Treasury Sanctions Impede Russian Access to Battlefield Supplies and Target Revenue Generators

July 20, 2023 / Source: Treasury

WASHINGTON — Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is taking action to further implement the commitments that G7 Leaders made on February 24, 2023 and May 19, 2023. The designations announced today by OFAC and the Department of State take measures to inhibit Russia’s access to products that support its military and war efforts; reduce Russia’s revenue from the metals and mining sector; undermine its future energy capabilities; degrade Russia’s access to the international financial system; and starve Russia of G7-produced technology needed for its technology, aerospace, and defense sectors.

“Today’s actions represent another step in our efforts to constrain Russia’s military capabilities, its access to battlefield supplies, and its economic bottom line,” said Deputy Secretary of the Treasury Wally Adeyemo. “As long as Russia continues to wage its unprovoked and brutal war against Ukraine, we will impose sanctions to deprive Russia of the technology it needs and disrupt the Russian arms industry’s ability to resupply.”

DISRUPTING RUSSIA’S TECHNOLOGY SUPPLIERS, IMPORTERS, AND DEVELOPERS

Sanctions are just one part of the U.S. government’s efforts to stop Russia’s procurement of critical goods and technology. The United States is working with partner governments and the private sector to identify and disrupt evasion networks and the actions taken today complement these shared efforts. While cooperating with partners, Treasury will use all tools available, including sanctions, to prevent Russia from acquiring the sensitive technology it needs to continue its full-scale war against Ukraine.

In a May 19, 2023 Supplemental Alert, Treasury’s Financial Crimes Enforcement Network (FinCEN) and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) identified certain high priority items, primarily based on the Harmonized System (HS) code classification of components from Russian weapons systems recovered on the battlefield in Ukraine, to assist financial institutions in identifying suspicious transactions relating to possible export control evasion. Items described by these HS codes have been found in multiple Russian weapons systems used against Ukraine, including the Kalibr cruise missile, the Kh-101 cruise missile, and the Orlan-10 UAV. Many of the entities designated today have transferred certain of these high priority items to Russia-based end-users.

Russia’s Use of Kyrgyz Republic-based Entities to Acquire Dual-Use Technology

One of the most common tactics Russian entities have used to continue their importation of foreign-made electronics and technology is the use of third-party intermediaries and transshipment points outside of Russia. Entities based in the Kyrgyz Republic have been frequent exporters of controlled electronics components and other technology to Russia since Russia began its full-scale invasion of Ukraine. Some of these shipments have subsequently supplied sensitive dual-use goods to entities in Russia’s defense sector.

LLC RM Design and Development (RMDD), established in March 2022, is a Kyrgyz Republic-based seller of electronic and telecommunication equipment and parts. Since its founding last year, RMDD has been a prolific shipper of dual-use goods to Russia, including to firms that have supplied electronics to Russia-based defense companies.

RMDD has sent hundreds of shipments of goods, including semiconductor devices, electronic integrated circuits, and capacitors to the following Russia-based companies, among others:

Basis Trade Prosoft LLC (BTP), a supplier of industrial computers, components for automated process control systems, and radio-electronic components.
OOO Radiotekhsnab (RTS), an importer of electronic components and wholesaler of electronic and telecommunications equipment and parts.
Region-Prof LLC (Region-Prof), a supplier of automation equipment, electronic components, and hardware and software for building electronic equipment.

RMDD, RTS, and Region-Prof were designated pursuant to Executive Order (E.O.) 14024 for operating or having operated in the electronics sector of the Russian Federation economy. BTP was designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Limited Liability Company Siaisi (CIC) is a Russia-based company that primarily deals with electronic and optical equipment as well as computers and related equipment. CIC is owned by Russian Federation national Tatyana Grigoryevna Ivanova (Ivanova), who also serves as the general director of CIC. Ivanova is also the general director and owner of Kyrgyz Republic-based wholesaler OSOO Progress Lider (Progress Lider), which was established in March 2022 and has made numerous shipments to CIC.

CIC and Ivanova were designated pursuant to E.O. 14024 for operating or having operated in the electronics sector of the Russian Federation economy. Progress Lider was designated pursuant to E.O. 14024 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, CIC.

ZAO GTME Tekhnologii (GTME Tekhnologii) is a Kyrgyz Republic-based entity established in June 2022. GTME Tekhnologii has made dozens of shipments of goods to Russia, including high priority items included in the FinCEN-BIS Supplemental Alert, such as tantalum capacitors and electronic integrated circuits. GTME Tekhnologii’s primary customer has been Russia-based Technologies Systems and Complexes Limited (TSC), a vendor of electronic and digital equipment.

