New Sector Determination Enables Treasury to Target Russia ’ randomness Entire Financial system
WASHINGTON – Today, the United States is taking legal action to respond to President Vladimir Putin ’ s decision to recognize the alleged Donetsk and Luhansk People ’ sulfur Republics ( DNR and LNR ) as “ mugwump ” states and to deploy troops to these regions by sanctioning two major russian state-owned fiscal institutions, imposing extra restrictions on russian autonomous debt, and sanctioning five Kremlin-connected elites. This action from the U.S. Department of the Treasury ’ mho Office of Foreign Assets Control ( OFAC ) builds on yesterday ’ south Executive Order imposing severe restrictions on economic activeness with the DNR and LNR regions of Ukraine .
today Treasury is targeting Russia ’ s ability to finance aggression against its neighbors by sanctioning the Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank ( VEB ) and Promsvyazbank Public Joint Stock Company ( PSB ), along with 42 of their subsidiaries. VEB is crucial to Russia ’ s ability to raise funds, and PSB is critical to Russia ‘s department of defense sector. These sanctions ensure VEB and PSB can nobelium long do occupation in the United States and are cut off from the U.S. fiscal system. All assets under U.S. legal power will be immediately flash-frozen and U.S. individuals and entities are prohibited from doing business with these institutions unless authorized by OFAC. This will immediately impair the ability of VEB and PSB to perform basic functions in the external fiscal system. today ’ s action constrains Russia ’ s ability to finance defense-related contracts and raise new funds to finance its political campaign against Ukraine. Treasury is besides designating influential Russians and their class members in Putin ’ s inner traffic circle believed to be participating in the russian regimen ’ mho kleptocracy, including the Chairman and CEO of PSB.
“ Today ’ sulfur actions, taken in coordination with our partners and allies, begin the process of dismantling the Kremlin ’ s fiscal network and its ability to fund destabilize activeness in Ukraine and around the world, ” said Secretary of the Treasury Janet L. Yellen. “ We continue to monitor Russia ’ sulfur actions and if it further invades Ukraine, the United States will swiftly impose expansive economic sanctions that will have a hard and last impingement on Russia ’ randomness economy. ”
today ’ mho actions were taken pursuant to Executive Order ( E.O. ) 14024, which authorizes sanctions against Russia for its harmful foreign activities, including violating kernel principles of external law such as respect for the territorial integrity of early states. Pursuant to E.O. 14024, the Secretary of the Treasury, in consultation with the Secretary of State, has determined that incision 1 ( a ) ( i ) of E.O. 14024 applies to the fiscal services sector of the russian Federation economy, and that persons determined to operate or have operated in this identify sector can be subject to sanctions. This allows Treasury to target any person that operates or has operated in Russia ’ s fiscal services sector, including today ’ mho designations of PSB and VEB .
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BLOCKING MAJOR RUSSIAN FINANCIAL INSTITUTIONS
OFAC designated two fiscal institutions that are crucial to financing the russian defensive structure industry, a well as 42 of their subsidiaries. These fiscal institutions play meaning roles in the russian economy, holding combined assets worth tens of billions of dollars .
VEB and PSB are state-owned institutions that play specific roles to prop up Russia ’ randomness defense capability and its economy. VEB ’ s $ 53 billion asset portfolio makes it big enough to be among Russia ’ s top five fiscal institutions. VEB occupies a singular character in Russia ’ s fiscal system as the servicer of Russia ’ s sovereign debt, financier for exports, and a fund generator for investment projects with a loanword portfolio of over $ 20 billion. VEB finances Russia ’ s national economic growth, including large-scale projects to develop domestic infrastructure and other industries that are critical to Russia ’ south coevals of tax income. presently Russia ’ s 8th largest bank, PSB was earmarked by the russian politics to finance Russia ’ s Ministry of Defense and the russian defense sector. It services closely 70 percentage of Russia ’ sulfur refutation contracts and provides banking and personal finance to russian military personnel. Today ’ s designation of PSB exposes the russian government ’ s scheme to minimize sanctions risk photograph through PSB ’ s illicit sanctions evasion activeness .
