September 18, 2022

OFAC designates 22 officials and 2 entities for supporting Russian objectives and prohibits U.S. persons from providing quantum computing services to Russia

On September 15, 2022, the US Department of Treasury’s Office of Foreign Assets Control announced the designation of 22 individuals and 2 entities for supporting the Russian government’s objectives in Ukraine, both before and after the 2022 invasion.  The designations include various Russian officials who have assisted in Russia’s efforts to circumvent international sanctions through the expanded use of the National Payment Card System (NSPK) or the MIR National Payment System.  The designations also include court officials in the Republic of Crimea who have failed to provide fair trials for Ukrainians in Crimea or have unjustly targeted religious and ethnic minorities in the region as well as members, including two senior leaders, of the neo-Nazi paramilitary group Task Force Rusich – a group that has allegedly joined Russia’s military in combat in Ukraine.  This action was timed to coordinate with the Commerce Department’s imposition of additional export control measures against Russia and State Department actions targeting the Russia’s defense industry, high-technology industry, and proxy authorities.

Among the designees is Maria Alexeyevna Lvova-Belova, Russia’s Presidential Commissioner for Children’s Rights, accused of deporting thousands of Ukrainian children to Russia, including their forced adoption into Russian families.  OFAC also re-designated Ramzan Akhmatovich Kadyrov, the leader of Russia’s Republic of Chechnya, responsible for recruiting members of mixed martial arts clubs for the war in Ukraine, who is self-described as Putin’s “foot soldier” and, since the war in Ukraine began, was promoted to the rank of “lieutenant-general.” Kadyrov was previously designated by the US in 2017 pursuant to the Seirge Magnitsky Rule of Law Accountability Act of 2012 and in 2020 pursuant to Executive Order 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act.  Several of Kadyrov’s immediate family members were also designated by OFAC. The designations also include Dmitry Sergeevich Gramashov, an officer in Russia’s Federal Security Service (FSB), who is accused of unlawfully operating in the Crimea region targeting the pro-Ukraine population, including the repression of a journalist and conducting mass searches and arrests of ethnic Crimean Tatars.

Most of the September 15 designations are imposed pursuant to EO 14024 for being an official in the Government of Russia, operating in the financial services sector of the Russian economy, or being an entity that is owned or controlled by a designated person.  The Crimean court officials were designated pursuant to EO 13685 for operating in the Crimea region of Ukraine. Gramashov was not only designated pursuant to EO 13685 but also under EO 13660 for asserting governmental authority over a region of Ukraine without the authorization of the Ukrainian government.

On September 15, 2022, OFAC also issued a determination pursuant to EO 14071 which prohibits the exportation, reexportation, sale, or supply of quantum computing services by a US person to any person located in the Russian Federation.  This prohibition is effective on October 15, 2022.  OFAC also issued a determination pursuant to EO 14024 to identify the Russia’s quantum computing sector as sector which significantly impacts the Russian economy – a determination which enables sanctions to be imposed upon any person which operates in this sector.  This action builds upon previous determinations that permit sanctions against those operating in the accounting, trust and corporate formation, management consulting, aerospace, marine, electronic, financial services, technology, and defense and related material sectors of the Russian economy.  

As a result of these designations, all property and interests in property of today’s designees within the United States or within the possession or control of a US person are blocked, and US persons are generally prohibited from engaging in transactions involving the designated persons.  In addition, entities owned fifty percent or more by one or more designated persons are also blocked, unless they are exempt or authorized by a general or specific license issued by OFAC.

Department of Treasury Press Release | Determination Pursuant to Section 1(a)(ii) of EO 14071 | Determination Pursuant to Section 1(a) (i) of EO 14071