US sanctions Russia’s Defense-Industrial Base, the Russian Duma and Its Members, and Sberbank CEO

F.P. Report

WASHINGTON: Today, in its latest action to impose severe costs on the Russian Federation for its illegal, unwarranted, and baseless war against Ukraine, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is designating key enablers of the invasion. This includes dozens of Russian defense companies, 328 members of the Russian State Duma, and the head of Russia’s largest financial institution. This action aligns with similar actions taken by the European Union, the United Kingdom, and Canada, and reflects continued unity to hold Putin accountable for his war of choice.

OFAC is designating multiple companies that are part of Russia’s defense-industrial base and that produce weapons that have been used in Russia’s assault against Ukraine’s people, infrastructure, and territory. Today’s designations build on those levied by Treasury in previous weeks against key components of the Government of the Russian Federation (GoR) that facilitate Putin’s hostile campaign against Ukraine. By cutting off 48 companies from western technological and financial resources, today’s action will have a deep and long-lasting effect on Russia’s defense-industrial base and its supply chain.

Russian Duma members supported the Kremlin’s efforts to violate Ukraine’s sovereignty and territorial integrity, including through treaties recognizing the self-proclaimed independence of areas of eastern Ukraine controlled by Russia’s proxies, known as the so-called Donetsk People’s Republic (DNR) and Luhansk People’s Republic (LNR). Today’s action follows OFAC’s March 11, 2022 designation of 12 members of the Russian State Duma who appealed to President Vladimir Putin to recognize the independence of the DNR and LNR. In addition to designating 328 members of the State Duma today, OFAC is also designating the State Duma itself as an entity. Today’s actions are being taken pursuant to Executive Order (E.O.) 14024, which authorizes sanctions against Russia for its harmful foreign activities, including violating core principles of international law, such as respect for the territorial integrity of other states. OFAC’s actions complement the ongoing efforts of our allies and partners to hold accountable all those responsible for furthering this unconscionable war of choice against Ukraine and its people.

Finally, OFAC is designating Herman Gref, the head of Sberbank and a close Putin associate.

“The United States, with our partners and allies, is striking at the heart of Russia’s ability to finance and carry out its warfare and atrocities against Ukraine,” said Secretary of the Treasury Janet L. Yellen. “The Russian State Duma continues to support Putin’s invasion, stifle the free flow of information, and infringe on the basic rights of the citizens of Russia. We call on those closest to Putin to cease and condemn this cold-blooded war.”

Treasury has also issued new guidance on transactions with the Central Bank of the Russian Federation involving gold.

TARGETING MAJOR ENTERPRISES OF RUSSIA’S DEFENSE-INDUSTRIAL BASE

Tactical Missiles Corporation JSC — often abbreviated and transliterated as KTRV — is a large, state-owned Russian defense conglomerate. KTRV produces materiel in support of Russia’s defense-industrial base, including airborne weapons and weapon systems for Russia’s navy. Among these products are various underwater weapons, as well as digital computers and radar systems used in submarine fleets. KTRV also produces hypersonic weapons and supplies anti-radar, anti-ship, and other multi-purpose missiles.

Russia is deploying KRTV products in its war against Ukraine. For example, KTRV manufactures the Kh-31, a high speed airborne guided-missile, which Russia has used as part of a wider offensive against its neighbor. KTRV is being designated today pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy and for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, the Government of the Russian Federation. It was designated previously by the United Kingdom.

In addition to the main holding company, KTRV, OFAC designated 28 entities that are part of KTRV’s structure. These entitiessign and manufacture diverse products in support of Russia’s defense-industrial base, such as ammunition, radar systems, missile systems, and other military equipment. All entities owned 50 percent or more, directly or indirectly, by KTRV are subject to blocking, even if not identified by OFAC.

OFAC also is designating the General Director of KTRV, Boris Viktorovich Obnosov (Obnosov), pursuant to E.O. 14024 for being or having been a leader, official, senior executive officer, or member of the board of directors of KTRV, a person whose property and interests in property are blocked under E.O. 14024. As KTRV’s General Director, Obnosov is the head of the enterprise and has represented its products.

The following entities today are being designated for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, KTRV:

Globus Ryazan Design Bureau JSC develops, produces, and implements automated systems for maintenance and control of weapons and military equipment.
Joint Stock Company Ural Design Bureau Detal develops and manufactures radar systems for aircraft.
Temp-Avia Arzamas Research and Production Association JSC develops control systems and guidance systems for manned and unmanned aircraft.
Vympel State Engineering Design Bureau JSC develops aircraft armament.
Joint Stock Company Salute produces armored parts for airplanes and helicopters.
AO GNPP Region produces weapons and ammunition.
Joint Stock Company Machine Building Design Bureau creates missile systems.
Raduga State Machine Building Design Bureau Joint Stock Company creates high-precision missiles.
Joint Stock Company Azovski Optiko Mechanichesky Zavod manufactures spectral and thermal imaging equipment for aerospace purposes.
Joint Stock Company Smolensk Aircraft Plant manufactures and repairs aircraft, weapons, and military equipment.
Soyuz Turaevo Engineering Design Bureau JSC manufactures liquid rocket engines.
JSC MBDB Iskra manufactures fabricated metal products.
Joint Stock Company 711 Aircraft Repair Plant repairs weapons and military equipment.
TRV Auto Limited Liability Company repairs motor vehicles.
Joint Stock Company Central Design Bureau of Automatics is engaged in activity related to electronic machinery.
State Scientific Research Institute of Mechanical Engineering Imeni V.V. Bakhireva researches and develops blasting technology.
Joint Stock Company Concern Granit-Electron designs, manufactures, and supplies radio electronic complexes and systems for Russia’s navy.

