In a move some read as an effort to "Trump Proof" the Treasury's Russian sanctions regime, OFAC is re-designating pursuant to Executive Order (E.O.) 13662 almost 100 entities already designated pursuant to E.O. 14024. This codification provides legislative backing, making it more difficult for any administration to unilaterally lift these sanctions.
This move places the sanctions under rules governed by the Countering America’s Adversaries Through Sanctions Act (CAATSA). CAATSA, enacted in 2017, codified and expanded existing sanctions imposed by executive orders, including E.O. 13662.
As a result of these entities’ designation pursuant to E.O. 13662, foreign persons, including foreign financial institutions, that knowingly facilitate significant transactions for or on behalf of any of these entities could be subject to mandatory secondary sanctions under the Ukraine-/Russia-related sanctions program.
Treasury also applied sanctions on an evasion scheme established between actors in Russia and the People’s Republic of China to facilitate cross-border payments for sensitive goods.
In addition, Treasury is designating a Kyrgyz Republic-based financial institution that coordinated with Russian officials and a U.S.-designated bank to implement a sanctions evasion scheme.
“Today’s actions frustrate the Kremlin’s ability to circumvent our sanctions and get access to the goods they need to build weapons for their war of choice in Ukraine,” said Deputy Secretary of the Treasury Wally Adeyemo. “Today’s expansion of mandatory secondary sanctions will reduce Russia’s access to revenue and goods.”
The U.S. Department of the Treasury has unveiled actions to disrupt a sanctions evasion scheme involving Russia and the People’s Republic of China (PRC), aimed at enabling cross-border payments for sensitive exports. A Kyrgyzstani financial institution, OJSC Keremet Bank, was also sanctioned for facilitating Russia’s military-industrial operations.
The Treasury revealed that Russia and the PRC had coordinated to establish regional clearing platforms (RCPs) in their respective countries to process cross-border payments for sanctioned goods. Several Russian financial institutions, including Sberbank and Alfa-Bank, participated in the scheme. Designated entities in Russia and the PRC, including Herbarium Office Management LLC and Anhui Hongsheng International Trade Co. Ltd, were sanctioned under Executive Orders (E.O.) 14024 and 13662 for their roles in the financial services sector of the Russian economy.
Keremet Bank, a Kyrgyz Republic-based institution, coordinated with Russian bank Promsvyazbank to facilitate cross-border financial transactions for Russia’s military. The Kyrgyzstani Ministry of Finance had sold a controlling stake in Keremet Bank in 2024 to a firm with strong ties to a Russian oligarch, allegedly transforming the bank into a hub for sanctions evasion.
Treasury expanded the application of mandatory secondary sanctions to entities already designated under E.O. 14024, targeting Russia’s defense, energy, and financial sectors. Foreign financial institutions facilitating significant transactions for these entities may face severe penalties.
Deputy Treasury Secretary Wally Adeyemo emphasized that these actions “frustrate the Kremlin’s ability to circumvent our sanctions” and restrict Russia’s access to critical goods for its defense sector.
The U.S. State Department simultaneously designated over 150 individuals and entities, focusing on companies in Russia’s defense industry and PRC-based entities supporting sanctions evasion. Among these designations were companies involved in dual-use technology and sensitive exports enabling Russia’s war effort in Ukraine.
The designated entities’ U.S.-linked assets are frozen, and transactions with them are prohibited. Non-U.S. entities, including foreign financial institutions, risk sanctions for engaging in significant transactions with these entities.
OFAC has amended its regulations to implement for 2025 the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. This regulatory amendment adjusts for inflation the maximum amount of the civil monetary penalties that may be assessed under relevant OFAC regulations. The regulatory amendment is published in the Federal Register and is effective as of today, January 15, 2025.
OFAC also has issued Russia-related General License 122, "Authorizing the Wind Down of Transactions Involving Certain Entities Blocked on January 15, 2025;" Russia-related General License 123, "Authorizing Certain Transactions Related to Debt or Equity of, or Derivative Contracts Involving, Wafangdian Bearing Company Limited;" and Russia-/Ukraine-related General License 26A, "Transactions Authorized Pursuant to the Russian Harmful Foreign Activities Sanctions Regulations."
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