Sanctions Tracker: US update - Treasury Expands and Intensifies Sanctions Against Russia by Targeting Key Sectors, Evasion Efforts, and Military Supplies

On February 24, 2023, the one-year anniversary of the Russian invasion of Ukraine, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced significant actions that targeted Russia’s financial services sector, sanctions evasions, Russia’s military supply chain, and metals and mining sector. Under the authority of Executive Order 14024, OFAC targeted the metals and mining sector and imposed sanctions on 22 individuals and 83 entities. OFAC also designated over 30 third-country individuals and companies connected to Russia’s sanctions evasion efforts, including those related to arms trafficking and illicit finance. Moreover, OFAC designated over a dozen financial institutions in Russia, including one of the top-ten largest banks by asset value.  Finally, OFAC released a new sectoral designation, making it secondarily sanctionable for non-US companies and persons to “operate in” the metals and mining sector of the Russian Federation.

OFAC’s actions, according to the agency’s announcement, were intended to “further isolate Russia from the international economy and hinder Russia’s ability to obtain the capital, materials, technology, and support that sustain its war against Ukraine, which has killed thousands and displaced millions of people.”

The OFAC announcement, which can be read here in full, included a statement by Secretary of the Treasury, Janet L. Yellen, saying “As the Ukrainian people continue to valiantly defend their homeland and their freedom, the United States is proud to support Ukraine through economic, security, and humanitarian assistance,” Yellen continued, stating, “Over the past year, we have taken actions with a historic coalition of international partners to degrade Russia’s military-industrial complex and reduce the revenues that it uses to fund its war. Our sanctions have had both short-term and long-term impact, seen acutely in Russia’s struggle to replenish its weapons and in its isolated economy. Our actions today with our G7 partners show that we will stand with Ukraine for as long as it takes.”

In its announcement, the Treasury Department stated that so long as the war continues there will be significant and long-lasting consequences for Russia’s economy and defense base.

Financial Services Sector Sanctions

OFAC explained in its announcement that sanctions evasion and other illicit financial activity often involves support from accountants, investment advisors, wealth management and private equity firms, lawyers, and other financial services providers. According to an alert issued by the Financial Crimes Enforcement Network (FinCEN) in March 2022, sanctioned actors often seek to evade sanctions by using corporate vehicles to obscure ownership or sources of funds, such as shell companies or third-party proxies. FinCEN issued another alert in March 2022 underscoring sanctioned persons’ use of real estate, luxury goods, and other high-value assets, such as precious metals, stones, and jewelry (PMSJ), to store value and evade economic restrictions. In June 2022, FinCEN and the U.S. Department of Commerce’s Bureau of Industry issued an alert urging increased vigilance for export control evasion attempts.

Designation of Multiple Russian Financial Institutions

OFAC’s designation of Russian banks as SDNs was taken pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy, which are as follows:

• Credit Bank of Moscow Public Joint Stock Company—one of Russia’s ten largest banks by asset value and located in Moscow and Russia’s largest non-state public bank. The European Union removed Credit Bank of Moscow from the SWIFT international payment system in June 2022 and fully blocked the bank in December 2022. OFAC previously placed Credit Bank of Moscow on the Sectoral Sanctions Identifications List; it is now also subject to full blocking sanctions.
• Joint Stock Company Commercial Bank Lanta Bank—a bank located in Moscow, Russia.
• Public Joint Stock Company Commercial Bank Metallurgical Investment Bank (Metallinvestbank)—a bank located in Moscow, Russia. According to OFAC, Metallinvestbank has used alternative payment routes to facilitate the receipt of payments for Russian exports.
• Public Joint Stock Company MTS Bank—a bank located in Moscow, Russia and Abu Dhabi, United Arab Emirates. The UK also designated this bank February 24, 2023.
• Novosibirsk Social Commercial Bank Levoberezhny Public Joint Company—a bank located in Novosibirsk, Russia.
• Bank Saint-Petersburg Public Joint Stock Company—a bank located in Saint Petersburg, Russia. The UK also designated this bank today.
• Joint Stock Commercial Bank Primorye—a bank located in Vladivostok, Russia.
• SDM-Bank Public Joint Stock Company—a bank located in Moscow, Russia.
• Public Joint Stock Company Ural Bank for Reconstruction and Development (UBRD)—a bank located in Yekaterinburg, Russia. UBRD was also sanctioned by Canada and the UK.
• Public Joint Stock Company Bank Uralsib—a bank located in Moscow, Russia. The UK also designated this bank on February 24, 2023.
• Bank Zenit Public Joint Stock Company, a bank located in Moscow, Russia. The UK also designated this bank on February 24, 2023.

Additionally, Russia-based financial institutions OOO Zenit Finance, OOO Zenit Leasing, and OOO Zenit Factoring MSP were designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Bank Zenit.