The following entities are being designated for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, Joint Stock Company Concern Granit-Electron:

JSC Rawenstvo designs and manufactures special equipment and navigational radar systems.
Petrovsky Electromechanical Zavod Molot produces navigational, measuring, electromedical, control, and aeronautical instruments.
Joint Stock Company Severniy Press produces instruments and appliances for measuring, testing, and navigation.
JSC Saratovski Radiopribornyi Zavod manufactures instruments for measuring electrical quantities.
Joint Stock Company Zavod Kulakova produces equipment and apparatus for automatic regulation and operation.
Aktsionernoe Obshchestvo Ravenstvo-Service maintains and repairs computers and radar systems used on submarines.
Joint Stock Company Concern Sea Underwater Weapon Gidropribor creates marine underwater weapons and is engaged in underwater engineering.

The following entities were designated for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, Joint Stock Company Concern Sea Underwater Weapon Gidropribor:

Joint Stock Company Research and Design Bureau Institute Sea Thermal Engineering is engaged in research and development in the field of natural science and engineering.
Joint Stock Company Dagdizel Plant manufactures electric motors, generators, weapons, and ammunition.
Aktsionernoe Obshchestvo Verkhneufaleiskii Zavod Uralelement is engaged in activity related to electronic machinery.
Aktsionernoe Obshchestvo Elektrotyaga is engaged in activity related to electronic machinery.

JSC NPO High Precision Systems (High Precision Systems) is a state-owned holding company that develops, produces, modernizes, and repairs weapons and military equipment. Its products are sold to military services worldwide. Among other products, High Precision Systems produces surface-to-air and anti-tank missile systems for the Russian Armed Forces.

Some of the missile systems produced by High Precision Systems were brought to the Ukraine-Russia border in advance of the Russian Federation’s further invasion of its neighbor. This includes the Pantsir air defense system and Iskander missiles, which are precision-guided munitions. The Russian Armed Forces have used weapons produced by High Precision Systems during Russia’s offensive against Ukraine and previously in Syria.

High Precision Systems is being designated today pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy. It was added to OFAC’s Sectoral Sanctions Identification List in 2015 for being owned 50 percent or more by Rostec, an entity subject to Directive 3 of E.O. 13662. High Precision Systems was designated previously by the European Union (EU).

NPK Tekhmash OAO (Tekhmash) is a state-owned holding company that produces and supplies ammunition for the Russian Armed Forces. Weapons and ammunition produced by Tekhmash are in service in the Russia Armed Forces and across the world. In addition, Tekhmash focuses on rocket and grenade launchers, ground and sea-based multiple launch rocket systems, and unguided bombs, among other defense products.

Tekhmash produces the Uragan multiple launch rocket system, which has been used in the shelling of population centers in Ukraine and has endangered those trying to escape the battlefield.

Tekhmash is being designated today pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy. It was added to OFAC’s Sectoral Sanctions Identification List in 2015 for being owned 50 percent or more by Rostec, an entity subject to Directive 3 of E.O. 13662.

Joint Stock Company Russian Helicopters (Russian Helicopters) is a state-owned holding company that oversees the design, manufacturing, testing, and maintenance of civilian and military helicopters. It accounts for more than 90 percent of the Russian helicopter market and about 10 percent of the world helicopter market. Helicopters produced by this company are used by Russia in its war against Ukraine. Russian Helicopters produces the Mi-24, a helicopter that, since its introduction in 1972, has been exported worldwide.

Russian Helicopters was designated today for operating or having operated in the defense and related materiel sector of the Russian Federation economy. It was added to OFAC’s Sectoral Sanctions Identification List in 2015 for being owned 50 percent or more by Rostec, an entity subject to Directive 3 of E.O. 13662. Russian Helicopters was designated previously by the EU.

In addition to designating Russian Helicopters, OFAC today is designating 15 entities pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Russian Helicopters. Those companies, listed below, carry out the work required to design, produce, and maintain these lethal weapons.

