This month has seen a renewed focus on Russia, with the EU announcing its tenth package of measures focussing on military technology and sanctions circumvention to coincide with the one-year anniversary of the conflict. There also has been a conspicuous reemphasis by the major sanctioning bodies on coordination, with the G7 establishing an “enforcement coordination mechanism” to oversee the joint implementation of future measures. The new EU package came at the same time as a raft of new measures and designations jointly announced by the UK and US also designed to coincide with the war’s anniversary.
There has also been continued development around enforcement and prosecutions tied to sanctions evasion, notably in proceedings before the New York Southern District courts, in which two high-profile civil forfeiture actions targeting the proceeds of sanctions evasion were heard this month. A Singapore-flagged vessel carrying oil which originated from a Russia-flagged tanker was also denied access to a Spanish port.
In non-Russia related news, the US and UK have jointly announced further measures targeting public officials in Bulgaria under their respective Magnitsky / Anti-corruption programs, meanwhile the EU has added additional names to its Iran and Myanmar lists.
Russia
- The G7 has established a so-called ‘Enforcement Coordination Mechanism’ for coordinating the enforcement of Russia sanctions. The mechanism will be used for information sharing and follows the coordinated enaction on 5th February by G7 countries, alongside the EU and Australia, of new measures targeting the maritime transport of Russian refined oil products. The G7, EU and Australia all currently operate an embargo on the provision of services related to the transit or trade of such projects to third countries should the value of the cargo exceed $100 and $45 price cap exceptions.
- Later in the month, there was also a coordinated announcement of a raft of new measures by the EU, UK and OFAC to mark the one-year anniversary of the conflict. The EU’s tenth package was focussed on technological goods, introducing an export ban on electronics, specialised vehicles, machine parts, antennas, cranes and 47 electronic components used in Russian weapons systems. The package also included measures to clamp down on sanctions circumvention via a new reporting obligation on Russian Central Bank assets held in the EU. Alongside the package, nearly 100 new designations were announced targeting additional Russian defence sector civilian contractors, government officials, judges and media organisations.
- On the same day, OFSI announced an export ban on “every item” Russia has been found using in Ukraine, including radio equipment and electronic components, as well as over 140 other goods, including iron and steel products processed in third countries. Accompanying UK designations targeted executives at major Russian state-owned entities, notably nuclear power company Rosatom, defence companies Rostec and Almaz-antey, as well as Gazprom and Aeroflot.
- Also as part of the coordinated effort, OFAC issued a determination identifying the metal and mining sectors as being harmful foreign activities of the Russian Federation, creating the legal basis for the designation of anyone later determined to have operated in the sector. The new rule was accompanied by the designations of 21 Russian finance professionals and 82 entities, notably including the Central Bank of Moscow.
- The coordinated G7 measures followed a series of new designations announced earlier in the month. On 8th February, OFSI designated six entities it deemed to be to providing military equipment to Russia’s war effort and five Russian nationals connected to Putin’s luxury residences. The EU also used the measures set out in its ninth package to designate four more Russian TV channels; their European broadcasting licenses were also suspended. The UK and US also jointly designated seven people believed to be part of the Russian cybercrime gang Trickbot. Trickbot is alleged to have conducted a variety of illegal cyber activities, including ransomware attacks against hospitals, and members of the group are said to be associated with the Russian Intelligence Services.
- On 1st February OFAC designated ten people and 12 entities comprising an alleged sanctions evasion network supporting Russia’s military-industrial complex, led by Igor Zimenkov, an arms dealer with Russian, Israeli and Cypriot citizenship.
Enforcement Action
- On 7th February an indictment was unsealed in the Southern District of New York charging Russian national Vladimir Voronchenko with having been party to a scheme to maintain and sell US properties owned by US-sanctioned oligarch Viktor Vekselberg. According to the indictment, between June 2018 and March 2022 a Bahamian bank account held in the name of a company controlled by Voronchenko and a Russian bank account held in the name of a member of his family, transferred $4 million to an interest on lawyers’ trust account used to make payments for the maintenance and service of Vekselberg’s US properties. Two weeks later, the US Attorney General for the Southern District of New York also filed a civil forfeiture complaint targeting the US properties, reportedly worth $75 million, alleging them to be the proceeds of sanctions violations.
- Separately, the Southern District of New York has granted a Department of Justice forfeiture request for nearly $5.4 million owned by Russian businessman Konstantin Malofeyev, who was designated by OFAC in December 2014. In March 2014 Malofeyev made a $10 million investment in a Texas-based bank; it is alleged in June 2015 he signed a Sale and Purchase Agreement transferring his stake to a Greek business associate, without an OFAC license and in violation of US sanctions. The agreement was allegedly fraudulently backdated to appear as though the transfer had been made prior to Malofeyev’s designation. The forfeiture request was made against the proceeds of the later sale of the stake.
- Spain’s Ministry of Transport has announced that the Singapore-flagged Maersk Magellan was refused entry to the Port of Tarragona this month because it carried diesel that originated from another vessel, the Nobel, which had sailed under a Russian flag until July 2022. EU sanctions prohibit access to EU ports by Russia-flagged vessels and vessels that changed their Russian flag or registration to that of any other state after 24th February 2022.
- On 9th February, German press reports noted that the Cologne public prosecutor’s office had ordered searches of the premises of three unnamed companies and three private homes as part of an investigation into possible violations of EU sanctions. Reports state the investigation concerns the supply of electronic components to Russia and that records, documents and IT equipment were seized.
- On 7th February, Chris Bryant MP presented the Seizure of Russian State Assets and Support for Ukraine Bill to the House of Commons as a private members bill. The proposed statute would require the government to present proposals to seize frozen Russian state assets and allocate them to Ukraine. The government opposed the bill and it appears unlikely to therefore progress, although there will be a second reading on 3rd March 2023.
- On 15th February the Swiss government announced that a working group led by the Federal Office of Justice has concluded that the confiscation of private assets frozen under Russia sanctions for use in the reconstruction of Ukraine is inconsistent with Swiss law. The government said that it will follow international discussions of the possibility of confiscating Russian state assets and tougher criminal penalties for violating sanctions.
Other Designations
- Eight senior officials said to be responsible for the repression of Iranian citizens have been designated under the UK’s Iran Human Rights program; the names include military and political leaders as well as members of the judiciary in Baluchistan and Sistan.
- On 10th February the UK and US announced coordinated sanctions on several Bulgarian nationals and entities alleged to have been involved in offences including abuse of public institution funds under their respective anti-corruption / Magnitsky programs.
- The EU’s non-Russia designations this month targeted Myanmar, where nine people and seven entities tied to the recent coup were designated, and Iran, where the law enforcement Forces of the Islamic Republic of Iran Cooperation Foundation and the Police Science and Social Studies institute were designated alongside 32 individuals.
- The EU, UK and OFAC all issued new General Licenses this month to facilitate the provision of earthquake relief aid in Syria and Turkey where to do so was previously prohibited by each respective regime’s Syria sanctions program.
