By John Meyer, consultant in financial affairs – Eurasia Business News, August 23, 2024. Article n°1184.

US Treasury building in Washington D.C., United States, where OFAC works on sanctions against Russia. Photo credit : Eurasia Business News.

Building on the U.S. sanctions already imposed on Russia in response to its policy against Ukraine, the U.S. Department of the Treasury and the Department of State released on August 23 new sanctions against 400 individuals and entities both in Russia and outside its borders—including in Asia, Europe, and the Middle East—whose products and services enable Russia to sustain its war effort and evade sanctions.

34 Russians, Raspadskaya Coal Company, Norilsk Avia, Novatek China, Air Bridge Cargo, Atol, etc., fell under the American restrictions.

The US authorities have also included the son of Russian Defense Minister Andrei Belousov, Pavel Belousov, in the sanctions list.

The United States government stated its will to continue to support Ukraine as it defends its independence.

“Russia has turned its economy into a tool in service of the Kremlin’s military industrial complex. Treasury’s actions today continue to implement the commitments made by President Biden and his G7 counterparts to disrupt Russia’s military-industrial base supply chains and payment channels,” said the U.S. Deputy Secretary of the Treasury Wally Adeyemo. “Companies, financial institutions, and governments around the world need to ensure they are not supporting Russia’s military-industrial supply chains.”

OFAC is targeting numerous transnational networks, including those involved in procuring ammunition and military materiel for Russia, facilitating sanctions evasion for Russian oligarchs through offshore trust and corporate formation services, evading sanctions imposed on Russia’s cyber actors, laundering gold for a sanctioned Russian gold company, and supporting Russia’s military-industrial base by procuring sensitive and critical items such as advanced machine tools and electronic components. Today’s sanctions further limit Russia’s future revenue from metals and mining. Treasury is also targeting Russian financial technology companies that provide necessary software and IT solutions for Russia’s financial sector.

U.S. Treasure claims to be aware of Russian efforts to facilitate sanctions evasion by opening new overseas branches and subsidiaries of Russian financial institutions. Foreign regulators and financial institutions should be cautious about any dealings with overseas branches or subsidiaries of Russian financial institutions, including efforts to open new branches or subsidiaries of Russian financial institutions that are not themselves sanctioned. Treasury has a range of tools available to respond to the establishment of new evasion channels.

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The State Department is targeting entities and individuals involved in Russia’s future energy, metals, and mining production and exports; sanctions evasion; Russia’s military-industrial base, including armed unmanned aerial vehicle (UAV) production, Belarusian support for Russia’s war effort, and air logistics entities; additional subsidiaries of State Atomic Energy Corporation Rosatom; and malign actors involved in the attempted, forcible “re-education” of Ukraine’s children.

SANCTIONS EVASION, CIRCUMVENTION, AND BACKFILL

Consistent with commitments made by President Biden and G7 leaders, Treasury continues to target transnational networks that supply Russia with military materiel and sensitive dual-use goods like those included in the multilateral Common High Priority List, jointly developed by the United States, European Union, Japan, and the United Kingdom. Treasury is also targeting multiple networks that facilitate or enable illicit financial schemes and sanctions evasion on behalf of Russian revenue generators and oligarchs. Many of today’s designations were enabled or informed by extensive coordination with Treasury’s Financial Crimes Enforcement Network (FinCEN). Today’s action targets almost a dozen distinct networks, designating more than 100 individuals and entities across 16 jurisdictions, including the People’s Republic of China, Switzerland, Türkiye, and the United Arab Emirates.

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RUSSIA’S TECHNOLOGICAL BASE TARGETED

Today, Treasury is targeting more than 60 Russia-based technology and defense companies that are critical for the sustainment and development of Russia’s defense industry, including entities involved in weapons development and modernization, automation and robotics, development and acquisition of dual-use electronics, digital surveillance, Internet of Things, and artificial intelligence. These sanctions target Russia’s defense industry while protecting the access by Russian citizens to crucial telecommunications and other digital technology.

THE U.S. TARGETS RUSSIA’S STRATEGIC METALS AND MINING SECTOR

Guided by commitments made by President Biden and G7 leaders to reduce Russia’s revenues from metals, today Treasury is targeting entities involved in Russia’s metals and mining sector, including steel, iron, and coal mining firms and auxiliary firms that provide specialized services to Russian metals and mining companies.

RUSSIAN FINANCIAL TECHNOLOGY

Today, OFAC is targeting Russian financial technology companies as a part of implementing G7 commitments to curtail Russia’s use of and access to the international financial system to further its war against Ukraine.

Atol is a Russian technology developer involved in services related to payments.

Centre of Financial Technologies Group (CFT)is one of the largest software companies in the Russian market. CFT provides an array of software products for banking and payment solutions for the Russian financial market.

