On Thursday, April 15, 2021, President Biden issued broad new sanctions by means of an executive order (EO), "Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation." This action follows the Intelligence Community's "Assessment of Foreign Threats to the 2020 U.S. Federal Elections," which identified Russia's efforts to undermine U.S. elections by employing disinformation outlets, among other malicious acts. The new EO authorizes sweeping sanctions, which, according to Treasury Secretary Janet Yellen, were introduced to counter Russia's "continued and growing malign behavior."
Pursuant to this EO, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) designated various individuals and entities on its Specially Designated Nationals and Blocked Persons List (SDN List) for election interference, unauthorized occupation of the Crimea region of the Ukraine, and malicious cyber activities. Furthermore, the Biden administration announced that it will be expelling ten Russian diplomats. Treasury Secretary Yellen called these sanctions "the start of a new U.S. campaign against Russian malign behavior."
Sanctions in Connection to Election Interference
Pursuant to Executive Order 13848, OFAC added Alexei Gromov, first deputy chief of staff of the Presidential Administration of Russia for use of Russia's media apparatus to discredit the 2020 U.S. election process; and Konstantin Kilimnik, a known Russian Intelligence Services agent.
OFAC also designated the following Russian Intelligence Service disinformation outlets for election interference: SouthFront, the Strategic Culture Foundation, InfoRos, OOO, and IA InfoRos. This action builds upon prior designations of SouthFront and NewsFront for acting on behalf of Russian Intelligence Services. Denis Tyurin, a leader in InfoRos, has also been added to the sanctions list.
Individuals and Entities Linked to Yevgeniy Prigozhin's Network in Africa
OFAC sanctioned individuals and entities in connection with Yevgeniy Prigozhin, a Russian financier of the Internet Research Agency (IRA), a Russian troll farm. These designated entities and individuals have facilitated Prigozhin's global influence operations and are linked to the manipulation of elections in other countries, such as South Africa, and in Europe.
The following individuals were designated: Alexander Malkevich, owner of the Foundation for National Value Protection; and Yulia Afanasyeva, Petr Byschkov, and Taras Pribyshin.
The following entities were designated: The Association for Free Research and International Cooperation (AFRIC); the Foundation for National Values Protection; and the International Anticrisis Center.
Facilitators of Yevgeniy Prigozhin's U.S. Sanctions Evasion
In response to Prigozhin's use of shell and front companies to evade U.S. sanctions, OFAC designated the following companies for acting as covert procurement agents for Prigozhin: Trans Logistik, OOO; OOO Yunidzhet; and OOO Alkon.
OFAC also designated the following individuals: Artem Stepanov, deputy general director of Yunidzhet; Maria Zueva, general director of Yunidzhet; and Kirill Shcherbakov, owner of Yunidzhet and OOO Alkon.
Russian Internet Research Agency (IRA) Enablers
OFAC designated several Pakistani nationals and entities for their efforts in concealing the IRA's identity to aid the evasion of U.S. sanctions and anti-money laundering screening protocols.
Second Eye Solutions (also known as Forwarderz or SES) schemed to "provide digital photographs of fake documents." Fresh Air Farm House, Like Wise, and MK Softtech are Pakistani front companies used to launder SES profits.
The following individuals were also designated for enabling the IRA in their capacities as owners and employees of the companies identified above: Mohsin Raza, Mujtaba Raza, Syed Hasnain, Muhammad Hayat, Syed Raza, and Shahzad Ahmed.
Sanctions in Connection with the Russian Occupation of Crimea
In a coordinated action with the European Union, the United Kingdom, Canada, and Australia, OFAC imposed additional sanctions on five Russian individuals and three entities associated with Russia's occupation of the Crimea region of Ukraine and human rights abuses against the local population. The OFAC action, pursuant to EOs 13660 and 13685, targets individuals asserting governmental authority over the Crimea region without authorization from Ukraine and targets individuals and entities operating therein.
OFAC added Larisa Vitlievna Kulinich, the minister of property and land relations in the "so-called Republic of Crimea"; Pavel Leonidovich Karanda, the "so-called Minister of Internal Affairs for the so-called Republic of Crimea"; Leonid Mikhailiuk, the "so-called Chief of the Russian Intelligence Services' Federal Security Service (FSB) Department in Crimea and Sevastopol"; and Vladimir Nikolaevich Terentiev, the "so-called Head of the Main Directorate of the Investigative Committee in the so-called Republic of Crimea and Sevastopol."
These individuals are deemed critical to the Russian government's efforts to exercise control over Crimea.
Construction of the Kerch Strait Bridge
In connection to Russia's construction of the Kerch Strait Bridge, which links Russia to Crimea, OFAC designated Leonid Kronidovich Ryzhenkin, the chief executive officer of Mostotrest, a Russian construction company operating in Crimea.
OFAC also designated two Russian companies for their participation in the construction of the Kerch Strait Bridge: Lenpromtransproyekt, and Joint-Stock Company The Berkakit-Tommot-Yakutsk Railway Line's Construction Directorate.
Abuses Against the Local Population
A pre-trial detention center, Simferopol SIZO-1, was designated pursuant to EO 13685 for its human rights abuses against Ukraine's people. OFAC cited the prison's infamy for severe abuses, communicable diseases, inhumane living conditions, and inadequate medical assistance for its prisoners, particularly political prisoners.
Sanctions in Connection with Malicious Cyber Actions
Pursuant to the EO, OFAC imposed costs on the Russian government by limiting Russia's ability to finance its activities and by targeting Russia's malicious and disruptive cyber capabilities.
Prohibitions from Sovereign Debt
OFAC issued a directive that generally prohibits U.S. financial institutions from participating in the primary market for ruble- or non-ruble-denominated bonds issued after June 14, 2021 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. The directive also prohibits U.S. financial institutions from lending ruble- or non-ruble-denominated funds to these three entities.
Russian Technology Companies Linked to the Russian Intelligence Services
OFAC designated the following Russian technology companies for their support of the Russian Intelligence Services: ERA Technopolis; Pasit, AO; Federal State Autonomous Scientific Establishment Scientific Research Institute Specialized Security Computing Devices and Automation; Neobit, OOO; Advanced System Technology, AO; and Pozitiv Teknolodzhiz, AO.
The Russian Intelligence Services, specifically the Federal Security Service (FSB), Russia's Main Intelligence Directorate (GRU), and the Foreign Intelligence Service (SVR), are linked to cyber attacks, including the SolarWinds cyber attack. These OFAC sanctions build on prior sanctions of FSB and GRU for prior malicious cyber activities against the U.S. The designated private and state-owned companies designated have "enable[d] the Russian Intelligence Services' cyber activities," including providing expertise, developing tools and infrastructure, and facilitating malicious cyber activities.
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In response to these latest sanctions, Russian Deputy Foreign Minister Sergei Ryabkov warned that "a series of retaliatory measures will come in the nearest time." These latest actions by the United States are perceived to be the most significant sanctions introduced against Russia since 2018 and set the stage for even further action by providing the Biden administration with the flexibility to issue additional measures against Russia, as warranted.
To understand whether these recent actions may impact your business, please reach out to Venable's International Trade Group for guidance.