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On September 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), together with the Departments of Commerce and State, announced sanctions against 14 persons in Russia’s military-industrial complex, including two international suppliers, three key leaders of Russia’s financial infrastructure, and immediate family members of certain senior Russian officials, as well as 278 members of Russia’s legislature, for enabling Russia’s referenda and effort to annex Ukraine. As a result of the sanctions, all property and interests in property belonging to the sanctioned targets 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 50 percent or more by one or more designated persons” are 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 issued FAQ 1091 to provide new guidance warning of the heightened sanctions risk that international actors outside of Russia would face for providing political or economic support to Russia as a result of its illegal attempts to change the status of Ukrainian territory. According to OFAC, the FAQ emphasizes that the U.S. “is prepared to more aggressively use its existing sanctions authorities, including E.O. 13660, E.O. 14024, and E.O. 14065, to target persons—inside or outside Russia—whose activities may constitute material assistance, sponsorship, or provision of financial, material, or technological support for, or goods or services (together ‘material support’) to or in support of persons sanctioned pursuant to those Executive orders, or sanctionable activity related to Russia’s sham referenda, purported annexation, and continued occupation of the Kherson, Zaporizhzhya, Donetsk, and Luhansk regions of Ukraine.” OFAC noted, however, that it “will generally not impose sanctions on non-U.S. persons that engage in transactions that would be authorized for U.S. persons, such as certain energy-related transactions.”
The same day, Treasury and the DOJ announced that the Russian Elites, Proxies, and Oligarchs (REPO) Task Force Deputies convened to accelerate oligarch asset forfeiture efforts in response to Russia’s war in Ukraine. As previously covered by InfoBytes, REPO is a multilateral task force that was formed in February 2022 and is “committed to using their respective authorities in concert with other appropriate ministries to collect and share information to take concrete actions, including sanctions, asset freezing, and civil and criminal asset seizure, and criminal prosecution.” Representatives from Australia, Canada, Germany, France, Italy, Japan, the UK, the European Commission, and the U.S. discussed continuing initiatives “to tailor already robust asset forfeiture tools and maximize the impact of our joint work on Russian elites and their cronies” for their involvement with the war in Ukraine. REPO further noted that their steps “immobilized Russian assets as one of several means to induce Russia to come into compliance with its international law obligations, including the obligation to pay reparations.”
On September 26, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $720,258 settlement with an indirect subsidiary of a Switzerland-based bank for allegedly processing transactions in violation of the Cuba, Ukraine-related, Iran, Sudan, and Syria sanctions programs. According to OFAC’s web notice, from April 2013 to April 2016, the bank processed 273 transactions totaling approximately $3,076,180 on behalf of individuals residing in Cuba, Crimea, Iran, Sudan, and Syria. Specifically, OFAC noted that customers in sanctioned jurisdictions were able to continue to purchase and sell securities through the U.S. financial system and to receive related dividend and interest payments until the bank took further steps to prevent such payments.
In arriving at the settlement amount of $720,258, OFAC considered various aggravating factors, including that bank personnel “had reason to know they were processing transactions through the U.S. financial system for individual customers located in comprehensively sanctioned jurisdictions based on the underlying [know-your-customer (KYC)] data obtained by [the bank], which included address information indicating the customers’ location,” and “conferred approximately $3,076,180 in economic benefit to persons in Cuba, Crimea, Iran, Sudan, and Syria,” which caused harm to multiple sanctions programs' integrity. OFAC also considered various mitigating factors, including that the bank cooperated with OFAC throughout the investigation, and has undertaken remedial measures intended to minimize the risk of recurrence of similar conduct.
Separately, the same day OFAC announced a $401,039 settlement with a different indirect subsidiary of the Switzerland-based bank for allegedly processing transactions in violation of the Cuba, Ukraine-related, Iran, Sudan, and Syria sanctions programs. According to OFAC’s web notice, from December 2011 until July 2016, the bank processed 426 transactions totaling approximately $1,233,967 on behalf of individuals ordinarily resident in Cuba, Iran, and Syria.