Diasoft Ltd (Diasoft) is one of Russia’s largest developers and suppliers of information technology (IT) solutions for the financial sector.

Atol, CFT, and Diasoft were designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Promtekh Supply Chain

U.S.-designated Russia-based Aktsionernoe Obshchestvo Promyshlennye Tekhnologii (Promtekh) has used a network of companies located in Türkiye, France, and Hong Kong to send high priority goods to Promtekh’s subsidiaries. Russia-based Aspectriym Limited Trade Development (Aspectriym) is a subsidiary of Promtekh and is a defense procurement firm involved in the wholesale of electronic equipment and parts.

Based in France, in the Paris region, the company Industrial Technologies Group France (ITGF) is a sister firm of U.S.-designated Promtechcomplekt JSC, a subsidiary of Promtekh, and has worked with Aspectriym to procure foreign- and U.S.-made electronic components. This French company is now targeted by the OFAC sanctions.

Hong Kong-based Interasia Trading Group Limited (Interasia Trading) is the sole owner of ITGF. Russian national Igor Aleksandrovich Reutov (Reutov) is the Executive Director of ITGF. Reutov is also the owner of Estonia-based Free Sky Solutions OU (Free Sky) and the Managing Partner of France-based Aerialia. Aerialia was established in January 2024.

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ITGF also created a Türkiye-based firm, Enutek Makina Sanayi ve Ticaret Limited Sirketi (Enutek). Enutek has made hundreds of shipments of technology, including high priority dual-use technology such as electronic integrated circuits and ceramic capacitors, to U.S.-designated Promtekh subsidiaries, including Promtech Ulyanovsk, Dubna Switching Equipment Plant, and Promtech Irkutsk. Enutek was established in December 2022.

Other foreign suppliers to Promtekh subsidiaries include:

  • Türkiye-based Confienza Gida Pazarlama ve Ticaret Anonim Sirketi (Confienza) has sent over 200 shipments to Aspectriym, with shipments including high priority dual-use technology.
  • Hong Kong-based Grun Group Co Limited (Grun Group) has sent shipments totaling over $3 million to U.S.-designated subsidiaries of Promtekh, including shipments with high priority dual-use technology.
  • Hong Kong-based Hong Kong Yayang Trading Limited (Yayang Trading) has sent shipments totaling over $9 million to U.S.-designated Promtekh subsidiaries Dubna Switching Equipment Plant and Aspectriym, with shipments including high priority dual-use technology.
  • Hong Kong-based Kira International Trade Co Limited (Kira International) is a partner of Aspectriym. Kira International has sent shipments totaling over $1.5 million to Aspectriym, with shipments including high priority dual-use technology.
  • Hong Kong-based Most Development Limited (Most Development) has sent shipments totaling over $1 million to Aspectriym, with shipments including high priority dual-use technology.
  • Hong Kong-based New Wally Target International Trade Co Limited (New Wally Target) has sent over $4 million worth of shipments to Aspectriym, with shipments including high priority dual-use technology.

Aspectriym, ITGF, Enutek, Interasia Trading, Reutov, Confienza, Grun Group, Yayang Trading, Kira International, Most Development, and New Wally Target were designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy. Free Sky and Aerialia were designated pursuant to E.O. 14024 for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, Reutov.

Sanctions Evasion Through Switzerland and Liechtenstein Trust and Corporate Services Providers

Swiss national Anton Daniel Wyss (Wyss) is a major enabler of Russian cash flow in Switzerland and Liechtenstein and has used his Liechtenstein-based trust and corporate services provider (TCSP) Audax Consulting Trust Establishment (Audax) to obfuscate Russian beneficial ownership and investments into foreign ventures. Through their co-owned Liechtenstein-based company One Asset Management AG (One Asset), Wyss and his Austrian national associate Alexander Franz Josef Lins (Lins) provide asset management and reallocation services to sanctioned Russian nationals. Lins uses his own TCSP, Liechtenstein-based LMG Lighthouse Trust Reg (LMG), to facilitate sanctions evasion schemes for Russian clients. Audax, One Asset, and LMG are all located at the same address, and both Audax and LMG advertise their services in Russian-language brochures. Austrian national Stefan Anton Wolf (Wolf) is a director of Audax.

Wyss, Audax, LMG, and Lins were designated pursuant to E.O. 14024 for operating or having operated in the trust and corporate formation services sector of the Russian Federation economy. Wolf was designated pursuant to E.O. 14024 for being or having been a leader, official, senior executive officer, or member of the board of directors of Audax. One Asset was designated pursuant to E.O. 14024 for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, Wyss and Lins.

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© Copyright 2024 – Eurasia Business News. Article No. 1184.