On Friday, February 24, 2023, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) issued new sanctions against individuals and entities operating in Russia and against those assisting with Russia’s war efforts in Ukraine. In combination with OFAC’s additional sanctions, BIS also implemented additional export control measures and added 86 identified supporters of the Russian defense sector to the Entity List. For a full discussion of the export control and Entity List additions see our separate blog post. The White House also issued a statement stating that beginning March 10, there will be a 200% tariff on Russian aluminum entering the US. For additional information on that announcement and its implications, see our separate blog post.
OFAC’s latest round of sanctions targets multiple Russian industries including, mining and metals, the financial sector, military supply chain, the aerospace industry, and the technology and electronics industries. The sanctions also highlight the US’s use of secondary sanctions to sanction individuals and entities aiding Russia’s war efforts, assisting with sanctions evasion, and the backfilling of necessary parts, components, and materials.
Mining and Metals Sector Determination and Designations
OFAC issued a new Determination pursuant to Executive Order 14024 (“E.O. 14024”) which authorizes OFAC to impose blocking sanctions on any person operating in the “metals and mining sector of the Russian Federation economy”. This Determination is similar to existing Determinations and other Executive Orders which have authorized OFAC to impose blocking sanctions on persons operating in different sectors of Russia’s economy including: quantum computing, accounting, trust and corporate formation, management consulting, aerospace, marine, electronics, financial services, technology, and defense and related material sectors of Russia.
Pursuant to this new directive, OFAC added the following entities to the Specially Designated Nationals and Blocked Persons List (“SDN List”) as persons operating in the mining and metals sector of the Russian economy:
- Joint Stock Company Burevestnik Central Scientific Research Institute
- OOO Metallurg-Tulamash
- TPZ-Rondol OOO
OFAC also published Frequently Asked Questions (“FAQs”) related to the new Determination one of which defined the term “metals and mining sector of the Russian Federation economy” to include “any act, process, or industry of extracting, at the surface or underground, ores, coal, precious stones, or any other minerals or geological materials in the Russian Federation, or any act of procuring, processing, manufacturing, or refining such geological materials, or transporting them to, from, or within the Russian Federation”. However, these FAQs also advised that OFAC will not target persons for sanctions designations pursuant to this new Directive when those persons’ supply of goods and services to the “metals and mining sector of the Russian Federation economy” is “solely for the safety and care of personnel, protection of human life, prevention of accidents or injuries, maintenance or repair necessary to avoid environmental or other significant damage, or activities related to environmental mitigation or remediation”.
Financial Services Sector Designations
OFAC also used pre-existing E.O. 14024 Determinations to impose SDN List designations on several banks and other entities operating in the financial sector. Those entities include:
- Credit Bank of Moscow Public Joint Stock Company
- Joint Stock Company Commercial Bank Lanta Bank
- Public Joint Stock Company Commercial Bank Metallurgical Investment Bank
- Public Joint Stock Company MTS Bank
- Novosibirsk Social Commercial Bank Levoberezhny Public Joint Company
- Bank Saint-Petersburg Public Joint Stock Company
- Joint Stock Commercial Bank Primorye
- SDM-Bank Public Joint Stock Company
- Public Joint Stock Company Ural Bank for Reconstruction and Development
- Public Joint Stock Company Bank Uralsib
- Bank Zenit Public Joint Stock Company
OFAC also designated OOO Zenit Finance, OOO Zenit Leasing, and OOO Zenit Factoring MSP as SDNs for being owned or controlled by or acting on behalf of Bank Zenit.
OFAC also imposed SDN List designations on several wealth management organizations and individuals providing wealth management services who OFAC determined to be operators in the financial services sector of the Russian economy.
OFAC designated several non-Russian individuals for their roles in supporting Russia’s war efforts in Ukraine and their roles in assisting with sanctions evasion and backfilling. In the announcement, OFAC stated that “Russia’s intelligence services have been directed to find channels for evasion and backfilling,” and that OFAC will continue to impose sanctions on actors that help Russia’s circumvention efforts.