In arriving at the settlement amount of $401,039, OFAC considered various aggravating factors, including that bank personnel “had reason to know they were processing transactions through the U.S. financial system for individual customers located in comprehensively sanctioned jurisdictions based on the underlying KYC data [the bank had] obtained,” and the bank “conferred approximately $1,233,967 in economic benefit to persons in Cuba, Iran, and Syria,” which caused harm to multiple sanctions programs' integrity. OFAC also considered various mitigating factors, including that the bank cooperated with OFAC throughout the investigation, and has undertaken remedial measures intended to minimize the risk of recurrence of similar conduct.
On September 20, Assistant Secretary for Terrorist Financing and Financial Crimes Elizabeth Rosenberg delivered prepared remarks before a Senate Committee on Banking, Housing, and Urban Affairs hearing, in which she provided an overview of recent efforts taken by the U.S. Treasury Department to hold Russia accountable for its invasion of Ukraine. Rosenberg explained that these measures are intended to “squeeze Russia’s access to finance and technology for strategic sectors of its economy and degrade its industrial capacity for years to come” and highlighted sanctions imposed against hundreds of Russian individuals and entities, including Russia’s largest financial institutions and key nodes in the country’s military-industrial supply chains, to cut them off from the U.S. financial system. She noted that Treasury has also implemented restrictions on dealings in Russian sovereign debt and has “prohibited economic dealings with the so-called Donetsk People’s Republic and Luhansk People’s Republic regions of Ukraine” as well as new investments in the Russian Federation. Rosenberg added that Treasury has “also imposed prohibitions on importing certain commodities from Russia into the United States, including oil and natural gas, and similarly imposed prohibitions on exporting certain items like luxury goods and dollar-denominated banknotes.” Additionally, Rosenberg discussed international efforts, including “implementing the largest sanctions regime in modern history[,]” and working with allies to facilitate information sharing, law enforcement data, and relevant financial records. She emphasized that “Treasury has mounted an aggressive campaign to close the global financial policy and regulatory loopholes across jurisdictions that Russian aiders and abettors of this war, and other criminals, use to perpetuate their illicit activity[,]” and stated that Treasury remains focused on denying funds to Russia through its oil exports.
Find continuing InfoBytes coverage on the U.S. sanctions response to Russia’s invasion of Ukraine here.
On September 14, U.S. Treasury Secretary Janet Yellen announced that the Group of Creditors of Ukraine, which includes the U.S., concluded a Memorandum of Understanding to implement Ukraine’s request for a coordinated suspension of debt service through the end of 2023. According to Yellen, easing liquidity pressures will allow the Ukrainian government to direct additional spending towards its domestic needs and the welfare of its people. Yellen urged other official bilateral creditors, including private creditors, to support Ukraine as it defends itself from Russia’s invasion. The Group of Creditors of Ukraine issued a statement applauding measures taken by the Ukrainian government to address the economic and financial consequences of the war, and welcoming the conclusion of an agreement with bondholders and warrantholders to defer debt payments for two years.
On September 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), in coordination with the Departments of Commerce and State, announced sanctions against 22 individuals and two entities connected to Russia’s invasion of Ukraine. According to OFAC, the designated persons include multiple individuals who have furthered the Government of the Russian Federation’s objectives in Ukraine, both prior to and during Russia’s invasion of Ukraine in 2022. Also included among those designated is a neo-Nazi paramilitary group that has aided Russia’s military in Ukraine, and two of the group’s senior leaders. As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals and entities subject to U.S. jurisdiction 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 further noted that “transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt,” which “include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.”
The same day, OFAC issued Russia-related General License (GL) 51, authorizing the wind down of transactions involving the Limited Liability Company Group of Companies Akvarius, and GL 52, which relates to journalistic activities and the establishment of news bureaus. According to the GL 51, “all transactions ordinarily incident and necessary to the wind down of any transaction involving Limited Liability Company Group of Companies Akvarius (Aquarius), or any entity in which Aquarius owns, directly or indirectly, a 50 percent or greater interest, that are prohibited by Executive Order (E.O.) 14024,” are authorized as of October 15, subject to certain qualifications. According to GL 52, “news reporting organizations that are U.S. persons, and individual U.S. persons who are journalists or broadcast or technical personnel, are authorized to engage in certain transactions where such transactions are ordinarily incident and necessary to such U.S. persons’ journalistic activities or to the establishment or operation of a news bureau and are prohibited” by E.O. 14024, subject to certain qualifications.