GTME Tekhnologii and TSC were designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

OSOO Kargolayn (Cargoline), founded in March 2022, is a Kyrgyz Republic-based entity that has shipped millions of dollars of foreign-made aviation equipment to Russia, including directly to airlines that are subject to U.S. export controls.

Cargoline was designated pursuant to E.O. 14024 for operating or having operated in the aerospace sector of the Russian Federation economy.

Targeting Additional Sanctions Evasion Facilitators

Amegino FZE (Amegino) is a UAE-based engineering and services company that provides electronic components and related industry services. Amegino has sent dozens of shipments of electronics, including integrated circuits, to Russia since Russia launched its full-scale invasion of Ukraine.

Amegino was designated pursuant to E.O. 14024 for operating or having operated in the technology and electronics sectors of the Russian Federation economy.

Limited Liability Company AK Microtech (AKM)is a Russia-based firm that specializes in transferring foreign semiconductor technology to Russian microelectronics production companies, including entities that provide microelectronics to the Russian defense industry. A number of those end-users are on Treasury’s Specially Designated Nationals and Blocked Persons List as well as the Department of Commerce’s Entity List.

AKM uses non-Russian intermediaries to obfuscate Russian recipients. One such intermediary is Serbia-based firm MCI Trading DOO Beograd Palilula (MCI), which has helped AKM acquire high-tech items from producers in Asia, Europe, and the Middle East. MCI has also made dozens of shipments to AKM since Russia’s invasion of Ukraine began in February 2022. Serbia national Ivan Cvetic (Cvetic) is the director of MCI.

AKM was designated pursuant to E.O. 14024 for operating or having operated in the electronics sector of the Russian Federation economy. MCI and Cvetic were designated pursuant to E.O. 14024 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, AKM.

Designations Targeting Russia-Based Importers of Dual-Use Items

OFAC continues to target Russia-based entities that import dual-use technology from abroad. The following Russia-based entities were designated today pursuant to E.O. 14024 for operating or having operated in the electronics sector of the Russian Federation economy:

AK Systems, a developer, manufacturer, and distributor of high-tech electronic devices;
LLC Altrabeta, a developer and producer of electronic equipment;
Joint Stock Company Compel, a supplier of components for electronics manufacturing;
Limited Liability Company Forepost Trading, an electronic components supplier and producer of electronic equipment;
LLC IQ Components, an electronic components supplier;
Komponenta AO, an electronic components supplier and electronics manufacturing service provider;
LLC Onelek, an electronic components supplier;
NPF-Radiotekhkomplekt AO, an electronic components supplier to research institutes and design bureaus;
Saturn EK OOO, an electronic components supplier and producer of electronic equipment;
LLC Spetselservis, an electronic components supplier,; and
Staut Company Limited, a developer of electronic engineering devices, including for robotic systems.

TARGETING RUSSIA’S MUNITIONS FACTORIES AND HIGH-TECHNOLOGY INDUSTRIES THAT SUPPORT RUSSIA’S DEFENSE SECTOR

OFAC continues to target entities that directly support Russia’s war against Ukraine. The following Russia-based entities were designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy:

Aleksinskii Khimicheskii Kombinat (Aleksinsky Chemical) produces ammunition and weapons. Aleksinsky Chemical also produces polymers, paints, and composite materials for Russia’s military-industrial complex. Aleksinsky Chemical was also designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy.
Kazanskii Gosudarstvennyi Kazennyi Porokhovoi Zavod produces explosives, weapons, ammunition, small arms, and other defense items for the Government of the Russian Federation.
Tambovskii Porokhovoi Zavod (Tambov Gunpowder) is one of Russia’s main producers of ammunition for artillery and small arms. Tambov Gunpowder also produces and sells explosives, including armor-piercing projectiles, to the Russian military.
Joint Stock Company Tula Cartridge Works manufactures small arms ammunition for Russia’s military.

In March 2022, OFAC designated Joint Stock Company Kronshtadt (Kronshtadt) pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy. Kronshtadt is a Russian defense contractor that develops and manufactures equipment, software, and integrated solutions for Russia’s unmanned aviation and defense industries and supports Russia’s Ministry of Defense. Today, OFAC is targeting two Russia-based entities that are working with Kronshtadt.

