On April 1st, President Obama issued an Executive Order (“EO”) establishing the first-ever economic sanctions program in response to cyber attacks. The EO will impact individuals and entities (“designees”) responsible for cyber attacks that threaten the national security, foreign policy, economic health, or financial stability of the US.
Specifically, the EO authorizes the Treasury Department to freeze designees’ assets. Although none have yet been named, we believe the EO was issued with specific designees in mind and expect designations to follow shortly. Given the EO’s broad scope that covers “entities” (including foreign governments and their affiliates), it may also be used to help deter state-sponsored cyber crimes.
Once designees are announced, financial institutions should take steps to ensure they do not engage in prohibited dealings with them. In addition, institutions that are targeted by cyber criminals will see an increase in government inquiries to assist in building cases against potential targets of sanctions.