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OFAC sanctions Russians, issues guidance on sanctions evasion through virtual currency, general licenses, and FAQs

Financial Crimes Digital Assets Department of Treasury OFAC Of Interest to Non-US Persons Ukraine Ukraine Invasion Russia Virtual Currency

Financial Crimes

On March 11, the U.S. Department of the Treasury’s Office of Foreign Assets Control issued guidance, in line with the G7 leaders' statement, to guard against possible attempts to use virtual currency to evade U.S. sanctions imposed on Russia. According to OFAC, the public guidance “further cut[s] off avenues for potential sanctions evasion by Russia” and “continues to make clear that Treasury’s expansive sanctions actions against Russia require all U.S. persons to comply with OFAC regulations, regardless of whether a transaction is denominated in traditional fiat currency or virtual currency.

Additionally, OFAC announced sanctions against Russian and Kremlin elites, and Russia’s political and national security leaders who have supported Russia’s invasion of Ukraine. As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals and entities that are in the U.S. or in the possession or control of U.S. persons, and “any entities that are owned, directly or indirectly, 50 percent or more” by the targeted individuals and/or entities are blocked and must be reported to OFAC. The sanctions complement an Executive Order (E.O) issued by President Biden that imposes new import and export restrictions on Russia, including the export of U.S. banknotes to Russia. Among other things, this E.O. prohibits the importation into the U.S. of certain products of Russian Federation origin. Additionally, the E.O. bans the exportation, reexportation, sale, or supply, directly or indirectly, from the U.S., or by a U.S. person, wherever located, of U.S. dollar-denominated banknotes to the Russian government or to any person located in the Russian Federation.

OFAC also issued Russia-related General License 17 to authorize the import of existing purchases of prohibited products that are under pre-existing contract until March 25, 2022, and General License 18 and General License 19 to authorize certain activities regarding U.S. dollar-denominated banknotes as they pertain to personal remittances and U.S. persons, respectively. OFAC also issued Ukraine-related General License 23, “Blocking Property of Certain Persons and Prohibiting Certain Transactions With Respect to Continued Russian Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine,” “to authorize certain transactions that are ordinarily incident and necessary to nongovernmental organizations’ activities in the so-called Donetsk People’s Republic (DNR) or Luhansk People’s Republic (LNR) regions of Ukraine, including activities related to humanitarian projects to meet basic human needs, democracy building, education, non-commercial developments projects, and environmental and natural resource protection,” and published new Frequently Asked Questions and amended one Frequently Asked Question regarding Russia sanctions.

Find continuing InfoBytes coverage on the U.S. sanctions response to Russia’s invasion of Ukraine here.