All entities owned 50 percent or more, directly or indirectly, by Russian Helicopters are subject to blocking, even if not identified by OFAC. The following Russian Helicopters subsidiaries are being designated today:

Joint Stock Company National Helicopter Center Mil and Kamov designs helicopters.
Joint Stock Company Reductor – Pm produces helicopter components.
Joint Stock Company Stupino Engineering Productive Enterprise produces helicopter components.
Joint Stock Company Kazan Helicopters produces helicopters.
Rostov Helicopter Production Complex produces helicopters.
Joint Stock Company Ulan-Ude Aviation Plant produces helicopters.
Joint Stock Company Kumertau Aviation Production Enterprise produces helicopters.
Joint Stock Company Helicopter Service Company conducts maintenance and after-sales service of Russian-made helicopters.
Joint Stock Company 150 Aircraft Repair Plant repairs helicopters.
Joint Stock Company 356 Aircraft Repair Plant repairs helicopters.
Joint-Stock Company 810 Aircraft Repair Plant repairs helicopters.
Limited Liability Company Center of Purchases and Logistics of the Helicopter Industry repairs motor vehicles.
International Helicopters Programs Limited Liability Company engages in management and support services for air transportation activities.
Joint Stock Company Progress Arsenyev Aviation Company is engaged in transport manufacturing.
Obshchestvo S Ogranichennoi Otvetsvennostyu Vr-Resurs is engaged as a special trade contractor and in real estate.

Joint Stock Company Kronshtadt (Kronshtadt) is a private Russian defense contractor that develops and manufactures equipment, software, and integrated solutions for the unmanned aviation and defense industries of Russia. Kronshtadt runs a full production cycle of drones, including in support of the Russian Ministry of Defense, such as the Orion drone. The Orion drone is an unmanned aerial vehicle used by Russia’s military in its campaign of aggression against Ukraine. The drones, originally made to gather intelligence, were repurposed and have been used to attack Ukraine’s positions by Russia’s Aerospace Forces. Russia’s use of Kronshtadt’s Orion drone in Ukraine follows its deployment in combat and reconnaissance missions in Syria. Kronshtadt is being designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy.

TARGETING RUSSIAN STATE DUMA AND ITS MEMBERS

OFAC is designating The State Duma of the Federal Assembly of the Russian Federation (the Duma) and 328 of its members for their complicity in Putin’s war. The Duma, which is the Russian Parliament’s lower chamber, passed a resolution asking Putin to recognize DNR and LNR as independent states, though they are part of Ukraine. Putin recognized the so-called independence of the self-proclaimed DNR and LNR as a ruse to justify ordering Russia’s troops into Ukraine, thereby initiating Putin’s war of choice against his neighbor. The Duma is being designated pursuant to E.O. 14024 for being a political subdivision, agency, or instrumentality of the GoR.

In addition, OFAC is designating 328 members of the Duma pursuant to E.O. 14024 for being or having been leaders, officials, senior executive officers, or members of the board of directors of the GoR.

Four Duma members that are being designated today were previously designated by OFAC. This group includes: Andrei Konstantinovich Lugovoi, who was previously designated by OFAC pursuant to Section 404(a) of the Sergei Magnitsky Rule of Law Accountability Act of 2012; Alexander Yuryevich Borodai, who was previously designated by OFAC pursuant to E.O. 13660 for threatening the peace, security, stability, sovereignty, or territorial integrity of Ukraine; and Vladislav Matusovich Reznik and Andrei Vladimirovich Skoch, who were previously designated pursuant to E.O. 13661 for being officials of the GoR.

KEY RUSSIAN FINANCIAL SECTOR OFFICIAL AND CLOSE PUTIN CONFIDANT

Herman Oskarovich Gref (Gref) is the Chief Executive Officer (CEO) of Public Joint Stock Company Sberbank of Russia (Sberbank) and Chairman of its Executive Board. On February 24, 2022, Treasury imposed correspondent and payable-through account restrictions on Sberbank, Russia’s largest financial institution. As CEO of Sberbank, Gref oversees not just Russia’s largest multi-billion dollar, multinational financial institution, but also a large number of companies owned by Sberbank in other industries.

Gref has been an advisor to Putin since the 1990s, during which time he occupied various and increasingly senior roles, including at the St. Petersburg Mayor’s office. Additionally, Gref served as Russia’s Minister of Economic Development and Trade from 2000 to 2007, a position to which he was appointed by Putin before becoming CEO of Sberbank. Gref is being designated today for being or having been a leader, official, senior executive officer, or member of the board of directors of the GoR.

NEW GUIDANCE ON GOLD TRANSACTIONS

Treasury is also issuing a new Frequently Asked Question (FAQ) to blunt the Central Bank’s ability to deploy international reserves, including gold, to prop up the Russian economy and fund Putin’s brutal war. This guidance makes clear that any transaction involving gold related to the Central Bank of the Russian Federation is covered by existing sanctions.

SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of the persons above 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 percent 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 otherwise exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

For identifying information on the individuals and entities sanctioned today, click here.

The following individuals are members of the Russian State Duma and are being designated pursuant to E.O. 14024 for being or having been leaders, officials, senior executive officers, or members of the board of directors of the GoR: