On April 6, 2018 the Office of Foreign Assets Control (OFAC) designated numerous Russian oligarchs and entities associated or owned by such persons, Russian state officials, a Russian weapon company it a Russian bank owned by the arms company.
Such designations were executed pursuant to E.O 13661 and E.O 13662, codified by the Countering America’s Adversaries Through Sanctions Act (CAATSA). This regulation permits OFAC in consultation with State Department and the Executive Branch of the United States to designate those individuals and entities acting against the interest of U.S. national and foreign policy.
OFAC also issued General Licenses 12 and 13 to authorize a wind-down of business activity with such designated persons and entities. All property of such designated persons and entities must now be blocked and U.S. persons are prohibited from dealing with such persons and entities including entities 50% or more owned or controlled by such designated persons and entities. Non-US persons may face sanctions liability for facilitating transactions on behalf of the persons and entities.
What Does this Mean For Those Associated with Russian Leaders?
Individuals with close ties to Vladamir Putin were designated pursuant to E.O. 13661 and 13662. This includes Oleg Deripaska, for his business activity on behalf of the Government of the Russian Federation, particulary in the enegy sector. Derispaka has been purported to be involved in sophisticated money laundering schemes, illegal wiretapping, and participation in extortion and racketeering. EN+ Group was designated for being owned or controlled by Oleg Deripaska. This is significant as EN+ Group is based in the United States and is a prominent aluminum and energy producer. EuroSibEnergo was also designated due to ownership by Deripaska and EN+ Group. GAZ Group was also designated for the same reason but is Russia’s leading automotive manufacturer.
Suleiman Kerimov was designated for possibly smuggling 20 million euros on separate occasions into France in suitcases rather than the formal international banking system.
Kirill Shamalov was designated a major director of the Russian energy sector. Shamalov owns a majority of shares in Sibur, a Russian oil and gas company.
Victor Vekselberg, a prominent internationally-renowned Russian businessman, founder and chairman of Renova Group, which plays a prominent role in the Russian energy sector. Renova Group was designated for being owned or controlled by Victor Vekselberg.
Potential Impact on Russian-Owned Business
Designated Russian state-owned firms include Rosoboroneksport, a weapons trading company active in Syria, and the RFC Bank owned by Rosoboroneksport. Designated Russian government officials include Andrey Akimov, the chairman of Gazprom bank, Mikhail Fradkov, the President of the Russian Institute for Strategic Studies, Sergey Fursenko, a member of the board of Gazprom Neft. Further designations are provided in the link here.
These designations are a major step in sanctioning prominent Russian companies and oligarchs by the U.S. government. The United States has accused Russia of interfering in its 2016 elections and promoting corruption in various countries.
Any person or entity designated in such a listing or those who have ongoing or past business activity with such persons would be well advised to consult with an OFAC Attorney for sanctions compliance advice. Those who seek to be removed from the SDN list should initiate the Designation Reconsideration process.