State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank ( VEB ) finances domestic development projects as Russia ’ s home economic development institution. In partnership with commercial banks, VEB provides financing for large-scale projects to develop the state ’ s infrastructure and industrial production. VEB was designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, the Government of Russia ( GoR ), and for operate on or having operated in the fiscal services sector of the russian Federation economy .
In accession, 25 of VEB ’ s subsidiaries were designated today pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, immediately or indirectly, VEB or the GoR. These subsidiaries represent a across-the-board image of businesses, including banks and other fiscal firms, electronic part producers, a coal mine company, a sporting activities caller, among others, in Russia and three other countries. All entities owned 50 percentage or more, directly or indirectly, by VEB are subject to blocking under E.O. 14024, even if not identified on OFAC ’ s Specially Designated Nationals and Blocked Persons List ( SDN List ). Prior to nowadays ’ s action, VEB and any entity owned 50 percentage or more by VEB were subject to sealed debt- and equity-related restrictions pursuant to Directive 1 under E.O. 13662. These entities are immediately blocked .
OFAC issued general licenses authorizing certain transactions related to the wind-down of transactions involving VEB, adenine well as VEB ’ s service of sovereign debt .
Promsvyazbank Public Joint Stock Company ( PSB ) is deemed by the GoR as a systemically authoritative russian state-owned fiscal institution and is Russia ’ s one-eighth largest fiscal initiation. The GoR nationalized PSB in 2018 and repurposed it to finance the refutation diligence and service big defensive structure contracts as contribution of a scheme to assist the government in avoiding new sanctions. Since its transformation into the russian state defense bank, PSB has issued billions of dollars in fiscal support for russian defense mechanism sector companies, and it presently services closely 70 percentage of state of matter contracts signed by the russian Ministry of Defense ( MoD ). In addition to supporting the MoD and Russian defense enterprises, PSB provides its bank products, including mortgages, to russian military personnel. In an attempt to insulate itself from U.S. sanctions, the GoR has besides tasked PSB with providing accredit to entities under U.S. and partner nations ’ sanctions then that other lenders, namely Sberbank and VTB Bank, can offload the risk of conducting commercial enterprise with approved entities. PSB is reported to be creating a separate currency substitute to service companies targeted by westerly sanctions .
PSB was designated for operating or having operated in the refutation and relate materiel and fiscal services sectors of the russian Federation economy. In addition to PSB itself, 17 of its subsidiaries were designated today pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, PSB. The 17 parry subsidiaries, all of which are located in Russia, include a variety of companies including fiscal, engineering, and real estate-related entities. All entities owned 50 percentage or more, directly or indirectly, by PSB are subject to blocking under E.O. 14024, even if not identified on OFAC ’ s SDN List .
As separate of the appellation of PSB, OFAC besides took action against five vessels that are owned by PSB Lizing OOO, a designate subsidiary company of PSB. All five vessels were identified pursuant to E.O. 14024 as freeze property in which PSB Lizing OOO has an sake .
- Baltic Leader (IMO: 9220639), a Russian-flagged roll-on roll-off cargo vessel with a gross registered tonnage of 8831;
- Linda (IMO: 9256858), a Russian-flagged crude oil tanker with a gross registered tonnage of 61991;
- Pegas (IMO: 9256860), a Russian-flagged crude oil tanker with a gross registered tonnage of 61991;
- Fesco Magadan (IMO: 9287699), a Russian-flagged container ship with a gross registered tonnage of 7519; and
- Fesco Moneron (IMO: 9277412), a Russian-flagged container ship with a gross registered tonnage of 7519.
TARGETING ELITES AND FAMILIES CLOSE TO PUTIN
Elites close to Putin continue to leverage their proximity to the Russian President to pillage the russian express, enrich themselves, and elevate their family members into some of the highest positions of ability in the state at the expense of the russian people. Sanctioned oligarchs have used family members to move assets and to conceal their huge wealth. The following designations target knock-down Russians in Putin ’ s inner encircle believed to be participating in the russian government ’ second kleptocracy and their family members .
