The World Chess Federation has announced that its Swiss UBS bank accounts have been closed after its president, Kirsan Ilyumzhinov, had sanctions imposed by OFAC on 25 November 2015, pursuant to Executive Order 13582, for “materially assisting and acting for or on behalf of” previously designated entities and individuals, including the Government of Syria and the Central Bank of Syria (links for Mr. Ilyumzhinov’s SDN entry and the Treasury press release).
The US Department of State has issued a press release on the third anniversary (12 February 2018) of the Minsk Agreements saying that “Sadly, Russia continues to disregard its commitments… stoking a hot conflict in Ukraine that has cost over 10,000 lives…”
The statement says that US sanctions on Russia “will remain in place until Russia fully implements its commitments under the Minsk agreements”, and the “separate Crimea-related sanctions will remain in place until Russia returns the peninsula to Ukraine”.
In accordance with section 242 of the Countering America’s Adversaries Through Sanctions Act of 2017 (CAATSA), the US Treasury has issued a Report addressing the potential effects of expanding sanctions under Directive 1 (issued by Executive Order 13662) to include new Russian sovereign debt and related derivative products.
The Report – which is not a binding sanctions decision – concludes: “given the size of Russia’s economy, its interconnectedness and prevalence in global asset markets, and the likely over-compliance by global firms to U.S. sanctions, the magnitude and scope of consequences from expanding sanctions to sovereign debt and derivatives is uncertain and the effects could be borne by both the Russian Federation and U.S. investors and businesses.”
Consequently, during a hearing of the US House Financial Services Committee yesterday, the Treasury Secretary Steven Mnuchin announced that the US would not be expanding its sanctions against Russia’s sovereign debt and derivatives market.
Pursuant to section 241(a)(1) of the Countering America’s Adversaries Through Sanctions Act of 2017 (CAATSA), the US Treasury has published an unclassified Report, listing 114 ‘senior foreign political figures’ and 96 ‘oligarchs’ in the Russian Federation, determined by their “closeness to the Russian regime and their net worth”. The Report makes clear that “it is not a sanctions list”; while some people mentioned may have been sanctioned pursuant to other authorities, inclusion of individuals or entities in the Report should not be interpreted as imposing sanctions on them (OFAC FAQ reiterates this point).
The 114-long list of ‘senior foreign political figures’ consists of (inter alia) senior members of the Russian Presidential Administration, members of the Russian Cabinet, and other senior political leaders, including the leadership of the State Duma and Federation Council, members of the Russian Security Council, and senior executives at state-owned enterprises (individuals listed in Appendix A to the Report). The 96-long list of ‘oligarchs’ in the Russian Federation consists of those with an estimated net worth of $1bn or more (individuals listed in Appendix B to the Report).
Pursuant to section 241(a)(2) of CAATSA, the US Treasury has also produced a classified annex on Russian parastatal entities (companies in which state ownership is at least 25% and that had 2016 revenues of approximately $2bn or more). The Report states that the classified annex may also include further individuals not included in Appendixes A and B (i.e. other senior foreign political figures and oligarchs in the Russian Federation), as well as people who hold a position below those included in the Report or have a net worth below $1bn.
Although the Report is not a sanctions list, Treasury Secretary Steven Mnuchin has informed the Senate Banking Committee that the Treasury would be using the Report to inform future targeted sanctions, and that “there will sanctions that come out of this”.
We previously reported that under section 231 of CAATSA, the US administration had until the 29 January 2018 to detail a list of people for sanctions that have knowingly engaged in a “significant transaction” with Russia’s defence or intelligence sectors. The State Department has stated that “when and if we have sanctions to announce, we will do so”.
OFAC has designated 21 people and 9 entities, and added 12 entities to its Russia / Ukraine Sectoral Sanctions Identification List.
These measures were taken to “maintain sanctions pressure on Russia until it fully implements its commitments under the Minsk agreements” and to underscore the “US government’s opposition to Russia’s occupation of Crimea”.
11 people were designated pursuant to EO 13660 for being “Ukrainian separatists… responsible for or complicit in, or having engaged in, directly or indirectly, actions or policies that threaten the peace, security, stability, sovereignty, or territorial integrity of Ukraine; or for asserting governmental authority over a part or region of Ukraine without the authorization of the Government of Ukraine”. Pursuant to the same EO, OFAC also designated 3 people and 4 entities “who have supported the illicit coal trade from [Ukraine]”.
4 people and 2 entities were designated pursuant to EO 13661, which authorises sanctions against (inter alia) officials of the Russian government and any individual or entity that has acted for or on behalf of, or supported, an individual or entity previously designated under this EO.
1 construction company and 2 associated people were designated pursuant to EO 13685, which authorises sanctions against (inter alia) any person determined to operate in the Crimea region of Ukraine. Under the same EO, OFAC also designated 1 person and 2 entities “related to Russia’s transfer of four turbines made by a Russian-German joint venture to Crimea”.
OFAC also identified 12 subsidiaries that are 50% or more owned by Surgutneftegaz, an entity which was added to the Sectoral Sanctions Identification List (SSI List) in September 2014 under Directive 4. The subsidiaries are subject to the same restrictions as their parent. See OFAC’s revised guidance on Entities Owned by Persons Whose Property and Interests in Property Are Blocked (50% Rule). Links here for OFAC Notice and US Treasury press release.
The UK Office of Financial Sanctions Implementation (OFSI) has designated two people pursuant to section 4 of the Anti-Terrorism, Crime and Security Act 2001 which permits HM Treasury to designate where it has “a reasonable belief that the persons specified… have taken or are likely to take action which is to the detriment of the UK economy, or a threat to the life or property of one or more nationals or residents of the UK”. The freezing orders have been made in relation to Andrey Lugovoy, listed as a “Member of the Russian Duma (Parliament)”, and Dmitri Kovtun, a Moscow-born national listed as the “General Director of Global Project”; it’s a crime to make funds available to those individuals. The OFSI Notice explains that the designated persons may apply to Court to set aside this designation under section 63 of the Counter Terrorism Act 2008.
The Moscow Arbitration Court has refused to grant injunctive relief in an action by Siemens Gas Turbines Technologies LLC (SGTT) against Technopromexport LLC and Technopromexport VO OJSC (subsidiaries of Russian state conglomerate Rostec) in respect of power turbines illegally diverted to Russia-annexed Crimea in mid-2017 (in violation of EU sanctions). As part of its claim, SGTT sought an injunction preventing the turbines from being installed in Crimea. SGTT has now appealed against the ruling (papers filed at Moscow’s Ninth Arbitration Appeals Court).
In December 2017, the Moscow Arbitration Court had dismissed a similar action by Siemens AG (a parent company of SGTT) for the seizure of the power turbines (see previous blog here).