companies in the financial services, energy, and defense sectors. The EO 13662 sectoral sanctions do not freeze all assets of the companies they target. Instead, they prohibit specific categories of transactions — mainly new debt above set maturity limits, new equity, and support for certain oil projects — with entities named on OFAC’s Sectoral Sanctions Identifications (SSI) List. The underlying national emergency was most recently renewed in February 2025, and the sanctions remain actively enforced.¹

What the Four Directives Prohibit

The operational restrictions live in four OFAC directives issued under the order. Each covers a different sector and sets different limits on what U.S. persons can do with listed entities.

Directive 1 (financial services). U.S. persons cannot deal in new debt with a maturity longer than 14 days, or in new equity, issued by listed entities. The maturity limit was originally 30 days and was tightened in 2017 by the Countering America’s Adversaries Through Sanctions Act (CAATSA).²

Directive 2 (energy). Prohibits new debt with a maturity longer than 60 days issued by listed entities. CAATSA shortened this from 90 days.³

Directive 3 (defense and related materiel). Prohibits new debt with a maturity longer than 30 days issued by listed entities.⁴

“Debt” here is broader than bonds and loans. It reaches extensions of credit, loan guarantees, letters of credit, bankers acceptances, commercial paper, and delayed payment terms for goods.⁵ That last category trips up ordinary trade transactions: selling goods to a Directive 1 counterparty on terms longer than 14 days can create prohibited new debt. The maturity clock starts when the obligation is created, not when payment is made. What is still permitted is spot purchases and cash-paid services; the restrictions target financing, not commerce itself.

Directive 4 (energy technology). This one works differently. It bans U.S. persons from providing goods, services, or technology in support of exploration or production for three types of oil projects: deepwater, Arctic offshore, and shale formations with the potential to produce oil.⁶ The prohibition applies in two ways:

Projects located in Russia or maritime areas Russia claims, where a Directive 4 entity is involved.⁷
Projects anywhere in the world, initiated after January 29, 2018, in which a Directive 4 entity holds a 33 percent or greater ownership interest or a majority of voting interests.⁶

Financial services are excluded from Directive 4, so a bank can still process payments tied to these projects. What is off-limits is drilling technology, engineering consulting, and specialized equipment. Oilfield service providers and technical advisors face the sharpest exposure.

Who Counts as a Sanctioned Entity

OFAC publishes the SSI List to identify which companies fall under which directive.⁸ A listing carries the prohibitions of the directive number it appears under.

Screening the list is only the first step. OFAC’s 50 Percent Rule treats any entity owned 50 percent or more, directly or indirectly, by one or more sanctioned persons as itself sanctioned, even if it never appears by name on any list.⁹ Ownership stakes aggregate across sanctioned owners. If Sanctioned Company A owns 30 percent and Sanctioned Company B owns 25 percent of Entity X, Entity X is treated as sanctioned.

Indirect ownership counts too. A subsidiary held through a majority-owned holding company is caught even though no listed person appears on its own share register.¹⁰

The rule addresses ownership only, not control. An entity a sanctioned person controls but does not own above 50 percent is not automatically treated as sanctioned.⁹ That is not a safe harbor: OFAC can still designate such an entity under a separate authority, and has warned that entities with significant sanctioned-person involvement below the threshold may face future enforcement.

Separately, U.S. persons cannot enter contracts signed by a blocked person acting as an executive or representative of a non-blocked entity.⁹ Confirming who will actually sign on the other side matters as much as screening the counterparty’s name.

Penalties for Violations

The International Emergency Economic Powers Act, under which the order was issued, provides both civil and criminal penalties.

Civil penalties: the statutory base is the greater of $250,000 or twice the transaction value. With inflation adjustments, the current per-violation cap is $377,700 or twice the transaction value, whichever is greater. Civil liability does not require proof of intent.¹¹
Criminal penalties: a willful violator can be fined up to $1 million and imprisoned up to 20 years.¹¹

The “twice the transaction value” multiplier drives most of the risk. A single $50 million prohibited loan extension exposes the U.S. person to a $100 million civil penalty. Each prohibited transaction is a separate violation, and a pattern compounds fast.

