U.S. Treasury Disrupts Russia’s Sanctions Evasion Schemes
Actions expose a secret payment channel for sensitive exports and target a Kyrgyzstani financial institution for supporting Russia’s military-industrial base
WASHINGTON – Today, the U.S. Department of the Treasury is moving against Russian efforts to evade U.S. sanctions. This action targets a sanctions evasion scheme established between actors in Russia and the People’s Republic of China (PRC) to facilitate cross-border payments for sensitive goods. In addition, Treasury is designating a Kyrgyz Republic-based financial institution that coordinated with Russian officials and a U.S.-designated bank to implement a sanctions evasion scheme.
Treasury is also reinforcing the grave risks foreign persons face in continuing to work with Russia’s military-industrial complex by re-designating pursuant to Executive Order (E.O.) 13662 almost 100 entities already designated pursuant to E.O. 14024. As a result of these entities’ designation pursuant to E.O. 13662, foreign persons, including foreign financial institutions, that knowingly facilitate significant transactions for or on behalf of any of these entities could be subject to mandatory secondary sanctions under the Ukraine-/Russia-related sanctions program.
“Today’s actions frustrate the Kremlin’s ability to circumvent our sanctions and get access to the goods they need to build weapons for their war of choice in Ukraine,” said Deputy Secretary of the Treasury Wally Adeyemo. “Today’s expansion of mandatory secondary sanctions will reduce Russia’s access to revenue and goods.”
The U.S. Department of State is sanctioning more than 150 entities and individuals pursuant to E.O. 14024, including a wide range of companies in Russia’s defense industry and those supporting its military industrial base. Today’s sanctions also include dozens of companies across multiple countries that continue to support Russia’s efforts to evade U.S. sanctions, particularly in the PRC, which remains the largest supplier of dual use items and enabler of sanctions evasion in support of Russia’s war effort.
REGIONAL CLEARING PLATFORM SANCTIONS EVASION SCHEME
With the guidance and awareness of Russian officials and their PRC counterparts, Russia and China have been working to set up regional clearing platforms (RCPs) in both Russia and China to act as counterparties to allow for cross-border payments for sensitive goods. The RCPs facilitate non-cash mutual settlement for payments for so-called sanctioned goods.
U.S.-designated Russian financial institutions Public Joint Stock Company Sberbank of Russia, Joint Stock Company Alfa-Bank, Open Joint Stock Company Sovcombank, T-Bank, and Limited Liability Company Bank Tochka are reportedly participants in the scheme.
The following entities are Russia-based RCPs involved in this scheme: Herbarium Office Management LLC (Herbarium), Aktsionernoe Obshchestvo Atlant Torg, Limited Liability Company Sigma Partners, Aktsionernoe Obshchestvo Tranzaktsii I Raschety, Joint Stock Company Arctur, and Paylink Limited.
Russian national Andrei Valeryevich Prikhodko is the General Director of Herbarium.
The following entities are PRC-based RCPs involved in this scheme: Anhui Hongsheng International Trade Co Ltd, Qingyuan Fo Feng Leda Supply Chain Service Co Ltd, Heilongjiang Shunsheng Economic And Trade Development Co Ltd, Qingdao Hezhi Business Service Co Ltd, Xinjiang Financial Import And Export Co Ltd, Hangzhou Xianghe Trading Co Ltd, Shaanxi Hongrun Jinhua Trading Co Ltd, Fujian Xinfuwang International Trade Co Ltd, and Jilin Province Shunda Trading Company Ltd.
The 15 entities and one individual identified above are being designated pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy and pursuant to E.O. 13662 for operating in the financial services sector of the Russian Federation economy.
