Skip to content

Discerning Data

  • About Us
  • Additional Resources
  • Contact Us

DISCERNING DATA

A Faegre Drinker Blog Covering the Latest in Privacy, Cybersecurity and Data Strategy

  • Privacy
  • Cybersecurity
  • Data Strategy
  • Disruptionware

Ransomware Payments Become an Even Riskier Choice Amidst the Ever-Growing Sanctions List

Share

In February 2022, Executive Order 14024 highlighted that Russia’s invasion of Ukraine threatened not only Ukraine but also the national security and foreign policy of the United States. Pursuant to this executive order, and in the face of national security concerns, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) has instituted extensive sanctions, including both economic and trade sanctions. Also, in response to the national security concerns, the Cybersecurity and Infrastructure Security Agency (CISA) issued a Shields Up notice, urging companies to bolster their cybersecurity to protect themselves against the threat of a cyberattack.

As the conflict between Russia and Ukraine continues, the threat of a cyberattack, specifically ransomware and NotPetya-style attacks, remains top of mind. However, as entities continue to bolster their cybersecurity and protect themselves against these attacks, they should be cognizant of the implications that OFAC sanctions may have in connection with such an attack.

All U.S. persons must comply with the sanctions against Russia. U.S. persons are defined as U.S. citizens and permanent residents regardless of location, as well as all persons and entities who are in the U.S. and all entities incorporated in the U.S. and any of their foreign branches.

This analysis becomes complicated during ransomware attacks. When an entity is the victim of a ransomware attack, they typically have to make a decision about whether to pay the attacker a ransom in order to retrieve their data or to get a key to unencrypt their data. Ransom payments — including payments with cryptocurrency or payments facilitated through third parties — to sanctioned persons or entities are in violation of the OFAC regulations. In light of the Russia-Ukraine conflict, the number of sanctioned individuals and entities has increased dramatically, making it more difficult to ensure that an entity requesting a ransom payment is not subject to sanctions.

Making a ransomware payment where it is known that the ransomware attacker originated from a person or group on the OFAC sanctions list is in violation of the OFAC regulations and subjects the payor to civil penalties. In addition, where the person/entity making the payment knew (or had reason to know) that the attacker was on a sanctions list, they can also be subject to criminal investigation and/or prosecution.

Even when there is no reason to suspect the attacker originated from a person or group on the OFAC sanctions list, ransomware payments still carry significant risk. OFAC can impose civil penalties for sanctions violations based on strict liability, meaning penalties can be imposed even when the party who made the ransomware payment did not know and had no reason to know that it made the payment to an attacker on the OFAC sanctions list.

As a further attempt to discourage ransom payments to sanctioned entities, the Financial Crimes Enforcement Network released an alert to all financial institutions “to be vigilant against efforts to evade the expansive sanctions and other U.S.-imposed restrictions implemented in connection with the Russian Federation’s further invasion of Ukraine.”

The imposition of sanctions by the US government has evolved greatly over the last year or so, not just due to the increased risk of nefarious cyber-attacks, but in large part due to the Russian-Ukrainian conflict. It is more important than ever, before considering paying a ransom, to ensure that you are in compliance with OFAC rules and requirements, and that the payment of ransom does not cause the cyber victim more harm than good.

The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.

About the Author: Jason G. Weiss

Jason G. Weiss leverages a past career as a cybersecurity and computer forensics Supervisory Special Agent with more than 22 years of decorated service at the FBI to guide clients through the complex and high-stakes issues associated with cybersecurity incident preparedness and response and compliance. View Jason's full bio on the Faegre Drinker website.

About the Author: Jane Blaney

Jane Blaney assists clients seeking solutions related to insurance matters, with concentrated knowledge in health insurance, health insurance regulation and technology services. View Jane's full bio on the Faegre Drinker website.

About the Author: Grayson Harbour

Grayson Harbour is an associate in the firm's Labor & Employment practice group. Read Grayson's full bio on the Faegre Drinker website.

Receive Email Alerts to New Articles

SUBSCRIBE

July 18, 2022
Written by: Jason G. Weiss, Jane Blaney and Grayson Harbour
Category: Cybersecurity, International
Tags: cyberattack, OFAC, ransomware, Russia, Ukraine

Post navigation

Previous Previous post: New York Department of Financial Services Announces $5 Million Penalty in Most Recent Cybersecurity Enforcement Action
Next Next post: Discussion on the Dangers of Wire Transfer Fraud Cyberattacks – Faegre Drinker on Law and Technology Podcast

Search the Blog

Sign Up for Email Alerts

PODCASTS

Faegre Drinker on Law and Technology

©2023 Faegre Drinker Biddle & Reath LLP. All Rights Reserved. Lawyer Advertising.

  • About Us
  • Additional Resources
  • Contact Us
We use cookies to improve your experience with our website. By browsing our site, you are agreeing to the use of cookies. For more information about how we use cookies, please review our privacy policy and cookie policy. OK
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT