Treasury Targets Broad Range of Entities in Recent Round of Sanctions
On August 2, acting pursuant to Executive Order 14024, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) announced sanctions designating members of the Russian elite, a multinational corporation, and sanctions evaders.
Among the designated entities/individuals are:
- Andrey Grigoryevich Guryev, a close associate of President Vladimir Putin who served in the Russian government and was appointed to the Federal Council of the Federal Assembly of the Russian Federation. Guryev is also the founder and former Deputy Chairman of PhosAgro, a leading Russian chemical company. Guryev’s Cayman Islands-flagged yacht, the Alfa Nero, also has been identified by OFAC as blocked property. Guryev is similarly sanctioned by the UK.
- Andrey Andreevich Guryev, the son of Andrey Grigoryevich Guryev and former CEO of PhosAgro. The younger Guryev is the sole owner of Dzhi Al Invest OOO (DAI), an investment company also designated pursuant to EO 14024.
- Viktor Filippovich Rashnikov, the majority owner and chairman of the board of directors of Publichnoe Aktsionernoe Obschestvo Magnitogorskiy Metallurgicheskiy Kombinat (MMK), a large vertically integrated steel producer that contributes a substantial source of revenue to the Russian government through taxes. MMK was also designated. Rashnikov is similarly sanctioned by Australia, Canada, the EU, Switzerland, and the UK.
- Investitsionnaya Kompaniya MMK-FINANS, an investment company and MMK subsidiary.
- MMK Metalurji Sanayi Ticaret Ve Liman Isletmeciligi Anonim Sirketi, a Turkey-based steel manufacturer and MMK subsidiary.
- Alina Maratovna Kabaeva, a former member of the State Duma, current head of the National Media Group, and rumored girlfriend to President Vladimir Putin. Kabaeva is also sanctioned by the EU and the UK.
- Natalya Valeryevna Popova, the First Deputy Director of Non-State Development Institute Innopraktika, a Russian technology company.
Cracking Down on Sanctions Evasion
The Treasury Department designated the Joint Stock Company Promising Industrial and Infrastructure Technologies (JSC PPIT) for attempting to circumvent sanctions imposed on the Russian Direct Investment Fund (RDIF). According to OFAC, in February 2022, Anatoly Alexandrovich Braverman, Deputy CEO of RDIF, devised a plan to evade sanctions by transferring RDIF’s assets and cash to JSC PPIT in anticipation of RDIF’s addition to the OFAC Specially Designated Nationals and Blocked Persons List. In addition to JSC PPIT’s designation, OFAC designated the organization’s General Director, Anton Sergeevich Urusov. In announcing this designation, OFAC emphasized that “those who facilitate U.S. sanctions evasion will themselves be sanctioned.”
Commerce Department Adds First Foreign Produced Aircraft to List of EAR Violators
On August 2, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) added 25 Airbus aircraft to its list of blocked aircraft believed to have violated the EAR by flying into Russia without adequate U.S. export authorization. According to BIS, these 25 aircraft were flown by I-Fly, Nordwind, Red Wings, S-7 Airlines, Ural Airlines, and Yamal Airlines and were a mix of A-320s, A-321s and A-330s. Though manufactured by Airbus, these aircraft apparently are subject to the EAR because the aircraft contain more than a de minimis amount of U.S.-origin controlled content.
Until now, the list – which currently totals 183 aircraft – only included U.S.-origin aircraft. Three Boeing-produced aircraft flown were also added to the list. The current list can be found at the conclusion of the August 2 press release announcing the new designations here.
OFAC Issues Multiple General Licenses, New Frequently Asked Questions (FAQs)
While OFAC continues to expand restrictions related to Russia and Russian parties, the agency also continues to issue or extend general license (GL), and issue FAQs to help explain various restrictions and licenses. In particular, OFAC has recently issued the following:
- GL 6B – authorizes transactions related to producing, manufacturing, selling, and transporting agricultural commodities, equipment, medicine, medical devices as well as relevant replacement parts, components, and software updates. The GL also authorizes transactions related to the prevention, diagnosis, and treatment of COVID-19 and ongoing clinical trials and medical research activities. The GL replaces GL 6A and does not have an expiration date.
In connection with the issuance of GL 6B, OFAC also issued FAQ 1039 to explain that GL 6B authorizes certain transactions ordinarily incident and necessary to the exportation of agricultural commodities even with certain designated entities. In addition, OFAC issued a Fact Sheet to better clarify the United States’ position that it has not implemented sanctions on the Russian Federation’s production, manufacturing, sale, or transport of agricultural commodities, including fertilizer. The Fact Sheet can be found here.
- GL 25C – authorizes all transactions ordinarily incident and necessary to receiving or transmitting telecommunications involving the Russian Federation. The GL replaces GL 25B and does not have an expiration date. In addition, OFAC FAQ 1040 explains that the GL authorizes certain transactions related to the receipt or transmission of previously-prohibited telecommunications involving Russia.
- GL 30A – authorizes transactions involving SEFE Securing Energy for Europe GmbH — formerly known as Gazprom Germania GmbH — or any entity 50% or more owned by SEFE Securing Energy for Europe GmbH. The GL replaces GL 30 and has no expiration date.
- GL 44 – authorizes transactions ordinarily incident and necessary to the export or re-export of tax preparation or filing services to U.S. persons in the Russian Federation. GL 44 does not have an expiration date.
- GL 40B – authorizes certain transactions ordinarily incident and necessary to the provision, exportation, or re-exportation of goods and services to ensure the safety of civil aviation for aircraft registered outside of Russia. This GL replaces GL 40A and does not have an expiration date.
