Obama signs order creating new cyber sanctions program

The order is the latest attempt by the Obama administration to come up with options short of direct retaliation to deal with a growing cyber threat coming from both nations and criminal groups.

Jonathan Ernst/REUTERS
President Obama delivers remarks at the dedication ceremony for the Edward M. Kennedy Institute for the United States Senate, in Boston March 30, 2015.

President Obama on Wednesday created the first-ever sanctions program to penalize overseas hackers who engage in cyber spying and companies that knowingly benefit from the fruits of that espionage, potentially including state-owned corporations in Russia and China.

"Cyberthreats pose one of the most serious economic and national security challenges to the United States," Obama said in a statement after signing an executive order creating the sanctions.

The order was the latest attempt by his administration to come up with options short of direct retaliation to deal with a growing cyberthreat coming from both nations and criminal groups. It gives the US the authority to sanction individuals and companies, though no specific penalties were announced.

Obama said the sanctions would apply to those engaged in malicious cyber activity that aims to harm critical infrastructure, damage computer systems, and steal trade secrets or sensitive information.

In a fact sheet, the White House said the sanctions would also apply to "a corporations that knowingly profits from stolen trade secrets." Analysts have long suspected that state-owned companies in China and Russia are complicit in economic cyber espionage that targets the intellectual property of Western companies.

The announcement follows the Obama administration's allegations that North Korea was behind last year's cyberattack on Sony Pictures. Major US companies, including Target and Home Depot, have also been the target of hacking that put consumer information at risk. The US government says hackers based in Russia and China have engaged in widespread pillaging of corporate trade secrets, some of it state-sponsored. Former National Security Agency director Keith Alexander calls it the greatest transfer of wealth in history.

The administration has "really thought about how to make this painful to the beneficiaries," of cyber spying, " said James Lewis, a cyber expert with the Center for Strategic and International Studies. "They've gotten away with this for a long time, so making them suffer a little for stealing is a good idea."

The US did sanction several North Korean individuals in retaliation for the Sony hack, but they were not targeted specifically for their role in that incident.

In May, the Justice Department issued criminal indictments against five Chinese military hackers it accused of cyber espionage against US corporations for economic advantage. But the hackers are in China and out of reach of the U.S. justice system. Potentially, some of the companies that benefited from their cyber spying do business in the global economy and therefore could be hurt by US sanctions.

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