AO NPO Kurganpribor (Kurganpribor) produces components for rocket systems, missiles, and bombs. Kurganpribor is likely working with Russian unmanned aerial vehicle (UAV) manufacturers to develop engines for UAV weapons programs.

Joint Stock Company Astrophysika National Centre of Laser Systems and Complexes (Astrofizika) is a research and development center focused on laser and optical technologies, including for defense purposes. Astrofizika is working with Kronshtadt to develop a line of engines for UAVs.

Kurganpribor was designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy. Astrofizika was designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

OFAC is also targeting entities in key industries such as aerospace, quantum technologies, and advanced computing that Russia exploits to support its defense industries. To deprive Russia of technology for its aerospace sector, the following Russia-based companies were designated pursuant to E.O. 14024 for operating or having operated in the aerospace sector of the Russian Federation economy:

Arsenal Machine Building Plant Open Joint Stock Company (MZ Arsenal) manufactures military equipment and technology, as well as space technology. Specifically, MZ Arsenal develops and produces materiel for Russia’s navy, solid-fuel rocket engines, and ballistic missiles.
Joint Stock Company Experimental Design Bureau Fakel produces products for aerospace purposes.
M.V. Frunze Arsenal Design Bureau Joint Stock Company is a military contractor that specializes in the development of space remote sensing systems.
Joint Stock Company Research and Production Corporation Precision Systems and Instruments (NPK SPP) manufactures electronics for space complexes. NPK SPP won a contract from Russia’s Ministry of Defense to support a space surveillance system.
Open Joint Stock Company Russian Institute of Radionavigation and Time develops aerospace systems, including for defense purposes.
Joint Stock Company Science Research Institute for Precise Instruments (RIPI) designs and manufactures radio engineering equipment and software-hardware complexes for the Russian aerospace industry. Additionally, RIPI has showcased space-related products and radar at a Russian military forum.
Space Research Institute Russian Academy of Sciences designs and tests equipment and systems for space research under the control of Russia’s Ministry of Defense.
Joint Stock Company Special Research Bureau of Moscow Power Engineering Institute produces aerospace industry products for missiles and aircraft.

Scientific Production Company Optolink (Optolink) is a Russia-based producer of technological and electronic products, including optical fibers, high precision fiber optic gyroscopes, diodes, and transistors, used in aerospace systems. On December 8, 2022, Optolink was added to the Department of Commerce’s Entity List based on information that Optolink contributes to Russia’s military and/or defense industrial base.

Optolink was designated pursuant to E.O. 14024 for operating or having operated in the technology and electronics sectors of the Russian Federation economy.

OFAC is also targeting research institutes and other entities that support Russia’s research and development of high-technology goods. The following entities were designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy:

The Budker Institute of Nuclear Physics of Siberian Branch Russian Academy of Sciences is one of Russia’s leading physics research centers and focuses on the development of new technologies.
P.L. Kapitza Institute for Physical Problems, Russian Academy of Sciences is a Russia-based research institution primarily researching quantum fluids and superconductivity.
The Federal State Budgetary Institution of Science Federal Research Center Kazan Scientific Center of the Russian Academy of Sciences (FRC KAZSC RAS) is a Russian Federal Research Center responsible for achieving results in the implementation of technological priorities in Russia, particularly in areas of strategic importance. FRC KAZSC RAS conducts research related to nanotechnologies and quantum informatics and is a leading center in the field of radio spectroscopy.
The Osipyan Institute of Solid State Physics of the Russian Academy of Sciences (ISSP) is a Russia-based quantum research institute and it is involved in solving problems with high-tech applications. On September 30, 2022, the Department of Commerce added ISSP to the Entity List for acquiring and attempting to acquire U.S.-origin items in support of the Russian military.
A.M. Prokhorov General Physics Institute Russian Academy of Sciences is a Russia-based institute that focuses research on laser physics and optics, quantum electronics, microelectronics, and nanoelectronics.
Closed Joint Stock Company Superconducting Nanotechnology is a Russia-based company that specializes in the development, fabrication, and implementation of superconducting devices and which produces products which have applications for quantum computing.

The Institute of Laser Physics of the Siberian Branch of the Russian Academy of Sciences (Institute of Laser Physics) is a federally financed institution owned by the Government of the Russian Federation. The Institute of Laser Physics is involved in the application of high-power lasers for scientific research and technology.

The Institute of Laser Physics 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 the Russian Federation.