KEREMET BANK
Since at least summer 2024, officials at Kyrgyz Republic-based OJSC Keremet Bank (Keremet Bank) have coordinated with Russian officials and U.S.-designated Russian bank Promsvyazbank Public Joint Stock Company (PSB) to implement a sanctions evasion scheme wherein Keremet Bank would facilitate cross-border transfers on PSB’s behalf. OFAC designated PSB on February 22, 2022 pursuant to E.O. 14024 for operating or having operated in the defense and related materiel and financial services sectors of the Russian Federation economy. The Government of the Russian Federation nationalized PSB in 2018 and repurposed it to finance Russia’s defense industry and service large defense contracts. Since its transformation into the Russian state defense bank, PSB has issued billions of dollars of financial support for Russian military-industrial base companies.
U.S.-designated Russian-Moldovan oligarch Ilan Mironovich Shor has also been involved in the discussions regarding Keremet Bank’s role in the sanctions evasion scheme.
In 2024, the Kyrgyzstani Ministry of Finance sold a controlling stake in Keremet Bank to a firm strongly linked to a Russian oligarch with ties to the Russian government. The purchase of Keremet Bank was intended to create a sanctions evasion hub for Russia to pay for imports and receive payment for exports.
Keremet Bank is being designated pursuant to E.O. 14024, as amended by E.O. 14114, for having conducted or facilitated any significant transaction or transactions, or provided any service, involving Russia’s military-industrial base, including the sale, supply, or transfer, directly or indirectly, to the Russian Federation, of any item or class of items as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State and the Secretary of Commerce.
INCREASING SECONDARY SANCTIONS RISK FOR CRITICAL RUSSIAN ENTITIES
In furtherance of G7 commitments, today’s redesignations pursuant to E.O. 13662 target entities operating in the financial services, energy, and defense and related materiel sectors of the Russian Federation economy in order to curtail Russia’s international financial connectivity, reduce Russia’s revenues derived from energy products and other commodities, and disrupt Russia’s ability to acquire weapons and weapons inputs.
For a list of entities being designated today pursuant to E.O. 13662 for operating in the financial services sector of the Russian Federation economy, please see Annex 1.
For a list of entities being designated today pursuant to E.O. 13662 for operating in the energy sector of the Russian Federation economy, please see Annex 2.
For a list of entities being designated today pursuant to E.O. 13662 for operating in the defense and related materiel sector of the Russian Federation economy, please see Annex 3.
- Bank Saint-Petersburg Public Joint Stock Company is a Russian bank.
- Bank Zenit Public Joint Stock Company is a Russian bank.
- Credit Bank of Moscow Public Joint Stock Company is a Russian bank.
- Eximbank of Russia JSC is a Russian bank.
- Gas Industry Insurance Company Sogaz is a Russian insurance company.
- Gazprombank Joint Stock Company is a Russian bank.
- International Investment Bank is a Russian bank.
- Joint Stock Commercial Bank AK Bars Public Joint Stock Company is a Russian bank.
- Joint Stock Commercial Bank Novikombank is a Russian bank.
- Joint Stock Commercial Bank Primorye is a Russian bank.
- Joint Stock Company Alfa-Bank is a Russian bank.
- Joint Stock Company Avtovaz is a Russia-based carmaker that wholly owns U.S.-designated Russian bank Joint Stock Company Auto Finance Bank.
- Joint Stock Company Bank Dom RF is a Russian bank.
- Joint Stock Company Post Bank is a Russian bank.
- Joint Stock Company Russian National Reinsurance Company is Russian reinsurance company.
- Joint Stock Company State Transportation Leasing Company is a Russia-based entity that majority-owns U.S.-designated Russian bank Joint Stock Commercial Bank National Reserve Bank Joint Stock Company.
- Moscow Exchange provides access to the Russian financial markets and offers trading opportunities across a diverse range of asset classes combined with post-trade services.
- National Clearing Center operates as a clearing house and central clearing party in the Russian financial market.
- National Payment Card System Joint Stock Company operates Russia’s Mir payment system.
- Non-bank Credit Institution Joint Stock Company National Settlement Depository is a key component of Russia’s financial infrastructure, providing a wide range of services, including bank account payment services, trade repository services, and liquidity management services.
- Obshchestvo S Ogranichennoi Otvetstvennostyu Holdingovaya Kompaniya Yuesem is a holding company and private equity investor that owns and manages assets in the financial services industry.