Additionally, OFAC published several frequently asked questions clarifying “Russian Harmful Foreign Activities Sanctions,” which include guidance on the use of the National Payment Card System (NSPK) or the Mir National Payment System given the broad sanctions imposed on Russia’s financial system this year.
On September 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Orders 13382 and 14024 against an Iran-based air transportation service provider, as well as three companies and one individual involved in the research, development, production, and procurement of Iranian unmanned aerial vehicles (UAVs) and UAV components. Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson reiterated that the U.S. “is committed to strictly enforcing our sanctions against both Russia and Iran and holding accountable Iran and those supporting Russia’s war of aggression against Ukraine,” and stressed that the U.S. will “not hesitate to target producers and procurers who contribute to Iran and its IRGC’s UAV program, further demonstrating [the U.S.’s] resolve to continue going after terrorist proxies that destabilize the Middle East.” The sanctions follow designations implemented by OFAC last year against members of a network of companies and individuals that provided critical support to Iran’s Islamic Revolutionary Guard Corps Qods Force’s use of UAVs (previously covered by InfoBytes here).
As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals and entities subject to U.S. jurisdiction are blocked and must be reported to OFAC. U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons. Additionally, OFAC warned that “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals or entities designated today could be subject to U.S. correspondent or payable-through account sanctions.”
On September 9, the U.S. Treasury Department announced preliminary guidance on implementing a maritime services policy and related price exception for seaborne Russian oil. As previously covered by InfoBytes, OFAC recently announced that it planned to publish preliminary guidance on implementing the price cap to provide a high-level overview of the directive, including how U.S. persons can comply in advance of formal guidance and legal implementation. According to the preliminary guidance, the policy is intended to establish a framework for Russian oil to be exported by sea under a capped price, and establish a ban on services for any shipments of seaborne Russian oil above the capped price. Objectives of the guidance include: (i) maintaining a reliable supply of seaborne Russian oil to the global market; (ii) reducing upward pressure on energy prices; and (iii) reducing the revenues the Russian Federation earns from oil after its own war of choice in Ukraine has inflated global energy prices. The policy contains an exception, which applies to “jurisdictions or actors that purchase seaborne Russian oil at or below a price cap to be established by the coalition (the “price exception”).” The policy, which relates to a broad range of services in connection with the maritime transportation of Russian Federation origin crude oil and petroleum products, will become effective December 5, 2022 for the maritime transportation of crude oil and on February 5, 2023 for the maritime transportation of petroleum products.
On September 2, the U.S. Treasury Department announced that G7 Finance Ministers confirmed their joint intention to implement a price cap on Russian-origin crude oil and petroleum products. According to the statement, G7 countries, along with other allies and partners, “plan to prohibit the provision of services that enable maritime transportation of such oil and products unless purchased at or below a price level determined by the coalition of countries adhering to and implementing the price cap.” Secretary of the Treasury Janet L. Yellen issued a statement commending the action. She noted that the price cap will “help deliver a major blow for Russian finances and will both hinder Russia’s ability to fight its unprovoked war in Ukraine and hasten the deterioration of the Russian economy,” while also maintaining supplies to global energy markets by keeping Russian oil flowing at lower prices.
In conjunction with the announcement, OFAC said it plans to publish preliminary guidance on implementing the price cap later this month. The guidance will provide a high-level overview of the mechanism, including how U.S. persons can comply in advance of formal guidance and legal implementation which will be issued at a later date.
On August 1, 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 elites, a major multinational company, a sanctions evasion operation, and a yacht used by a sanctioned individual. The action was taken together with the U.S. Department of State, which imposed additional sanctions on entities and individuals, as well as visa restrictions. 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. 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.
On July 20, the Group of Creditors of Ukraine issued a joint statement regarding coordinated suspension of debt services for Ukraine through 2023, as the Russian invasion continues. According to the statement, the group noted that it would also consider the possibility of deferral for an additional year beyond 2023. The statement granted Ukraine’s request for deferral given the “exceptional circumstances, and acknowledging Ukraine’s exemplary track record of honoring debt service to date,” also “strongly encourage[s] all other official bilateral creditors to swiftly reach agreement with Ukraine on a debt service suspension.”