DEGRADING RUSSIA’S ACCESS TO THE INTERNATIONAL FINANCIAL SYSTEM

Imposing sanctions against additional Russia-based financial institutions further degrades the Russian Federation’s ability to maintain access to the global financial system. The following five Russian banks were designated pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy:

Joint Stock Company Locko Bank, a commercial bank located in Moscow, Russia.
Joint Stock Company Petersburg Social Commercial Bank, a commercial bank located in Moscow and Saint Petersburg, Russia.
Joint Stock Company Commercial Bank Solidarnost, a commercial bank located in Moscow, Russia and among the leading credit institutions in Russia’s Volga region.
JSC Tinkoff Bank (Tinkoff Bank), a commercial bank in Moscow, Russia. Tinkoff Bank is partially owned by U.S.-designated Vladimir Olegovich Potanin. Tinkoff Bank was sanctioned by the European Union (EU) and the United Kingdom (UK) in February and May of 2023, respectively.
Unistream Commercial Bank JSC, a money-transfer institution located in Moscow, Russia.

FURTHER LIMITING RUSSIA’S REVENUE FROM EXTRACTIVE INDUSTRIES AND FUTURE CAPABILITIES

Today, OFAC is taking further action to limit Russia’s revenue from its metals industries and to limit Russia’s future energy capabilities in support of the G7 commitments.

Reducing Russia’s Revenue from the Metals and Mining Sector

Joint Stock Company Ural Mining and Metallurgical Company (UMMC) is one of Russia’s top producers of metals such as copper, zinc, gold, and silver.

UMMC Nonferrous Metals Processing Limited Liability Company (UMMC NFMP) is a Russia-based UMMC subsidiary involved in the non-ferrous metals processing industry that operates plants that manufacture copper, brass, bronze, copper-nickel, and nickel rolled products.

Joint Stock Company Uralelektromed (Uralelektromed) is a Russia-based UMMC subsidiary involved in the refining of precious metals, cathodes, and bullion products.

UMMC, UMMC NFMP, and Uralelektromed were designated pursuant to E.O. 14024 for operating or having operated in the metals and mining sector of the Russian Federation economy.

Targeting Russia’s Manufacturers of Equipment and Chemicals for the Energy Industry

The following Russia-based manufacturers of energy industry equipment were designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy:

Joint Stock Company Scientific Production Enterprise Research and Design Institute of Well Logging designs special methods and technologies for geophysical surveys involving oil, gas, ore, and coal wells and is involved in manufacturing equipment for well logging.
Limited Liability Company Proizvostvennaya Kommercheskaya Firma Gazneftemash manufactures equipment for the drilling of new oil and gas wells.
Joint Stock Company Gazprom Avtomatizatsiya manufactures gas distribution stations for Public Joint Stock Company Gazprom, an entity that is subject to Directive 4 Under E.O. 13662 and Directive 3 Under E.O. 14024.
Joint Stock Company Neftegazavtomatika manufactures automation equipment for the oil and gas industries.
Limited Liability Company Oktanta manufactures drill piping inspection equipment.
Limited Liability Company Perm Oil Machine Company manufactures oilfield and drilling equipment.
Limited Liability Company Rustmash manufactures oil drilling equipment.

The following Russia-based manufacturers of energy-related refining agents were designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy:

Limited Liability Company Ishimbay Specialized Chemical Plant of Catalyst manufactures chemicals.
Limited Liability Company KNT KAT manufactures catalysts for the oil and gas industries.
Limited Liability Company RN KAT (RN KAT) is a subsidiary of Open Joint-Stock Company Rosneft Oil Company (Rosneft), an entity that is subject to Directive and Directive 4 of E.O. 13662. RN KAT manufactures refining agents for Rosneft’s refineries.
Limited Liability Company Sterlitamak Catalyst Plant manufactures chemicals.

Limited Liability Company Tyumen Petroleum Research Center (TPRC) is Rosneft’s corporate research and design institute. TPRC, which is involved in technology development, performs field engineering and support for geological survey processes and is involved in the development of oil and gas fields in Russia and elsewhere for Rosneft subsidiaries.

TPRC was designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Targeting a Facilitator of Investment in Russia’s Extractive Industries

The Fund for Development of Energy Complex Energy (Fund Energy) is a Russia-based investment house that invests in energy, oil and gas, and mining enterprises and infrastructure facilities.

Fund Energy was designated pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy.

SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of the persons above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked. All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons are prohibited unless exempt or authorized by a general or specific license issued by OFAC. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

For identifying information on the individuals and entities sanctioned or property identified today, click here.

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