U.S. Treasury and OFAC Launch Extensive Sanctions Targeting Russia's Industrial Supply Chain

In a resolute move aimed at further crippling Russia's capacity to wage war on Ukraine, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) has announced a sweeping set of sanctions targeting Russian elites, the country's industrial base, financial institutions, and technology suppliers. This substantial escalation of sanctions comes as part of the United States' broader strategy to leverage economic restrictions against Russia's ongoing aggression in Ukraine.

A press release issued by the Treasury outlines that these sanctions are intended to focus on individuals and entities who have either benefited from or actively supported Russia's military actions against Ukraine. This is yet another robust effort by the U.S. to curtail Russia's military supply chains and restrict the flow of equipment, technology, and services to support the ongoing conflict.

Secretary of the Treasury, Janet L. Yellen, affirmed the United States' unwavering commitment to undermining Russia's war efforts, stating, "With today’s sanctions, the United States is continuing our relentless work to target Russia’s military supply chains and deprive Putin of the equipment, technology, and services he needs to wage his barbaric war on Ukraine."

Targeting Russian Oligarchs and Defense Sector Ties

The extensive sanctions list includes high-profile Russian individuals and entities closely linked to the country's defense sector and political elite. Among those targeted are:

• Andrei Removich Bokarev, a Russian oligarch, former President of Transmash, and board member of various rail-related manufacturing firms. He is also associated with the Russian Association of Employers and the Russian Union of Industrialists and Entrepreneurs (RSPP). Bokarev has personal connections to Russian Defense Minister Sergei Shoigu and other senior Kremlin officials.
• Iskandar Kakhramonovich Makhmudov, another Russian tycoon and the founder of U.S.-designated Joint Stock Company Ural Mining and Metallurgical Company (UMMC). He owns or serves on the board of several Russia-based metals and mining companies and owns various financial services entities. Makhmudov also has links to Russian organized crime.

Aerospace and Military Industry Entities

The sanctions extend to Russian companies involved in aerospace and military industries. Among those affected are:

• Open Joint Stock Company Aero Engine Scientific and Technical Complex Soyuz (Soyuz), engaged in Russia's military aerospace industry, including engine production for cruise missiles and military transport aircraft.
• Open Joint Stock Company Balashikhinskiy Liteyno Mekhanicheskiy Zavod (Balashikha), a firm involved in the manufacture, development, production, testing, and repair of aviation equipment, with Russia's Ministry of Defense as a significant consumer of its products.
• Russian national Mkrtich Okroevich Okroyan, Chief Designer at Soyuz and a board member of Balashikha, along with his family members.
• Aleksei Yurievich Krivoruchko, a Russian Deputy Defense Minister, former CEO of U.S.-designated Joint Stock Company Concern Kalashnikov, and various other global sanctions.

Restricting Supply Chains

The United States is also cracking down on Russian efforts to acquire high-tech and dual-use goods for its military. Sanctions have been imposed on various Russia-based entities involved in shipping foreign electronics to Russia-based end-users, including Finland-based logistics firms Siberica Oy (Siberica) and Luminor Oy (Luminor). The sanctions extend to Russian entities importing directly from Luminor.

Russia's dependence on third-country entities to acquire dual-use goods is also targeted. Two entities based in Türkiye, Margiana Insaat Dis Ticaret Limited Sirketi (Margiana) and Demirci Bilisim Ticaret Sanayi Limited Sirketi (Demirci), which have supplied Russian entities, have also been subjected to sanctions.

Efforts to limit Russia's access to technology needed for its military are reinforced by sanctions on several Russia-based entities involved in the electronics and technology sectors. This includes companies operating in semiconductors, digital optical systems, IT services, and more.

The sanctions also extend to Russia's manufacturing and construction sectors, aligning with commitments made by G7 leaders in May 2023. Leading Russian firms in these sectors have been designated for sanctions.

Curbing Russia's Access to the International Financial System

To further restrict Russia's financial capabilities, OFAC has designated two more Russia-based banks and several wealth management, consulting, auditing, and investment firms. These sanctions aim to limit Russia's access to the international financial system.

These far-reaching sanctions entail the blocking of all property and interests in property in the United States owned by the sanctioned individuals and entities. Additionally, any transactions involving property or interests in property of these designated persons within the United States are prohibited, except when authorized by OFAC.

This move represents a significant escalation of the United States' efforts to disrupt Russia's military supply chains and exert economic pressure on the country to cease hostilities in Ukraine. The Treasury's press release indicates that the United States will continue to employ economic sanctions as a tool to achieve its foreign policy goals and support Ukraine.