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Financial Services Law Insights and Observations

OFAC sanctions Russians for election influence

Financial Crimes Of Interest to Non-US Persons OFAC OFAC Designations OFAC Sanctions Department of Treasury Ukraine Russia SDN List

Financial Crimes

On June 23, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Order 14024, against two individuals for attempting to conduct “global malign influence operations,” including efforts to influence a U.S. local election. According to OFAC, the designated individuals are Russian Federal Security Service officers who operate as part of a mission that provokes anti-government and anti-democratic positions designed to undermine faith in democratic principles, weaken U.S. diplomatic connections, and exploits societal divisions in an effort to expand Russia’s influence. OFAC said one of the individuals directed more than six U.S. co-conspirators, including two who ran in local U.S. elections, to report on the activities of political groups. OFAC designated the two individuals “for having acted or purported to act for or on behalf of, directly or indirectly, the Government of the Russian Federation.” The designated individuals were also recently indicted by the DOJ as well as by the U.S. Attorney’s Office for the Middle District of Florida. In a parallel action announced the same day, the EU released its Eleventh Package of sanctions against Russia. The Eleventh Package added, among other things, over 100 individuals and entities subject to asset freezes, a new anti-circumvention tool to restrict the trade of sanctioned goods, and 87 new entities to the list of those directly supporting Russia’s military and industrial complex in the war against Ukraine.

As a result of these sanctions, all property and interests in property belonging to the sanctioned persons that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Further, “any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons, unless exempt or authorized by a general or specific OFAC license. Additionally, OFAC warned that financial institutions and other persons that engage in certain transactions or activities with the sanctioned persons may themselves be exposed to sanctions or be subject to an enforcement action.