The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has sanctioned Russia’s Gazprombank and other Russian lenders to restrict the country’s access to the international financial system.
The actions include designating Gazprombank and its six foreign subsidiaries, more than 50 Russian banks with international connections, more than 40 Russian securities registrars, and 15 finance officials.
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OFAC has also revealed the sanctions risks associated with Russia’s SPFS, a system designed to circumvent sanctions.
Gazprombank, a key financial institution for Russia, and its subsidiaries in Luxembourg, Hong Kong, Cyprus, Switzerland, and South Africa have been targeted under Executive Order 14024 for operating in the Russian financial services sector.
These designations are part of a broader effort to prevent Russia from using the international financial system to finance its military operations in Ukraine.
Gazprombank is known to facilitate Russia’s military purchases and compensate Russian soldiers and their families.
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By GlobalDataIn addition to these designations, OFAC has issued two new general licences to allow US persons to wind down transactions with Gazprombank and divest from its debt or equity.
An amendment to Russia-related General License 53 ensures that diplomatic banking activities with Gazprombank remain uninterrupted.
OFAC continues to authorise transactions for agricultural commodities, medicine, medical devices, and certain non-governmental and international organisations.
OFAC’s alert emphasises the sanctions risk for foreign financial institutions joining SPFS, which Russia uses to maintain financial connectivity and evade sanctions.
The US Treasury Secretary Janet Yellen said: “Today’s sanctions targeting Russia’s largest remaining non-designated bank, as well as dozens of other financial institutions and officials in Russia, will further diminish and degrade Russia’s war machine.
“This sweeping action will make it harder for the Kremlin to evade U.S. sanctions and fund and equip its military.”
The designation of over 50 Russian banks aims to prevent Russia from obtaining the technology and equipment needed for its war efforts.
Foreign financial institutions are warned of the sanctions risks in maintaining correspondent relationships with these banks. OFAC has also targeted more than 40 Russian securities registrars and updated FAQ 1197 for guidance on securities involving these registrars.
Furthermore, OFAC has designated 11 additional officials from the Central Bank of the Russian Federation, including those aiding Russia’s financial connectivity and alternate financial pathways.
The action also includes designations of Russian staff at VTB Bank’s Shanghai branch and Sberbank’s New Delhi branch.