- GL 43A – authorizes certain transactions related to the divestment or transfer of debt or equity of Public Joint Stock Company Severstal or Nord Gold PLC. Further, the GL authorizes transactions ordinarily incident and necessary to the wind-down of derivative contracts involving the entities mentioned above. GL 43A expires on August 31, 2022.
- GL 45 – authorizes transactions related to the wind-down of financial contracts or other agreements entered into on or before June 6, 2022, involving debt or equity issued by entities in the Russian Federation. GL 45 expires on October 20, 2022. FAQ 1071 explains that GL 45 authorizes transactions that would otherwise be prohibited pursuant to section (1)(a)(i) of E.O. 14071 and identifies potentially authorized transactions.
- GL 46 – authorizes transactions related to establishing, administering, executing, and participating in the EMEA Credit Derivatives Determination Committee’s auction in order to settle credit derivative transactions with a reference entity of “the Russian Federation.” GL 46 does not have an expiration date. FAQ 1072 also provides additional information about transactions that may be covered by the GL.
- GL 47A – authorizes certain transactions ordinarily incident and necessary to the wind-down of transactions involving one or more of the following blocked entities: Skolkovo Foundation, Skolkovo Institute of Technology, Technopark Skolkovo Limited Liability Company, Federal State Institution of Higher Vocational Education Moscow Institute of Physics and Technology, Publichnoe Atksionernoe Obschestvo Magnitogorskiy Metallurgicheskiy Kombinat, or Joint Stock Company State Transportation Leasing Company. This GL, which replaces GL 47, expires on September 1, 2022.
- GL 48A – authorizes certain transactions related to the divestment or transfer of debt or equity of Publichnoe Aktsionernoe Obschestvo Magnitogorskiy Metallurgicheskiy Kombinat or Joint Stock Company State Transportation Company. The GL also authorizes transactions ordinarily incident and necessary to the wind-down of derivative contracts involving these entities. This GL replaces GL 48 and expires, depending on the nature of the transaction under the GL, either on October 3, 2022, or October 31, 2022.
- GL 49 – authorizes certain transactions ordinarily incident and necessary to the wind-down of transactions involving MMK Metalurji Sanayi Ticaret Ve Liman Isletmeciligi Anonim Sirketi (MMK Metalurji). GL 49 expires on January 31, 2023.
- FAQ 1075 explains that PhosAgro PJSC is not blocked as a result of Andrey Grigoryevich Guryev and Andrey Andreevich Guryev’s designations because, based on OFAC information, blocked persons do not own 50% or more of PhosAgro PJSC and the organization is not considered blocked property of either Guryev.
- FAQ 1074 explains that EuroChem Group AG is not blocked as a result of Andrey Igorevich Melnichenko’s designation because, based on OFAC information, blocked persons do not own 50% or more of the organization and it is not considered blocked property of Melnichenko.
- FAQ 1073 explains that Sheremetyevo International Airport is not blocked as a result of Alexander Anatolevich Ponomarenko’s designation because, based on OFAC data, blocked persons do not own 50% or more of the airport and it is not considered blocked property of Ponomarenko.
- FAQ 1054 explains that the new investment prohibitions of EOs 14066, 14068, and 14071 prohibit U.S. persons from purchasing debt and equity securities issued by entities in the Russian Federation.
- FAQ 1053 explains that the new investment prohibitions of EOs 14066, 14068, and 14071 do not prohibit transactions related to the divestment or facilitation of divestment in a pre-existing project or operation in the Russian Federation.
- FAQ 967 explains that Directive 2 under EO 14024 prohibits U.S. financial institutions from 1) opening and maintaining correspondent or payable-through accounts for, or on behalf of, institutions subject to Russia-related CAPTA Directive prohibitions; and 2) processing transactions involving foreign financial institutions subject to Russia-related CAPTA Directive prohibitions.
Treasury Targets Kremlin for Continued Political Influence Operations
On July 29, OFAC announced that it had, based on work in conjunction with the Department of Justice, sanctioned two individuals and four entities for supporting the Kremlin’s global operation to influence elections and destabilize democracies. OFAC contends the Kremlin uses a combination of co-optees – individuals recruited by the Russian Federal Security Service (FSB) – and Government Organized Non-government Organizations (GONGOs) – state sponsored and controlled proxy organizations — to support the Kremlin’s influence operations. Below are the individuals and entities designated.
- Aleksandr Viktorovich Ionov, a Russian national who has worked as an FSB co-optee allegedly promulgating Kremlin disinformation and advancing its malign influence agenda.
- Anti-Globalization Movement of Russia (AGMR), a “socio-political movement ‘against certain aspects of the globalization process’ … seeking to stop ‘manifestations’ of the ‘new world order.’” Ionov is president and founder of AGMR.
- Ionov Transkontinental OOO, an organization in which Ionov is the president, founder, and sole shareholder. The company has a footprint in Iran, Lebanon, and Venezuela.
- STOP-Imperialism, a website that calls itself a “global information agency.” The company is allegedly used to “further disseminate disinformation in fulfillment of the Kremlin’s overall malign influence campaign.” Ionov is the registrant of the website’s domain.
- Center for Support and Development of Public Initiative Creative Diplomacy (PICREADI), an organization designed to promote dialogue among Russia and the West while drawing attention to critical points in Russian-Western relations. The organization is described as “independent in thought and mission,” yet allegedly relies heavily on funding from Russia’s intelligence Services.
- Natlya Valeryevna Burlinova, the founder and president of PICREADI.