On December 15, 2022, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced that it was adding Russian banks and financial services entities as well as additional Russian persons to the Specially Designated Nationals (SDN) List in order to further isolate Russia from global markets. For additional information on these entities and persons, see here.
Designation of PJSC Rosbank
Significantly, OFAC has designated major Russian bank, PJSC Rosbank. According to the Treasury Department, the Central Bank of the Russian Federation considers Rosbank to be an important credit institution to the Russian Federation. The United Kingdom and Canada designated Rosbank earlier this year under their respective sanctions programs.
Contemporaneous with Rosbank’s designation, OFAC has issued the following Russia-related General Licenses (GL):
- GL 58 – authorizing all transactions that are ordinarily incident and necessary to the wind down of transactions involving Rosbank, or any entity in which Rosbank owns, directly or indirectly, a 50 percent or greater interest, through 12:01 a.m. eastern daylight time, March 15, 2023.
- GL 59 – authorizing the wind down of certain securities and derivatives transactions involving Rosbank and U.S. persons divestment or transfer of securities of Rosbank to non-U.S. persons through 12:01 a.m. eastern daylight time, March 15, 2023.
- Amended GL 8E – adding Rosbank to this general license which authorizes certain blocked financial institutions to process energy-related transactions through 12:01 a.m. eastern daylight time, May 16, 2023.
These GLs are subject to certain conditions and must be reviewed carefully. OFAC has issued a FAQ to assist persons regarding the wind-down period for transactions involving Rosbank.
Designation of Specific VTB Subsidiaries
OFAC has also designated an additional 17 subsidiaries of VTB Bank, Russia’s second largest bank. VTB was placed on the SDN List in February 2022 and, thus, under OFAC’s 50% ownership and control rule all VTB related entities owned 50% or more, directly or indirectly, by the bank have been blocked even if not specifically designated by OFAC. Nevertheless, OFAC noted that by identifying these additional subsidiaries of VTB Bank it would help strengthen compliance with existing sanctions.
Designation of Russian Oligarch Vladimir Potanin and Additional Russian Officials
In addition, and in coordination with the State Department, OFAC has designated Vladimir Potanin, one of Russia’s richest persons. He formerly served as Deputy Prime Minister for Russia and recently acquired Rosbank. The State Department also designated five senior officers and directors of Russian Railways, a Russian state-owned entity, and 29 additional members of the government of the Russian Federation and certain family members. The additional government officials have been placed on the SDN List for reportedly overseeing and enforcing the conscription of citizens in response to Russia’s recent mobilization order for more soldiers. For detailed information on these individuals, see the State Department’s Fact Sheet.
As a result of these actions by the Departments of the Treasury and State, all property and interests in property of these newly designated Specially Designated Nationals (SDN) List entities that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50% or more by one or more blocked persons are also blocked. 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 are prohibited unless authorized by a general or specific license issued by OFAC, or exempt.