Reporting Blocked and Rejected Transactions

When a U.S. person blocks property or rejects a transaction under EO 13662, the report to OFAC is due within 10 business days under 31 CFR 501.603 and 501.604.¹²

Anyone holding blocked property also files an Annual Report of Blocked Property by September 30 each year, using OFAC’s standardized template.¹² Frozen accounts and rejected wires during the year need to be tracked well enough to support that filing.

Voluntary Self-Disclosure After a Violation

If your company finds it has violated the order, voluntarily reporting the violation to OFAC is treated as a mitigating factor in penalty calculations. Under OFAC’s enforcement guidelines, the base penalty is reduced, and in practice non-egregious cases see roughly a 50 percent cut.¹³

The disclosure has to give OFAC enough information to understand what happened. When the initial report is incomplete, OFAC generally expects a comprehensive follow-up within 180 days. Self-reporting is not amnesty. Penalties can still follow. What changes is the size, and the difference is often between a settlement a company can absorb and one it cannot.

General Licenses and Specific Licenses

Some transactions with sanctioned entities are pre-authorized. OFAC publishes general licenses that permit specific categories of activity without any application; if your facts fit, you can proceed.¹⁴ The Ukraine/Russia general licenses are updated on the OFAC website.

When no general license covers what you need to do, apply for a specific license through OFAC’s online portal. Review is case-by-case, and approval is not guaranteed. OFAC will not issue a specific license for activity already covered by a general one, so check the existing licenses first.¹⁴

How EO 13662 Relates to Other Russia Sanctions

EO 13662 is one piece of a larger framework, and the pieces are easy to confuse.

CAATSA, enacted in 2017, codified parts of the sectoral sanctions into statute, tightened the debt maturity limits under Directives 1 and 2, and expanded Directive 4 to reach certain worldwide projects initiated after January 29, 2018.² Because CAATSA is legislation, those pieces cannot be undone by executive action alone.

Executive Order 14024, signed in April 2021, is a separate authority. It permits full blocking sanctions — complete asset freezes — against designated persons, whereas EO 13662 operates only through the sectoral directives.¹⁵ The two orders sit under different national emergencies and different legal bases. Being listed under a EO 13662 directive does not by itself put an entity under EO 14024, and vice versa, though OFAC can and does designate the same entity under both, stacking the restrictions.

A June 2024 determination under Executive Order 14071 prohibited certain information technology and software services to persons located in the Russian Federation.¹⁶ That prohibition turns on the end user’s location rather than list status. Services to a third-country company with Russian ownership are permitted as long as the services will not be further exported to someone in Russia. This is a separate rule from EO 13662 and applies even when no SSI-listed entity is involved.

1
Federal Register. Continuation of the National Emergency With Respect to Ukraine
2
Office of Foreign Assets Control. FAQ 370 – What Do the Prohibitions in Directives 1 and 2 Mean
3
eCFR. 31 CFR 589.203 – Prohibited Transactions With Respect to Financing Activities in the Energy Sector of the Russian Federation Economy (Directive 2)
4
eCFR. 31 CFR 589.204 – Prohibited Transactions With Respect to the Defense and Related Materiel Sector of the Russian Federation Economy (Directive 3)
5
U.S. Department of the Treasury. FAQ – Ukraine/Russia-Related Sanctions
6
Office of Foreign Assets Control. FAQ 412 – What Do the Prohibitions Contained in Directive 4 Mean
7
eCFR. 31 CFR 589.205 – Prohibited Transactions With Respect to Oil-Producing Activities in the Energy Sector of the Russian Federation Economy (Directive 4)
8
U.S. Department of the Treasury. Sectoral Sanctions Identifications List
9
U.S. Department of the Treasury. Entities Owned by Blocked Persons (50% Rule)
10
U.S. Department of the Treasury. Frequently Asked Questions
11
Office of the Law Revision Counsel. 50 USC 1705 – Penalties
12
U.S. Department of the Treasury. Filing Reports with OFAC
13
Office of Foreign Assets Control. FAQ 13 – How Can I Report a Possible Violation of U.S. Sanctions to OFAC
14
U.S. Department of the Treasury. OFAC Specific Licenses and Interpretive Guidance
15
U.S. Department of the Treasury. Russian Harmful Foreign Activities Sanctions
16
U.S. Department of the Treasury. FAQ 1188 – Prohibition on Certain Information Technology and Software Services