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OFAC issues Russian general license
On April 12, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Russia-related General License (GL) 26, “Authorizing the Wind Down of Transactions Involving Joint Stock Company SB Sberbank Kazakhstan or Sberbank Europe AG,” which authorizes all transactions ordinarily incident and necessary to the wind down of transactions involving Joint Stock Company SB Sberbank Kazakhstan or Sberbank Europe AG, or any entity that Sberbank subsidiaries owns, through July 12, provided certain criteria are met. The GL was issued in the wake of Russia’s Sberbank being placed on the SDN list, which prohibits all transactions with Sberbank by U.S. persons, on April 6.
OFAC sanctions actors throughout the Western Balkans
On April 11, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 14033 against seven individuals and one entity across four countries in the Western Balkans, which “is the second action OFAC has taken under E.O. 14033 targeting persons who threaten the stability of the region through corruption, criminal activity, and other destabilizing behavior.” OFAC also noted that the Department of State is designating individuals from North Macedonia and Bosnia and Herzegovina under Section 7031(c) of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2022, instituting what is commonly known as a visa ban. As a result of the sanctions, all assets belonging to the designated persons that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. U.S. persons are generally prohibited from engaging in dealings involving any property or interests in property of the blocked or designated persons.
OFAC sanctions Ireland-based criminal organization and members
On April 11, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13581 against an Ireland-based crime group, which OFAC considers “a murderous organization involved in the international trafficking of drugs and firearms,” seven of its key members, and three companies controlled or owned by key members of the organization. According to OFAC, the sanctions were the result of a collaborated effort between OFAC, the Drug Enforcement Administration, the U.S. Department of State, U.S. Customs and Border Protection, Ireland’s national police force (An Garda Síochána), the United Kingdom’s National Crime Agency, and the European Union Agency for Law Enforcement Cooperation. As a result of the sanctions, all assets belonging to the designated persons that are in the U.S. or in the possession or control of U.S. persons must be blocked and reported to OFAC. U.S. persons are generally prohibited from engaging in dealings involving any property or interests in property of the blocked or designated persons.
OFAC sanctions Russian diamond mining and shipbuilding companies, and issues general licenses
On April 7, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Order 14024, against a Russian state-owned enterprise (SOE) and the world’s largest diamond mining company, which is also responsible for 90 percent of Russia’s diamond mining capacity. Additionally, the Department of State redesignated a Russian SOE open joint stock company, as well as its subsidiaries and board members. According to OFAC, the company develops and constructs most of the Russian military’s warships, likely including those used in Ukraine. OFAC further noted that it is “cutting off additional sources of support and revenue for the Government of the Russian Federation (GoR) to wage its unprovoked war against Ukraine.” As a result of the sanctions, all property and interests in property belonging to the sanctioned entities in the U.S. are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” OFAC noted that U.S. persons are prohibited from participating in transactions with the sanctioned persons, which includes “the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person or the receipt of any contribution or provision of funds, goods or services from any such person.”
On the same day, OFAC issued several Russia-related general licenses: (i) General License 9C authorizes “transactions related to dealings in certain debt or equity”; (ii) General License 10C authorizes “certain transactions related to derivative contracts”; (iii) General License 21A authorizes “the wind down of Sberbank CIB USA, Inc. and Alrosa USA, Inc.”; (vi) General License 24 authorizes “the wind down of transactions involving public joint stock company Alrosa”; and (v) General License 25 authorizes “transactions related to telecommunications and certain internet-based communications.”
Find continuing InfoBytes coverage on the U.S. sanctions response to Russia’s invasion of Ukraine here.
OFAC prohibits new investment in Russia and blocks Russia’s largest bank, executive order foreshadows more Russian export bans
On April 6, OFAC announced that President Biden issued a new E.O., Prohibiting New Investment in and Certain Services to the Russian Federation in Response to Continued Russian Federation Aggression, which bans “all new investment in the Russian Federation by U.S. persons, wherever located, as well as the exportation, reexportation, sale, or supply, directly or indirectly, from the U.S., or by a U.S. person, wherever located, of any category of services as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State, to any person located in the Russian Federation.” According to OFAC, the prohibitions come after recently issued E.O. 14066 and 14068 that prohibit certain imports and exports involving Russia, and are consistent with commitments made by the G7 leaders to ensure that their citizens are not underwriting Putin’s war.