Denis Aleksandrovich Bortnikov, son of Aleksandr Vasilievich Bortnikov
Aleksandr Vasilievich Bortnikov ( Aleksandr Bortnikov ) is the Director of the Federal Security Service ( FSB ) of the russian Federation and a permanent member of the Security Council of the russian Federation. Aleksandr Bortnikov was previously designated in March 2021 for being an official of the GoR, and for acting or purporting to act for or on behalf of, immediately or indirectly, the FSB. Aleksandr Bortnikov ’ s son, Denis Aleksandrovich Bortnikov ( Denis Bortnikov ), is presently a Deputy President of Russian-state owned fiscal institution VTB Bank Public Joint Stock Company ( VTB Bank ) and a Chairman of the VTB Bank Management Board .
today, OFAC redesignated Aleksandr Bortnikov and designated his son Denis Bortnikov pursuant to E.O. 14024 for being or having been leaders, officials, aged administrator officers, or members of the board of directors of the GoR. Denis Bortnikov was besides designated pursuant to E.O. 14024 for being the spouse or adult child of Aleksandr Bortnikov, a person whose property or interests in property are blocked for being or having been a drawing card, official, aged executive officeholder, or member of the board of directors of the GoR .
Petr Mikhailovich Fradkov ( Petr Fradkov ) is the Chairman and CEO of PSB. Petr Fradkov is besides the son of Mikhail Efimovich Fradkov ( Mikhail Fradkov ), erstwhile Prime Minister of Russia and former Director of the Russian Foreign Intelligence Service ( SVR ). Mikhail Fradkov was designated by OFAC in April 2018 for being an official of the GoR. Since 2018, Petr Fradkov has worked to transform PSB into a trust that services the defense diligence and supports state of matter department of defense contracts. In his function as Chairman and CEO of PSB, Petr Fradkov has held working meetings with Putin and participated in round table discussions in external forums in which he forecasts the PSB ’ s long-run strategic plans for supporting the russian refutation industry. Petr Fradkov is besides the General Director of Joint Stock Company Russian Export Center, which was blocked nowadays as a subordinate of VEB .
today, Petr Fradkov was designated pursuant to E.O. 14024 for operating or having operated in the defense and relate materiel and fiscal services sectors of the russian Federation economy .
Vladimir Sergeevich Kiriyenko, son of Sergei Vladilenovich Kiriyenko
Sergei Vladilenovich Kiriyenko ( Sergei Kiriyenko ) is the First Deputy Chief of Staff of the Presidential Office. Sergei Kiriyenko is reported to be Putin ’ s domestic policy curator. previously, Sergei Kiriyenko served as the Prime Minister of the russian Federation and as the General Director of Rosatom State Atomic Energy Corporation. Sergei Kiriyenko was previously designated in March 2021for being an official of the GoR. Sergei Kiriyenko ’ s son, Vladimir Sergeevich Kiriyenko ( Vladimir Kiriyenko ), previously worked as a vice president of the united states at the russian collectivist company, Rostelecom, and is soon the chief executive officer of VK Group, the parent company of Russia ’ s top sociable media platform, VKontakte.
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today, OFAC redesignated Sergei Kiriyenko and designated his son Vladimir Kiriyenko pursuant to E.O. 14024 for being or having been leaders, officials, aged administrator officers, or members of the board of directors of the GoR. Vladimir Kiriyenko was besides designated pursuant to E.O. 14024 for being the spouse or adult child of Sergei Kiriyenko, a person whose property or interests in place are blocked for being or having been a leader, official, senior administrator officer, or member of the board of directors of the GoR .
As a solution of today ’ s blocking actions, all property and interests in property of persons mentioned above that are in the United States or in the monomania or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percentage or more by one or more blocked persons are besides blocked. Unless authorized by a general or particular license issued by OFAC, or exempt, all transactions by U.S. persons or within ( or transiting ) the United States that involve any property or interests in property of blocked persons are broadly prohibited. The prohibitions include the lay down of any contribution or provision of funds, goods, or services by, to, or for the benefit of any obstruct person, or the receipt of any contribution or provision of funds, goods, or services from any such person. In addition, fiscal institutions and other persons that engage in certain transactions or activities with the approve individuals may be subject to an enforcement action .
