Reported by Monika Pronczuk and Valerie Hopkins

A powerful Russian businessman who has been under financial sanctions for nearly a decade has nevertheless used American and European banks to raise money for orphanages in a region that is at the heart of the Kremlin’s program of deporting Ukrainian children to Russia, records show.

The businessman, Konstantin Malofeyev, is among Russia’s most prominent conservative voices and a champion of the resettlement efforts, which prosecutors at The Hague have labeled a war crime. He calls for a return of the Russian Empire, and has repeatedly denied the existence of a Ukrainian identity.

Mr. Malofeyev has been cut off from most Western financial systems since 2014, when the Treasury Department and other international regulators accused him of financing Russian proxy forces inside Ukraine. He has denied that.

Mr. Malofeyev, though, has continued to use his charity, the St. Basil the Great Foundation, to raise money for orphanages in the Russian-occupied Donbas and Zaporizhzhia regions. In an interview, Mr. Malofeyev said he did not know whether those orphanages hosted Ukrainian children who had been forcibly relocated, but said the resettlement effort had been unfairly demonized.

The New York Times has seen records confirming a recent transfer of American dollars to the charity’s account in the Moscow branch of OTP Bank, a Hungarian bank.

The St. Basil the Great Foundation itself has not been blacklisted by American or European authorities. But under the Treasury Department’s “50 percent rule,” sanctions against Mr. Malofeyev would extend automatically to any entity in which he is a majority owner. The European Union has similar rules for organizations in which blacklisted people have “decisive influence.”

It is not clear whether Treasury Department rules would cover Mr. Malofeyev’s foundation. His ability to move money using Western banks, is an example of how sanctions — the West’s go-to punishment against Russia — rely largely on enforcement by banks, and can be a matter of interpretation.

Spokesmen for Bank of America and Deutsche Bank said the banks followed all sanctions rules. The Treasury Department declined to comment. European regulators did not comment, but said it was up to national governments to enforce the sanctions.

Read full report: https://www.nytimes.com/2023/08/27/world/europe/blacklisted-oligarch-western-banks-russia.html