- Promsvyazbank Public Joint Stock Company is a Russian bank.
- Public Joint Stock Company Bank Uralsib is a Russian bank.
- Public Joint Stock Company MTS Bank is a Russian bank.
- Public Joint Stock Company PIK Specialized Homebuilder (PIK) is a Russia-based company that offers insurance and subsidies for mortgages.
- Public Joint Stock Company Rosbank is a Russian bank.
- Public Joint Stock Company Sberbank of Russia is a Russian bank.
- Public Joint Stock Company SPB Bank is a Russian bank.
- Public Joint Stock Company Transkapitalbank is a Russian bank.
- SDM-Bank Public Joint Stock Company is a Russian bank.
- Sistema Public Joint Stock Financial Corporation is a Russia-based entity that operates as an investment holding company.
- Sovcombank Open Joint Stock Company is a Russian bank.
- SPB Exchange offers investment products to Russian investors.
- State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank is a bank that is Russia’s national economic development institution.
- Russian Direct Investment Fund is Russia’s sovereign wealth fund.
- T-Bank, formerly known as Tinkoff Bank, is a Russian bank.
- Transmashholding JSC owns multiple Russia-based financial companies.
- VTB Bank Public Joint Stock Company is a Russian bank.
ANNEX 1: RUSSIAN FINANCIAL SERVICES SECTOR
The following Russia-based entities are being designated pursuant to E.O. 13662 for operating in the financial services sector of the Russian Federation economy:
ANNEX 2: RUSSIAN ENERGY SECTOR
The following Russia-based entities are being designated pursuant to E.O. 13662 for operating in the energy sector of the Russian Federation economy:
- Aktsionernoe Obshchestvo Rusgazdobycha is engaged in natural gas extraction.
- Joint Stock Company Gazstroyprom is involved in oil and gas construction and is managing the construction of a natural gas pipeline in Russia.
- Joint Stock Company Polimetall owns a Russia-based entity involved in the wholesale of fuel and another Russia-based entity involved in support activities for petroleum and natural gas extraction.
- Joint Stock Company Razrez Kolyvanskiy is a Russian coal mining company.
- Joint Stock Company Ugolnaya Kompaniya Kuzbassrazrezugol is a Russian coal mining company.
- Limited Liability Company Machine Building Plant Tonar produces coal transportation vehicles.
- Limited Liability Company Shipbuilding Complex Zvezda (Zvezda) is building an oil tanker and five liquefied natural gas (LNG) carriers. U.S.-designated Joint Stock Company Rosnefteflot (Rosnefteflot) ordered 10 Aframax tankers from Zvezda, and Zvezda has constructed and delivered several of these tankers to Rosnefteflot. Zvezda is also being designated today pursuant to E.O. 13662 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Rosnefteflot, a person whose property and interests in property are blocked pursuant to E.O. 13662.
- Public Joint Stock Company Pipe Metallurgical Company produces threaded pipes, special pipes, pipeline systems, and other products for the energy sector, provides engineering solutions for power generation, and is developing products related to hydrogen energy.
- Public Joint Stock Company Severstal offers LNG storage and transportation, renewable energy resources, and transportation of oil and gas.
- Publichnoe Aktsionernoe Obshchestvo Mechel is a Russian coal mining company.
- Publichnoe Aktsionernoe Obshchestvo Raspadskaya is a Russian coal mining company.
- Velesstroi Limited Liability Company (Velesstroi) is a Russian construction company that implements oil and gas and electric power sector projects. Velesstroi’s products and services include oil pipelines, oil pumping stations, oil loading stations, and oil terminals.
- Arktik SPG 1 is building an artificial plot of land at the Sabetta port in Russia for the construction of a cargo terminal for the Geofizicheskoye oil and gas condensate field.
- Limited Liability Company Obsky Gas Chemical Complex is a Russia-based entity developing exploratory gas wells on West Siberia’s Yamal Peninsula.