SOVEREIGN DEBT RESTRICTIONS
As a part of today ’ s actions, OFAC besides increased restrictions on dealings in Russia ’ s sovereign debt, further cutting Russia off from sources of tax income to fund its government or President Putin ’ sulfur priorities, including his far invasion into Ukraine. These restrictions importantly cut off a core way for Russia to raise money. This kind of measure creates a try on resources for the russian express and greater risk for its ability to manage its finances .
specifically, OFAC issued Russia-related Directive 1A under E.O. 14024, “ Prohibitions Related to Certain Sovereign Debt of the russian Federation ” ( the “ Russia-related Sovereign Debt Directive ” ), amending and superseding directive 1 under E.O. 14024. This extends existing sovereign debt prohibitions to cover participation in the secondary commercialize for bonds issued after March 1, 2022 by the Central Bank of the russian Federation, the National Wealth Fund of the russian Federation, or the Ministry of Finance of the russian Federation .
For identifying information on the individuals and entities sanctioned today .
General License 2, General License 3, New FAQs, and Updated FAQs .
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Subsidiaries of Russian Financial Institutions Sanctioned on February 22, 2022 Pursuant to E.O. 14024
The place and interests in property of the following VEB subsidiaries are blocked :
- Bank BELVEB OJSC is a bank located in Belarus.
- VEB Leasing OJSC is a leasing company located in Russia.
- Prominvestbank is a bank located in Ukraine.
- VEB Capital is a financial company located in Russia.
- VEB Engineering LLC is an investment project implementation services company located in Russia.
- JSC Infraveb is an investment project support company located in Russia.
- JSC VEB.DV is an investment project support company located in Russia.
- VEB Asia Limited is a financial company located in Hong Kong.
- LLC Infrastructure Molzhaninovo is an electric energy company located in Russia.
- LLC Resort Zolotoe Koltso is a real estate and construction company located in Russia.
- JSC Russian Export Center is an export-related company located in Russia.
- LLC VEB Ventures is a financial company located in Russia.
- LLC VEB Service is a business and management advisory company located in Russia.
- LLC Special Organization for Project Finance Factory of Project Finance is a financial company located in Russia.
- LLC SIBUGLEMET Group is a coal mine company located in Russia .
- JSC ANGSTREM-T is a engineering party located in Russia .
- LLC NM-TEKH is a technology company located in Russia .
- JSC SLAVA is a real estate company located in Russia.
- JSC PFC CSKA is a sporting activities company located in Russia.
- LLC Torgovy Kvartal-Novosibirsk is a property leasing company located in Russia.
- LLC Baikal Center is a construction company located in Russia.
- LLC Progorod is an infrastructure company located in Russia.
- LLC VEB.RF Asset Management is a financial company located in Russia.
- Eximbank of Russia JSC is an export accompaniment institution located in Russia vitamin a well as a commercial bank regulated by the Central Bank of the russian Federation.
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- Russian Agency for Export Credit and Investment Insurance OJSC is an insurance agency located in Russia .
The place and interests in property of the follow PSB subsidiaries are blocked :
- Alkes Treid OOO is a financial company located in Russia.
- Antares OOO is a financial company located in Russia.
- Elitnye Doma OOO is a real estate company located in Russia.
- PSB Innovations and Investments Limited Liability Company is a technology company located in Russia.
- Era Fund Limited Liability Company is a technology company located in Russia.
- PSB-Foreks OOO is a financial company located in Russia.
- Kholtsvud OOO is a financial company located in Russia.
- Kourf OOO is a financial company located in Russia.
- Management Company Promsvyaz LLC is an investment company located in Russia.
- Paskal OOO is a company that provides management consulting services in Russia.
- PSB Biznes OOO is a hospitality company located in Russia.
- Saint-Petersburg International Banking Conference LLC is a financial company located in Russia.
- Sergievo-Posad Lend OOO is a financial company located in Russia.
- PSB Avializing OOO is a financial company located in Russia.
- Tekhnosoft OOO is a technology company located in Russia.
- Trinitex OOO is a real estate company located in Russia.
- PSB Lizing OOO is a financial company located in Russia.