On January 15, 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control targeted supporters of sanctions evasion schemes that enable persons in Russia to make cross-border payments with the People’s Republic of China, in connection with sensitive goods needed to fuel Russia’s war with Ukraine. OFAC reported that officials in Russia and China have been working to establish regional clearing platforms (“RCPs”) in each country that facilitate non-cash mutual settlement for payments related to sanctioned sensitive goods. OFAC designated 15 entities and one individual for their involvement in the scheme. These designations were imposed pursuant to Executive Order 14024 for operating or having operated in Russia’s financial services sector and pursuant to EO 13662 for operating in Russia’s financial services sector.
OFAC also designated Kyrgyz Republic-based OJSC Keremet Bank for recently implementing a sanctions evasion scheme in coordination with Russian officials and U.S.-designated Russian Bank Promsvyazbank Public Joint Stock company(“PSB”) to enable cross-border transfers on PSB’s behalf. OFAC designated Keremet Bank pursuant to EO 14024, as amended by EO 14114, for conducting or facilitating significant transactions involving Russia’s military-industrial base. In addition, OFAC designated nearly 100 entities, including PSB, that were previously designated under EO 14024 for working with Russia’s military-industrial complex. OFAC re-designated these entities pursuant to EO 13662, which subjects foreign persons that knowingly facilitate significant transactions for these entities to mandatory secondary sanctions under the Ukraine-/Russia-related sanctions program. As a result of these designations, all property and interests in property of the designated persons 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 a designated person. Entities owned 50 percent or more by one or more blocked persons are also blocked.
OFAC further reported that the U.S. Department of State also sanctioned more than 150 individuals and entities in Russia’s defense industry and supporters of Russia’s sanctions evasion efforts or its military industrial base. These sanctions were imposed pursuant to EO 14024.
In light of the new designations, OFAC issued two general licenses pursuant to the Russian Harmful Foreign Activities Sanctions Regulations (“RuHSR”), 31 CFR part 587. General License 122 temporarily authorizes wind down transactions with certain newly-designated entities, including PRC-based Wafangdian Bearing Company Limited, while General License 123 temporarily allows certain transactions related to debt or equity of, or derivative contracts involving, Wafangdian. According to the general licenses, these transactions are permitted until March 1, 2025.
OFAC also issued General License 26A pursuant to the Ukraine-/Russia-Related Sanctions Regulations (“URSR”), 31 CFR part 589, to authorize certain transactions pursuant to the RuHSR that would otherwise be prohibited by EO 13662. GL 26A effectively replaces and supersedes GL 26 in its entirety.
U.S. Department of Treasury Press Release | General License 122 | General License 123 | General License 26A