As part of its continued efforts to oppose Russia’s conduct in Ukraine and its occupation of Crimea, on September 1, 2016, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated 37 individuals and entities related to the conflict in Ukraine. The new designations are, in part, intended to address attempts to circumvent existing sanctions. With respect to evasion, OFAC designated CJSC ABR Management for acting for or on behalf of Bank Rossiya. Bank Rossiya was designated in 2014 for, in turn, being controlled by a designated member of the Russian leadership’s inner circle.
OFAC also designated 17 Ukrainian separatists for threatening the peace, security, or territorial integrity of Ukraine and for acting for or on behalf of previously designated entities. In addition, 18 construction, transportation, and defense entities were designated for operating in the Crimea region of Ukraine. This includes entities involved in the construction of the Kerch Bridge (from Russia to Crimea) and entities operating in the Crimean maritime sector. One such entity, PJSC Mostotrest, is a major Russian construction firm. OFAC has also issued a general license authorizing, until October 1, 2016, transactions necessary to divest or transfer holdings in PJSC Mostotrest.
Finally, OFAC also identified a number of subsidiaries of the Bank of Moscow and Gazprombank as being 50 percent or more owned by their parent companies, which have both been previously sanctioned. As a reminder, U.S. persons are prohibited not only from engaging in transactions with designated entities, but also with entities owned 50 percent or more (either directly or indirectly) by such entities.
These recent changes are a reminder of the constantly evolving sanctions regimes, particularly the Ukraine/Russia-related sanctions program. Companies should exercise heightened due diligence when engaging in or considering potential transactions with entities located in Russia and Ukraine.