Introduction
Politics of sanctions
Departments of Commerce and State tighten export controls
Designated officials and entities


Introduction

The Office of Foreign Assets Control (OFAC) has sanctioned additional parties in connection with the continuing crisis in Ukraine. The most recent designations target seven officials in Russia's leadership, including two members of President Putin's inner circle and 17 entities linked to Putin's inner circle in the banking, construction and energy sectors. OFAC imposed the sanctions pursuant to Executive Order 13661 (March 17 2014), which authorises sanctions on officials of the Russian government and any individual or entity that is owned or controlled by, has acted for or on behalf of, or has provided material or other support to, a senior Russian government official. The targeted individuals will be subject to an asset freeze and a US visa ban, and the targeted companies will be subject to an asset freeze.

Politics of sanctions

The sanctions come in response to what the Obama administration perceives to be Russia's lack of action in support of promises to de-escalate tensions in Ukraine, pursuant to its April 17 2014 Geneva Statement. Undersecretary for Terrorism and Financial Intelligence David Cohen stated: "The United States, acting on its own and alongside our international partners, will impose increasing costs on Russia if it persists in its efforts to destabilize Ukraine and will hold Russia accountable for its provocative actions." Treasury Secretary Jack Lew further explained the US motivation for the sanctions:

"Russia's dangerous and inflammatory actions against Ukraine are illegal and illegitimate. Since Russia has refused to follow through on its Geneva commitments, today the United States is following through on its statements... Today's targeted actions, taken in close coordination with the EU, will increase the impact we have already begun to see on Russia's own economy as a result of Russia's actions in Ukraine and from U.S. and international sanctions."

However, Lew suggested that if Russia were to take effective steps to de-escalate the conflict, sanctions against Russian officials and entities could ease. These sanctions come as Ukraine prepares to hold its presidential election on May 25 2014.

Departments of Commerce and State tighten export controls

In conjunction with the OFAC sanctions, the Department of Commerce's Bureau of Industry and Security (BIS) has also announced that it is expanding US export restrictions on items subject to the Export Administration Regulations in response to Russia's continued actions in southern and eastern Ukraine. To that end, the department added 13 of the designated companies to the entity list, based on its determination that the companies are involved, or pose a significant risk of becoming involved, in activities contrary to the national security and foreign policy interests of the United States. Exports, re-exports or other foreign transfers of items subject to the Export Administration Regulations to these designated companies now require a licence, and the department will review applications for such licences with a presumption of denial.

The Department of State has also announced that it is expanding its export restrictions on technologies and services regulated under the US Munitions List. The department's Directorate of Defence Trade Controls and BIS have announced that both agencies will deny export licence applications to supply to Russia or occupied Crimea any high-technology item or defence articles or services regulated under the Export Administration Regulations or the US Munitions List that will contribute to Russia's military capabilities. Both agencies will also revoke any such existing export licences.

Designated officials and entities

OFAC designated the following parties in the recent sanctions. Those marked with an asterisk were also added to the Department of Commerce's entity list.

The following Russian government officials have been designated:

  • Oleg Belavantsev, Russia's presidential envoy to Crimea;
  • Sergei Chemezov, director general of the State Corporation for Promoting Development, Manufacturing and Export of Russian Technologies High-Tech Industrial Products (Rostec). Rostec is a Russian state-owned holding company and has not been sanctioned;
  • Dmitry Kozak, deputy prime minister of the Russian Federation;
  • Evgeniy Murov, director of Russia's Federal Protective Service and an army general;
  • Aleksei Pushkov, a deputy of the State Duma and chairman of the State Duma Committee on International Affairs.
  • Igor Sechin, president and chairman of the management board of Rosneft, Russia's leading petroleum company. Rosneft is a state-owned company and has not been sanctioned; and
  • Vyacheslav Volodin, first deputy chief of staff of the Presidential Executive Office.

The following entities have been designated:

  • InvestCapitalBank and SMP Bank are controlled by Arkady and Boris Rotenberg, who were designated on March 20 2014 pursuant to Executive Order 13661.
  • *Stroygazmontazh (SGM Group), located in Russia, is a gas pipeline construction company owned or controlled by Arkady Rotenberg.
  • The *Volga Group, located in Luxembourg and Russia, has been designated for being owned or controlled by Gennady Timchenko. Timchenko was designated on March 20 2014 pursuant to Executive Order 13661 and is the sole shareholder of the Volga Group, an investment strategy group that holds interests in a variety of assets on his behalf.
  • *Transoil is a Russia-based rail freight operator that specialises in the transportation of oil and oil products. Transoil has been designated for being owned or controlled by the Volga Group and Timchenko.
  • *Aquanika (Russkoye Vremya LLC) is a Russia-based mineral water and soft drink company. Aquanika has been designated because it is owned or controlled by the Volga Group and Timchenko. Aquanika produces drinks under several trade names, including Aquanika.
  • *Sakhatrans LLC, located in Russia, is a transportation company engaged in the construction of the bulk terminal for coal and iron ore exports in Muchka Bay near Vanino, east Russia. Sakhatrans LLC has been designated for being owned or controlled by the Volga Group and Timchenko.
  • *Avia Group LLC, located in Russia, is involved in ground infrastructure for the Business Aviation Centre at Sheremetyevo International Airport in Moscow offering aircraft maintenance services, including aircraft storage and organisation support services for flight operations. Avia Group LLC has been designated for being owned or controlled by the Volga Group and Timchenko.
  • *Avia Group Nord LLC, also in Russia, provides management services for corporate aviation at Pulkovo International Airport in Saint Petersburg, Russia. Avia Group Nord LLC has been designated for being owned or controlled by the Volga Group and Timchenko.
  • *Stroytransgaz Holding is a holding company for construction assets, located in Cyprus. Stroytransgaz Holding has been designated for being owned or controlled by the Volga Group and Timchenko.
  • Stroytransgaz Group is a Russian construction group, comprising a number of business entities that specialise in different aspects of the construction industry. Stroytransgaz Group has been designated for being owned or controlled by the Volga Group and Timchenko.
  • *Stroytransgaz OJSC, located in Russia, is an electricity construction company. Stroytransgaz OJSC has been designated for being owned or controlled by the Stroytransgaz Group, the Volga Group and Timchenko.
  • *Stroytransgaz-M LLC, also in Russia, is an industrial construction company focused on oil, gas, petrochemical and other civil engineering projects. Stroytransgaz-M LLC has been designated for being owned or controlled by the Stroytransgaz Group, the Volga Group and Timchenko.
  • *Stroytransgaz LLC, in Russia, is an infrastructure construction company. Stroytransgaz LLC has been designated for being owned or controlled by the Stroytransgaz Group, the Volga Group and Timchenko.
  • The Limited Liability Company Investment Company Abros is owned or controlled by Bank Rossiya. Bank Rossiya was designated on March 20 2014 pursuant to Executive Order 13661 for acting for or on behalf of or materially assisting, sponsoring or providing financial, material or technological support for, or goods and services to or in support of, a senior official of the government of the Russian Federation. Bank Rossiya was also designated for being owned or controlled by Yuri Kovalchuk, who was designated on March 20 2014 pursuant to Executive Order 13661.
  • *CJSC Zest has been designated for being owned or controlled by Bank Rossiya.
  • JSB Sobinbank has been designated for being owned or controlled by Bank Rossiya.

Lisa Crosby, Andrew W Shoyer, Robert Torresen, Arnoud R Willems

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