OFAC also announced full blocking sanctions, pursuant to Executive Order (E.O.) 14025, on Sberbank, Russia’s largest state-owned bank and Alfa-Bank, Russia’s largest private bank, in addition to targeting family members of President Vladimir Putin and Foreign Minster Sergey Lavrov, as well as Russian Security Council members who are complicit in the war against Ukraine.
Earlier this week, OFAC also announced sanctions, in collaboration with the DOJ, FBI, Drug Enforcement Administration, Internal Revenue Service Criminal Investigation, and Homeland Security Investigations, against the world’s largest and most prominent darknet market. According to OFAC, the designation was enhanced by international collaboration with the German Federal Criminal Police, who seized the designated entity’s servers in Germany and $25 million worth of bitcoin. Additionally, OFAC identified more than 100 virtual currency addresses connected to the entity’s operations that have been used to conduct illicit transactions. OFAC also noted that Treasury will publish an updated National Strategy to Combat Illicit Finance, which will highlight planned Treasury efforts to continue to combat the virtual currency misuse. As a result of the sanctions, all property and interests in property belonging to the sanctioned entities in the U.S. are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” OFAC noted that U.S. persons are prohibited from participating in transactions with the sanctioned persons, which includes “the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person or the receipt of any contribution or provision of funds, goods or services from any such person.”
Additionally, OFAC issued several Russia-related general licenses: (i) General License 8B authorizes certain “transactions related to energy” through June 24; (ii) General License 9B authorizes “transactions related to dealings in certain debt or equity”; (iii) General License 10B authorizes “certain transactions related to derivative contract”; (iv) General License 21 authorizes “the wind down of Sberbank CIB USA, Inc”; (v) General License 22 authorizes “the wind down of transactions involving public joint stock company Sberbank of Russia”; and (vi) General License 23 authorizes the wind down of transactions involving joint stock company Alfa-Bank.”
Find continuing InfoBytes coverage on the U.S. sanctions response to Russia’s invasion of Ukraine here.
OFAC sanctions North Koreans for development of WMDs
On April 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13382 against five entities for supporting the Democratic People’s Republic of Korea’s (DPRK’s) development of weapons of mass destruction (WMD) and ballistic missile programs in violation of multiple United Nations Security Council resolutions. According to OFAC, the sanctions target a DPRK WMD research and development organization, which is connected to the development of the DPRK’s intercontinental ballistic missile launches, along with four of its revenue generating subsidiaries. As a result of the sanctions, all property and interests in property of the sanctioned entities are blocked and must be reported to OFAC. OFAC noted that its regulations generally prohibit U.S. persons from participating in transactions with the designated entities, including transactions transiting the U.S. OFAC’s announcement further warned that any foreign financial institution that knowingly facilitates significant transactions or provides significant financial services for any of the designated individuals may be subject to U.S. correspondent account or payable-through account sanctions.
OFAC sanctions Russian technology companies
On March 31, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced several new sanctions in response to Russia’s invasion of Ukraine. The new sanctions, issued pursuant to Executive Order 14024, target 21 entities and 13 individuals connected to the Russian Federation “as part of its crackdown on the Kremlin’s sanctions evasion networks and technology companies.” Additionally, OFAC has determined that three additional sectors of the Russian Federation’s economy are subject to sanctions, which permits OFAC to impose sanctions on any individual or entity determined to operate or have operated in any of those sectors. According to OFAC, one of the sanctioned entities is a technology company that exports over 50 percent of Russian microelectronics and is Russia’s largest chipmaker. This action follows OFAC’s March 24 designation of dozens of companies in Russia’s defense-industrial base that are directly involved in Russia’s invasion of Ukraine (covered by InfoBytes here). OFAC also expanded sanctions authorities to include the Russian aerospace, marine, and electronics sector. As a result of the 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, and “any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more” by the targeted persons are blocked and must be reported to OFAC. Additionally, U.S. persons are prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons and entities, unless exempt or authorized by a general or specific OFAC license.