Actions Targeting Russian Wealth Management-Related Entities

OFAC also designated the following entities in an effort to target Russian wealth management-related entities:

• CONFIDERI Pte Ltd (CONFIDERI)—a Russian multi-family office, a type of financial services firm specializing in high-net-worth individuals, with offices in Moscow and Singapore. Its specialties include asset structuring and wealth management, including on “international projects with Russian roots.” CONFIDERI offers, among other services, PMSJ investment opportunities and investment management through the Caribbean.
• CONFIDERI’s founders, Russian Federation-Israel nationals Olga Borisovna Raykes (Raykes) and Marat Maratovich Savelov (Savelov), have been recognized as private bankers, wealth managers, and investment advisers. Raykes and Savelov own the firm Vend Ore GmbH (Vend Ore), located in Vienna, Austria.
• CONFIDERI’s founders, Russian Federation-Israel nationals Olga Borisovna Raykes (Raykes) and Marat Maratovich Savelov (Savelov)—designated pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy. Vend Ore was designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Raykes and Savelov.
• IC Veles Capital LLC (IC Veles Capital)—a Moscow-based investment and wealth management firm that caters to Russian high-net-worth individuals. Its leaders are Russian Federation-Cyprus nationals Dmitry Vitalyevich Bugayenko (Bugayenko) and Aleksei Dmitrievich Gnedovskii (Gnedovskii).
  • IC Veles Capital, Bugayenko, Gnedovskii, and related financial companies Veles Aktiv OOO, Veles Management Ltd, and Limited Liability Company Veles Trust were all designated pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy.
  • Additionally, Bugayenko’s Cyprus-based firms Veles International Limited and Hadlerco Limited, were designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Bugayenko.
• Ulan Vladimirovich Ilishkin (Ilishkin)—a Russian Federation national and Deputy Chairman of the Management Board of U.S.-sanctioned Public Joint Stock Company Rosbank (Rosbank), which was acquired in 2022 by one of Russia’s richest men, U.S.-sanctioned Vladimir Potanin. Ilishkin also leads Rosbank’s L’Hermitage Private Banking unit.
• Alina Olegovna Nazarova (Nazarova)—a Russian Federation national and the head of A-Club, the private banking department of U.S.-sanctioned Joint Stock Company Alfa-Bank.
• Evgeniya Sergeyevna Tyurikova (Tyurikova)—a Russian Federation national a long-time finance professional who leads the private banking department of U.S.-sanctioned Public Joint Stock Company Sberbank of Russia (Sberbank).

Ilishkin, Nazarova, and Tyurikova were all designated pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy.

Actions Targeting Russian Sanctions Evasion

OFAC emphasized that it will continue to impose sanctions on actors inside and outside of Russia that circumvent sanctions and enable Russia to procure resources critical to enabling Russia’s war of aggression against Ukraine. Accordingly, OFAC imposed sanctions on the following entities and individuals for their roles in sanctions evasion efforts:

• Walter Moretti (Moretti)—designated pursuant to E.O. 14024 for having acted or purported to act for or on behalf of, directly or indirectly, the Government of the Russian Federation. According to OFAC, Moretti and his network of associates and companies covertly procured sensitive Western technologies and equipment for Russian intelligence services and the Russian military, including hydraulic presses, armament packages, and armor plating. Moretti and his associates have also procured equipment for Russia’s nuclear weapons laboratories.
• German national Markus Gerhard Mueller (Mueller), Swiss nationals Ronald Eric Cosman (Cosman) and Bruno Koller (Koller), as well as the Switzerland-based company Swisstec 3D AKUS AG (Swisstec)—designated pursuant to E.O. 14024 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Moretti.
• Taerio Limited and Tamyna FZE—designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Moretti.
• Stratton Investment Group LTD—a Malta-based company owned by Taerio Limited. OFAC designated Stratton Investment Group LTD pursuant to E.O. 14024 for being owned or controlled by Taerio Limited.
• Frederic Pierre Villa (Villa)—a Swiss Italian national who, along with Moretti, is on the board of directors of Stratton Investment Group LTD. OFAC designated Villa pursuant to E.O. 14024 for being a leader, official, senior executive officer, or member of the board of directors of Stratton Investment Group LTD.
• Tamyna AG—a Switzerland-based company and designated pursuant to E.O. 14024 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of Moretti.
• Swiss nationals Hans-Peter Bomatter (Bomatter) and Lutwin Schommer (Schommer) are the senior managers of Tamyna AG. OFAC designated Bomatter and Schommer pursuant to E.O. 14024 for being a leader, official, senior executive officer, or member of the board of directors of Tamyna AG.
• The Sofia, Bulgaria-based company Taerio International LTD EOOD (Taerio International) and the Saint Petersburg, Russia-based company Interpolytrade Limited Company (Interpolytrade) are owned or controlled by Mueller. OFAC is designating Taerio International and Interpolytrade pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Mueller.

Designations of Russian Elite-Linked Businessman Tied to Illicit Financial Activity

As part of its sanctions announcement, OFAC targeted the following individuals for alleged ties to illicit financial activity:

• Aleksandr Yevgenyevich Udodov (Udodov)—a Russian businessman and the former brother-in-law of Russian Prime Minister Mikhail Mishustin (Mishustin). According to OFAC, Udodov has been linked to business dealings with both Mishustin himself and Mishustin’s sister and has been investigated for manipulating value-added tax revenues and money laundering. Udodov and his Moscow-based management consulting firm, Limited Liability Company Aforra Management, were designated pursuant to E.O. 14024 for operating or having operated in the management consulting sector of the Russian Federation economy.

