April 21, 2022

OFAC designates numerous persons for efforts to help Russia evade sanctions, issues new general licenses and FAQ

On April 20, 2022, the Department of the Treasury’s Office of Foreign Assets Control designated more than 50 individuals and entities for attempting to help Russia evade US sanctions and the sanctions of US allies.  OFAC designated two major financial institutions, including the Public Joint Stock Company Transkapitalbank (TKB), a privately-owned commercial bank in Russia that offers clients the ability to process financial transactions via a proprietary banking system known as TKB Business as an alternative to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network.  OFAC also designated TKB subsidiary Joint Stock Company Investtradebank. Both were designated pursuant to EO 14024 – TKB for operating in the financial services sector of Russia’s economy and the subsidiary for being owned or controlled by TKB.  OFAC also issued two general licenses to address the newly-imposed TKB sanctions.  General License 28 authorizes, until October 20, 2022, all transactions by TKB (or a subsidiary) that originate in or are destined for Afghanistan, while General License 29 authorizes wind down transactions with TKB (or a subsidiary) through May 20, 2022.

OFAC also designated more than 40 named individuals and entities who are part of a global sanctions evasion network led by Konstantin Malofeyev, a Russian oligarch who was designated by OFAC in 2014 pursuant to Executive Order 13660, for financing activities that threatened the territorial integrity of Ukraine by promoting separatism in Crimea – sanctions that Malofeyev was recently accused of conspiring to violate on April 6, 2022 by the US Justice Department.  OFAC not only designated network members pursuant to EO 14024 but also Malofeyev and his son.  OFAC also emphasized that all entities owned 50 percent or more by Malofeyev are subject to blocking under EO 14024, even if they were not identified by OFAC. 

In addition, OFAC targeted Bitriver, a virtual currency mining company founded in Russia, in order to frustrate any attempt by the Kremlin to offset the impact of sanctions, specifically designating Bitriver AG, a Swiss holding company that has held legal ownership of Bitriver’s assets since 2021, along with 10 of its Russia-based subsidiaries.

According to OFAC, these designations were timed to coordinate with actions taken by the State Department to impose visa restrictions on 635 Russian nationals for engaging in actions that threaten Ukraine’s territorial integrity or involved human right abuses in prison facilities and unofficial detention areas in Ukraine. Visa restrictions were also imposed upon 3 GoR officials for gross violations of human rights and 17 individuals for undermining democracy in Belarus.

Finally, OFAC published a new frequently asked question (FAQ 1030) to address the obligations of credit card systems operators under the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR) and the Belarus Sanctions Regulations, 31 CFR part 548 (BSR).  According to OFAC, US persons are prohibited from processing credit card transactions involving certain sanctioned foreign financial institutions, unless they are exempt or receive authorization from OFAC, while non-US operators whose payment cards are issued by sanctioned foreign financial institutions may violate US sanctions if they allow the cards to be used in the US.  

Department of Treasury Press Release |Department of Treasury Recent Action | General License 28 | General License 29| FAQ 1030