- OOO Gazprom Invest designs and builds facilities for the gas industry.
- Regent Baltica Company Limited offers automated production of cryogenic isothermal panels for LNG storage.
- Limited Liability Company Arctic LNG 2 manages Russia’s Arctic LNG 2 project and is currently building three liquification trains capable of producing both LNG and stabilized gas condensate (SGC).
- Joint Stock Company United Metallurgical Company manufactures steel pipes for the offshore industry, and its products are used in the construction of major oil and gas pipelines.
- JSC Suek is a Russian coal, heat, and electricity producer.
- Open Joint Stock Company Tikhoretsk Machine Construction Plant VV Vorovsky sells a product for the intended use of installation of power lines.
ANNEX 3: RUSSIAN DEFENSE AND RELATED MATERIEL SECTOR
The following Russia-based entities are being designated pursuant to E.O. 13662 for operating in the defense and related materiel sector of the Russian Federation economy:
- Advanced Research Foundation develops unmanned ground vehicles and tanks, camouflage materials, and autonomous deep-submergence vehicles.
- Aleksinskii Khimicheskii Kombinat produces gunpowder, ammunition, and weapons.
- Aktsionernoe Obshchestvo Gruppa Kremnii El is a Russian microelectronics manufacturer whose products are used in advanced air defense systems, naval vessels, and missile systems.
- AMS Group LLC supplies cotton cellulose to Russian gunpowder and ammunition manufacturers.
- The Foreign Intelligence Service of the Russian Federation (SVR) is one of Russia’s security agencies and carries out intelligence activities for the purpose of providing the President of Russia, the Federal Assembly, and the Government of the Russian Federation with intelligence information they need to make decisions in political, economic, military-strategic, scientific-technical and environmental fields. The SVR provides military-technical support for the security of Russia.
- Federal State Enterprise Perm Powder Plant is a Russian gunpowder producer.
- Federal State Enterprise Science and Technology Association Kazan Plant of Precision Engineering is a Russian gunpowder producer.
- Federal State Enterprise YA M Sverdlov Plant is a Russian explosives manufacturer.
- Federal Service for Military-Technical Cooperation is responsible for control and oversight in the field of military-technical cooperation between Russia and foreign countries.
- Federal State Institution of Higher Vocational Education Moscow Institute of Physics and Technology works closely with the Russian military-industrial complex and has been recognized by the Russian Ministry of Defense for developing military-use drone systems.
- Federal State Unitary Enterprise Dukhov Automatics Research Institute is a Russian developer of nuclear weapons.
- Joint Stock Company Angstrem is a Russian developer and manufacturer of integrated circuits and semiconductor devices whose customers and partners include the Russian Ministry of Defense and various Russian defense companies.
- Joint Stock Company Rossiyskiye Kosmicheskiye Sistemy manufactures guided missile parts and equipment and military communications satellites.
- Joint Stock Company Shvabe creates high-tech optoelectronic equipment, including drones used by Russia’s military.
- Joint Stock Company Izhevsk Electromechanical Plant Kupol manufactures military equipment, particularly air defense systems.
- Joint Stock Company Mikron (Mikron) is a Russian integrated circuit manufacturer whose customers include Russian defense companies.
- Joint Stock Company Research And Production Association Named After S. A. Lavochkina operates as a contractor for military programs.
- Joint Stock Company Special Economic Zone of Industrial Production Alabuga is Russia’s main plant for making one-way attack unmanned aerial vehicles (UAVs).
- Joint Stock Company United Engine Corporation produces engines for military aviation and naval use.
- Kazanskii Gosudarstvennyi Kazennyi Porokhovoi Zavod manufactures explosives, weapons, and ammunition.
- JSC Academician M. F. Reshetnev Information Satellite Systems solves tasks in the interests of Russia’s defense capabilities.
- Kamaz Publicly Traded Company manufactures vehicles for defense purposes and has cooperated with U.S.-designated Rosoboroneksport OAO to deliver more than 2,000 military trucks to foreign customers.
