On May 8, 2022, the US Department of the Treasury’s Office of Foreign Assets Control designated individuals and entities that provide critical support to Russia’s war against Ukraine, including several bank executives for Sberbank and Gazprombank, two prominent, previously-designated banks in Russia. OFAC also designated Joint Stock Company Moscow Industrial Bank (MIB), a Russian state-owned bank, 10 MIB subsidiaries, three of Russia’s top state-owned television stations, and a Russian private defense company that supplies Russia’s military and intelligence services. These designations were issued pursuant to Executive Order 14024 for being either leaders in the Russian Federation or operating in a key sector of the Russian economy. As a result of these designations, all of their property and interests in property within the United States or within the possession or control of a U.S. person are blocked, and U.S. persons are generally prohibited from engaging in transactions involving the designated persons. In addition, entities owned 50 percent or more by one or more blocked persons are also blocked.
In an effort to cut off Russia’s access to services that have been used to evade sanctions, OFAC added the accounting, trust and corporate formation, and management consulting services sectors to the list of services that are subject to EO 14071 prohibitions, which bans the export, reexport, sale, or supply of these services from the US to the Russian Federation. The prohibitions upon Russia’s accounting, trust and corporate formation, or management consulting services sectors take effect on June 7, 2022. OFAC also issued a determination identifying the accounting, trust and corporate formation services, and management consulting sectors of the Russian economy pursuant to section 1(a)(i) of E.O. 14024, which means that persons determined to operate in these sectors of the Russian economy may be designated in the future.
In addition, OFAC issued four general licenses pursuant to the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587, related to the new designations and new restrictions on the Russian service sectors. General License 25A authorizes transactions to enable telecommunications and certain internet-based communications that would otherwise be prohibited with the newly-sanctioned persons, entities and service sectors. General License 33 authorizes until June 7, 2022 transactions necessary to wind down operations and contracts with newly-designated Russian television stations that were in effect prior to May 8, 2022, while General License 34 authorizes until July 7, 2022 transactions necessary to wind down export, reexport, sale and supply transactions with Russian accounting, trust and corporate formation, and management consulting service providers. GL 35 allows credit rating or auditing services until August 20, 2022 for transactions related to export, reexport, sale or supply of services that would have otherwise been prohibited by EO 14071.
Finally, OFAC issued new frequently asked questions (FAQs 1033 – 1040) in order to review and further clarify the provisions of the new designations, new general licenses, and the new restrictions upon the Russia’s accounting, trust and corporate formation, and management consulting service sectors.
Department of Treasury Press Release | Department of Treasury Recent Actions | General License 25A | General License 33 | General License 34 | General License 35 | Determination Pursuant to Section 1(a)(i) of EO 14024 | Determination Pursuant to Section 1(a)(ii) of EO 14071 | New FAQs