The following Udodov-owned, Russia-based companies were designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Udodov:

• Limited Liability Company Aforra Development
• Limited Liability Company Aforra Engineering
• Limited Liability Company Aforra Property
• Limited Liability Company Aktiv R
• Limited Liability Company Arendoff
• Limited Liability Company Atlas Real Estate
• Limited Liability Company Ayaks
• Limited Liability Company Garantiya
• Limited Liability Company Mushroom Rainbow
• Limited Liability Company New City
• Limited Liability Company Nikoliya
• Limited Liability Company Optima Invest
• Limited Liability Company Russul
• Limited Liability Company Stork

OFAC also alleged that Udodov’s business interests also extend outside of Russia’s borders. Udodov owns Avrora Capital SRO (Avrora Capital), located in Prague, Czechia. Udodov also has control over Leading Capital Investment Ltd (Leading Capital), a real estate holding company registered in the British Virgin Islands, and Bahamas-based Caliber Wealth Management Ltd (Caliber Wealth Management).

Accordingly, Avrora Capital, Leading Capital, and Caliber Wealth Management were designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Udodov.

Sanctions Targeting Russia’s Military Supply Chains

In the announcement, OFAC outlined additional steps it is taking to impose costs on and further restrict key entities that support Russia’s military capabilities. OFAC emphasized that it will continue to designate “Russian Federation persons connected to Russia’s defense industries to degrade Putin’s ability to wage war against Ukraine or against any other country in the future.” For further reading on OFAC designated individuals and entities tied to production of carbon fiber and related advanced materials, operating in the aerospace sector, operating in the defense and related materiel sector of the Russian Federation economy, and operating in the technology sector of the Russian Federation economy, please read here.

Designations of Other Entities Supporting the Russian Federation

OFAC also designated the following entities for supporting the Russian Federation in the war against Ukraine:

• Federal State Unitary Enterprise Central Scientific Research Institute of Economics, Informatics and Management Systems (TsNII EISU)—a Russia-based enterprise that performs a system-forming role in the further development of the command-and-control systems of the Armed Forces of the Russian Federation. TsNII EISU was designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation.
• Independent Insurance Group LTD (IIG)—designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy. IIG provides insurances services to companies in Russia’s defense sector.
• Private Military Company Redut (PMC Redut) —a Russian mercenary force fighting in Ukraine that purports to provide security services. According to OFAC, PMC Redut is linked to the GRU as well as the broader Russian Ministry of Defense. PMC Redut was designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, the Government of the Russian Federation.

Expanding Sanctions in the Metals and Mining Sector

OFAC also announced that it is enhancing and expanding its use of Russia-related sanctions authorities by issuing a determination that identifies the metals and mining sector of the Russian Federation economy pursuant to section 1(a)(i) of Executive Order (E.O.) 14024. This determination allows for sanctions to be imposed on any individual or entity determined to operate or have operated in that sector and expands the United States’ ability to swiftly impose additional economic costs on Russia for its war of choice in Ukraine. This action complements existing provisions for sanctions against those that operate or have operated in the quantum computing, accounting, trust and corporate formation, management consulting, aerospace, marine, electronics, financial services, technology, and defense and related materiel sectors of the Russian Federation economy.

Accordingly, OFAC designated four entities for operating or having operated in the metals and mining sector of the Russian Federation economy:

• Joint Stock Company Burevestnik Central Scientific Research Institute—a Russia-based arms and artillery manufacturer that is also involved in manufacturing metals.
• OOO Metallurg-Tulamash—a Russia-based steel manufacturer that also manufactures armaments for Russia’s navy.
• TPZ-Rondol OOO—a Russia-based company that specializes in coating metals and is a subsidiary of one of Russia’s leading ammunition manufacturers.
• Mtsenskprokat—a Russia-based company that produces unique metal alloys and products for Russia’s aviation and defense industries.

Issuance of General Licenses

In conjunction with this action, OFAC has issued Russia-related General License (GL) 60, authorizing the wind down and rejection of transactions involving certain financial institutions designated today through 12:01 a.m. eastern daylight time, May 25, 2023. In addition, OFAC has issued Russia-related GL 61, authorizing the wind down of certain securities and derivatives transactions involving certain of these financial institutions through 12:01 a.m. eastern daylight time, May 25, 2023. OFAC also issued amended GL 8F, adding certain of these financial institutions to the authorization to process certain energy-related transactions.

Read here for more information concerning the designated individuals and entities.

Additional Measures

In addition to the OFAC sanctions designations, the US Commerce Department’s Bureau of Industry and Security (“BIS“) announced four final rules imposing export control measures under the Export Administration Regulations (“EAR“), including licensing requirements on a number of household and other items, while adding 76 individuals and entities to the Entity List for engaging in sanctions evasion. The BIS press release summarizing these actions is available here.

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