U.S. identifies Bank of Moscow and Gazprombank units subject to sectoral sanctions
The U.S. Treasury Department on Thursday stepped up financial sanctions aimed at punishing Russia and producing a diplomatic resolution to the conflict in Ukraine.
Treasury's Office of Foreign Assets Control (OFAC) blacklisted 37 additional individuals and entities and took action to support its so-called sectoral sanctions program by identifying subsidiaries owned 50 percent or more by previously sanctioned Russian companies. The latter may be helpful to U.S. banks that have had difficulty identifying such entities.
"Russia continues to provoke instability in eastern Ukraine despite its Minsk commitments," John E. Smith, acting director of OFAC, said in the Treasury announcement. "Treasury stands with our partners in condemning Russia’s violation of international law, and we will continue to sanction those who threaten Ukraine’s peace, security, and sovereignty."
OFAC added that its action "also underscores the U.S. government's opposition to Russia's occupation of Crimea and our firm refusal to recognize its attempted annexation of the peninsula."
The new OFAC sanctions come in the wake of recent European Union sectoral sanctions. The timing demonstrates "continued international unity in opposing Russia’s actions in Ukraine," OFAC said.
The sectoral sanctions were announced by President Barack Obama in July 2014 as the United States stepped up pressure on Russia over its support for separatist rebels in war-torn Ukraine. The measure bars U.S. companies from engaging in any "new debt of longer than 90 days maturity or new equity" with targeted firms, an effort intended to punish Russia by increasing its financing costs.
OFAC on Thursday identified nearly 100 subsidiaries of the previously designated Bank of Moscow and Gazprombank that are 50 percent or more owned by their respective parent entities and therefore subject to the same sanctions under the sectoral regime.
U.S. financial institutions have struggled to comply with the highly complex sectoral sanctions regime which requires exceptional due diligence. Bankers have cited identification of entities 50 percent or more owned by sanctioned entities as a significant challenge, making OFAC's list a useful document that must be acted upon immediately.
"These identifications will help the public more effectively comply with the sanctions on these companies," OFAC said.
Detailed information on the newly blacklisted people and entities and the Bank of Moscow and Gazprombank subsidiaries can be found here:
Treasury Sanctions Individuals and Entities for Sanctions Evasion and Activities Related to the Conflict in Ukraine