OFAC imposed SDN List designations on the following individuals and entities for their roles in helping Russia:
- Walter Moretti
- Taerio Limited
- Tamyna FZE
- Markus Gerhard Mueller
- Ronald Eric Cosman
- Bruno Koller
- Swisstec 3D AKUS AG
- Stratton Investment Group LTD
- Frederic Pierre Villa
- Tamyna AG
- Hans-Peter Bomatter
- Lutwin Schommer
- Taerio International LTD EOOD
- Interpolytrade Limited Company
Russian Elite-Linked Businessman Tied to Illicit Financial Activity
OFAC added Aleksandr Yevgenyevich Udodov to the SDN list as he is linked to business dealings with Russian Prime Minister Mikhail Mishustin (already an SDN since April of 2022) and has also been investigated for manipulating value-added tax revenues and money laundering. Multiple Udodov companies were also added to the SDN List including, Udodov’s Moscow-based management consulting firm, Limited Liability Company Aforra Management and several others.
Sanctions Targeting Russia’s Military Supply Chains
The recent tranche of sanctions also targeted Russia’s military supply chains, including Russian entities that produce carbon fiber and related materials. The entities added to the SDN List include:
- UMATEX Group Europe SRO
- Zavod Ulgerodnykh I Kompozitsionnykh Materialov
- UVICOM LTD
Entities in Aerospace Sector
OFAC used pre-existing E.O. 14024 Determinations to impose SDN List designations on the following entities which OFAC determined to be operators in the aerospace sector of the Russian economy:
- Joint Stock Company Prepreg Advanced Composite Materials
- Limited Liability Company Alabuga-Fibre
- Limited Liability Company Prepreg-Dubna
- Joint Stock Company Research Institute of Graphite-Based Materials NIIGRAFIT
- Joint Stock Company the Urals Scientific Research Institute of Composite Materials
Russia’s Technology and Electronics Sectors
Similarly, OFAC used pre-existing E.O. 14024 Determinations to impose SDN List designations on the following entities and individuals which OFAC determined to be operators in the Russian electronics sector:
- 0Day Technologies
- OOO Iteranet (Iteranet)
- OKB Spektr OOO
- Limited Liability Company Maxtech
- Anastasiya Olegovna Eshstrut
- Maksim Valeryevich Safonov
- Novilab Mobile, LLC
- Limited Liability Company Promtekhekspert
- PSV Technologies LLC (PSV)
- Sergei Valentinovich Petrov
- Svetlana Alekseyevna Moretti
- AO Russian High Technologies
- Forward Systems, R&DC
- ZAO Akuta
- Joint Stock Company Vakuum.ru
- By Trade OU
- OOO Lavina Puls
- AO Inforus
- Andrey Igorevich Masalovich
- Open Joint Stock Company Ilyenko Elara Research and Production Complex
- Andrey Aleksandrovich Uglov
OFAC also published several new General Licenses and amended several existing General Licenses to authorize activities that would otherwise be prohibited under these new SDN List designations. These General License issuances and amendments included (but were not limited to): (i) the amendment of General License No. 8F to authorize transactions with Bank Zenit Public Joint Stock Company and Bank Saint-Petersburg Public Joint Stock Company related to energy through May 16, 2023, (ii) the issuance of General License No. 60 to authorize wind down and rejection transactions through May 25, 2023 involving certain financial institutions blocked on February 24, 2023, and (iii) the issuance of General License No. 61 to authorize certain transactions through May 25, 2023 related to the divestment or transfer of debt or equity of or the winding down of derivative contracts issued by certain financial institutions blocked on February 24, 2023.
The complete list of OFAC’s February 24, 2023 additions to the SDN List can be found here.
Husch Blackwell’s Export Controls and Economic Sanctions Team continues to closely monitor all export controls and enforcement related developments and will provide further updates as circumstances warrant. Should you have any questions or concerns, please contact Cortney Morgan, Grant Leach, Emily Mikes, or Eric Dama of our Export Controls and Economic Sanctions Team.