OFAC reaches $78,750 settlement with financial analytics company
On April 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a roughly $78,750 settlement with a financial analytics company for allegedly processing transactions in violation of Ukraine-Related Sanctions Regulations. According to OFAC’s web notice, in August 2016, the company (which had been recently acquired) reissued and re-dated an August 2015 invoice with a new date that was 374 days after the invoice for the debt was originally issued. After a partial payment, the company reissued the original August 2015 invoice creating two “new” invoices each reflecting half of the remaining balance and dated November 2016, both with payment due upon receipt. After another partial payment, the company reissued a fourth invoice with the remaining debt in September 2017, again altering the date. OFAC concluded that the company violated the Ukraine-Related Sanctions Regulations “by dealing in new debt of longer than 90 days maturity when [it] extended the payment date of its invoices.”
In arriving at the settlement amount, OFAC considered various aggravating factors, including, among other things, that (i) the company “failed to exercise a minimal degree of caution or care when it reissued and re-dated four invoices to extend the payment date of invoices far beyond the authorized debt tenor, knowing or having reason to know such conduct would violate U.S. sanctions regulations”; (ii) the company’s staff “were aware of and involved in the conduct giving rise to the Apparent Violations”; and (iii) the company “was a commercially sophisticated entity and considered a leader in global energy market analysis, with over 500 customers in 60 countries.” OFAC also considered various mitigating factors, including, among other things, that the company (i) has not received a penalty notice from OFAC in the preceding five years; (ii) “took remedial measures by enhancing their compliance program to better ensure compliance with OFAC sanctions, creating more robust training, adding periodic testing to invoices involving SSI List entities, and adding additional staff to manage sanctions issues”; and (iii) cooperated during the investigation.
Providing context for the settlement, OFAC stated that this “case underscores the importance of careful adherence to OFAC regulations, including in cases where counterparties may make compliance challenging.”
OFAC sanctions IRGC-connected entities
On March 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 13224, as amended, as well as E.O. 13382, against an Iran-based procurement agent and his network of companies that supported the Islamic Revolutionary Guard Corps Research and Self Sufficiency Jihad Organization (IRGC), the IRGC unit responsible for the research and development of ballistic missiles, as well as Iran’s Parchin Chemical Industries (PCI), an element of Iran’s Defense Industries Organization. Additionally, OFAC sanctioned an Iranian intermediary involved in the procurement of parts used to develop missile propellant on behalf of PCI.
According to OFAC, the sanctions follow Iran’s missile attack on March 13 in Erbil, Iraq and an Iranian-enabled Houthi missile attack against a Saudi Aramco facility on March 25, in addition to other missile attacks by Iranian proxies against Saudi Arabia and the United Arab Emirates. As a result of the 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, and “any entities that are owned, directly or indirectly, 50 percent or more” by the targeted persons are blocked and must be reported to OFAC. U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons.
OFAC sanctions individuals for raising funds supporting Nigerian terrorist group
On March 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224, as amended, against six individuals connected to the Nigerian terrorist group Boko Haram. According to OFAC, the six individuals “were found guilty of establishing a Boko Haram cell in the United Arab Emirates (UAE) to raise funds for and provide material assistance to Boko Haram insurgents in Nigeria.” The sanctions follow “arrests, prosecutions, and designations in the UAE in September 2021, demonstrating the commitment of the Emirati government to using judicial measures and targeted financial sanctions to disrupt the flow of funds to these networks.” Under Secretary of the Treasury Brian Nelson stated that the U.S. is joining the UAE in targeting terrorist financing networks to ensure the Boko Haram network is unable to further move funds through the international financial system. As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals 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 are blocked and must be reported to OFAC. Additionally, 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.
OFAC’s announcement further warned that “engaging in certain transactions with the individuals designated today entails risk of secondary sanctions” and that any foreign financial institution that knowingly facilitates significant transactions or provides significant financial services on behalf of a Specially Designated Global Terrorist may be subject to U.S. correspondent account or payable-through account sanctions.