The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), in consultation with the Department of State, has sanctioned numerous Russian oligarchs and the companies they own or control, 17 senior Russian government officials, and a state-owned Russian weapons trading company. In his announcement, Treasury Secretary Steven Mnuchin stated, “The Russian government engages in a range of malign activity around the globe, including continuing to occupy Crimea and instigate violence in eastern Ukraine, supplying the Assad regime with material and weaponry as they bomb their own civilians, attempting to subvert Western democracies, and malicious cyber activities. Russian oligarchs and elites who profit from this corrupt system will no longer be insulated from the consequences of their government’s destabilizing activities.”
The full list of individuals and entities being placed on OFAC’s Specially Designated Nationals (SDN) list is available here. With the placement of these persons and entities on the SDN list, U.S. persons are now generally prohibited from engaging in transactions with them, and all assets subject to U.S. jurisdiction of these designated individuals and entities are frozen. OFAC has cautioned that non-U.S. persons could face sanctions for knowingly facilitating significant transactions for or on behalf of these Russian individuals or entities.
Generally, the Russian oligarchs placed on the SDN list are known for their involvement in Russia’s energy sector and are close allies to Russian President Vladimir Putin or are current Russian government officials. Many of the companies these oligarchs own or control have also been sanctioned and placed on the SDN List. They are: B-Finance Ltd.; Basic Element Limited; EN+ Group PLC; JSC EuroSibEnergo; United Company RUSAL PLC; Russian Machines; GAZ Group; Agroholding Kuban; Gazprom Burenie, OOO; NPV Engineering Open Joint Stock Company; Ladoga Menedzhment, OOO; Russian Machines; and Renova Group. OFAC has cautioned that this list of companies owned or controlled by the sanctioned Russian oligarchs should not be viewed as exhaustive, and reminds U.S. persons and companies of OFAC’s 50 percent rule. Under this rule, property and interests in property of entities directly or indirectly owned 50 percent or more in the aggregate by one or more persons or entities placed on the SDN list are considered blocked regardless of whether such entities appear on the list. Appropriate party screening and due diligence will increasingly be necessary when U.S. persons or companies engage in transactions in Russia.
Given the scope of these sanctions, OFAC has issued General License No. 12 to allow for U.S. companies currently engaged in transactions with these Russian companies to wind down operations and conclude contracts or other agreements that were in effect before April 6, 2018. All activities with these Russian companies must conclude by June 5, 2018. OFAC has issued General License No. 13, authorizing U.S. persons to undertake any necessary transactions necessary to divest or transfer any debt, equity or other holdings in EN+ Group PLC, GAZ Group and United Company RUSAL PLC by May 7, 2018.
Due to Russia’s continued support of the Assad regime and its destabilizing activities in Syria, OFAC has sanctioned Rosoboroneksport, a state-owned Russian weapons trading company, and its related bank, Russian Financial Corporation. Rosoboroneksport has been placed on OFAC’s SDN list and its Sectoral Sanctions Identifications (SSI) list, a list identifying persons and entities operating in certain sectors of the Russian economy (such as financial services, energy, metals and mining, engineering and defense) under which the United States has placed certain additional restrictions limiting U.S. companies from engaging in specific transactions with such SSI listed entities.