- LTD Bina Group (Bina) imports cotton cellulose, a main ingredient in the production of gunpowder, solid rocket propellants, and explosives, which it has sold to Russian military factories.
- Limited Liability Company Navimaks Group specializes in supplying materials and equipment to enterprises in Russia’s defense industry, including cotton cellulose, a main ingredient in the production of gunpowder, solid rocket propellants, and explosives.
- Limited Liability Company Volga Dnepr Airlines has coordinated shipments of military equipment within and to Russia.
- Main Directorate of Deep Sea Research is a Russian military unit that deploys a fleet of surface ships, submarines, and naval drones.
- Open Joint Stock Company Russian Electronics, part of Russia’s state defense conglomerate State Corporation Rostec, develops military-class electronic devices.
- Publichnoe Aktsionernoe Obschestvo Sollers is a Russian automotive manufacturer and the parent company of Russia-based Ulyanovsk Automobile Plant, which supplies the Russian military with various types of vehicles.
- Public Joint Stock Company United Aircraft Corporation designs, manufactures, sells, maintains, and repairs military aircraft.
- Public Joint Stock Company Yakovlev manufactures airplanes, ammunition, helicopters, and weapons; and designs, manufactures, sells, and services military aviation equipment.
- Russian Federal Nuclear Center – Zababakhin All-Russia Research Institute of Technical Physics designs, tests, and maintains nuclear weapons components.
- Skolkovo Foundation is a Russian state-managed technical innovation hub. In August 2024, Skolkovo Foundation switched its focus to projects related to military developments or that support military-industrial complex factories to increase their production scale.
- State Scientific Research Institute Of Mechanical Engineering Imeni V.V. Bakhireva develops warheads for guided missiles.
- State Corporation Rostec implements policy in the field of military and technical cooperation between Russia and foreign states, showcasing military and dual-purpose products in Russia and abroad, and facilitating foreign trade in military commodities.
- Tactical Missiles Corporation JSC produces high-speed airborne guided missiles and weapon systems for Russian naval ships.
- Tambovskii Porokhovoi Zavod manufactures explosives and products such as armor piercing shots.
- Vertolety Rossii AO designs, manufactures, services, and tests modern military helicopters.
SANCTIONS IMPLICATIONS
As a result of today’s action, all property and interests in property of the designated persons described above that are in the United States or in the possession or control of U.S. persons is/are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC or exempt, U.S. sanctions generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. Violations of U.S. sanctions may result in the imposition of civil or criminal penalties on U.S. and foreign persons. OFAC may impose civil penalties for sanctions violations on a strict liability basis. OFAC’s Economic Sanctions Enforcement Guidelines provide more information regarding OFAC’s enforcement of U.S. economic sanctions. In addition, financial institutions and other persons may risk exposure to sanctions for engaging in certain transactions or activities with designated or otherwise blocked persons.
In addition, foreign financial institutions that conduct or facilitate significant transactions or provide any service involving Russia’s military-industrial base, including any persons blocked pursuant to E.O. 14024, run the risk of being sanctioned by OFAC. For additional guidance, please see the updated OFAC advisory, “Updated Guidance for Foreign Financial Institutions on OFAC Sanctions Authorities Targeting Support to Russia’s Military-Industrial Base,” as well as OFAC Frequently Asked Questions (FAQs) 1146-1152, 1181-1182. Non-U.S. persons, including foreign financial institutions, could also face sanctions for knowingly facilitating significant transactions for or on behalf of individuals or entities blocked pursuant to E.O. 13662. See FAQs 541-546, 574 for additional information.
The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the Specially Designated Nationals and Blocked Persons (SDN) List, but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897 here. For detailed information on the process to submit a request for removal from an OFAC sanctions list, please click here.
Any persons included on the SDN List pursuant to E.O. 14024 or E.O. 13662 may be subject to additional export restrictions administered by the Department of Commerce, Bureau of Industry and Security (BIS).
For identifying information on the individual and entities sanctioned today, click here.