Reported by the U.S. Department of the Treasury

The U.S. Department of the Treasury has intensified efforts to counter Russian sanctions evasion by targeting collaborations with Chinese actors to facilitate payments for sensitive goods. Additionally, a Kyrgyz Republic-based financial institution, Keremet Bank, is being sanctioned for working with Russian officials and a U.S.-designated bank in evasion schemes. These actions underscore the serious risks associated with aiding Russia’s military-industrial complex. Almost 100 entities previously designated under Executive Order (E.O.) 14024 have been redesignated under E.O. 13662, increasing the risk of secondary sanctions for foreign actors facilitating significant transactions on their behalf.

The U.S. Department of State has sanctioned over 150 entities and individuals, including companies in Russia’s defense industry and international entities, especially in China, that support sanctions evasion. China has been identified as a major supplier of dual-use items aiding Russia’s war effort. The sanctions aim to hinder the Kremlin’s ability to obtain resources critical for weapon production and revenue generation.

One prominent evasion strategy involves Regional Clearing Platforms (RCPs) in Russia and China, established to enable cross-border payments for sensitive goods. Several Russian financial institutions and RCPs, such as Herbarium Office Management LLC, have been implicated. Similarly, Chinese entities like Anhui Hongsheng International Trade Co Ltd and Xinjiang Financial Import And Export Co Ltd are involved in these schemes. These entities and individuals are designated under E.O. 14024 and E.O. 13662 for operating within the financial services sector of the Russian economy.

Keremet Bank has played a significant role in these evasion efforts, collaborating with Russian officials and Promsvyazbank, a Russian state defense bank. The Kyrgyz Ministry of Finance’s sale of Keremet Bank to a firm linked to a Russian oligarch further underscores its use as a sanctions evasion hub. This designation highlights how financial institutions in neighboring countries are being leveraged to bypass sanctions and finance Russian military activities.

As part of G7 commitments, redesignations under E.O. 13662 target entities across Russia’s financial services, energy, and defense sectors. These actions aim to limit Russia’s global financial connectivity, reduce revenues from energy exports, and disrupt access to critical defense inputs. Annexes detail the newly designated entities across these sectors, emphasizing the scope of the sanctions and their intended economic impact on Russia.

The sanctions also block property and interests of designated entities within the United States, enforce strict reporting requirements, and prohibit U.S. persons from engaging in transactions with them. Violations can result in severe civil or criminal penalties. The Treasury’s Office of Foreign Assets Control (OFAC) has provided updated guidance for foreign financial institutions, warning of secondary sanctions risks for facilitating significant transactions involving designated entities.

These measures reflect a broader strategy to undermine Russia’s military-industrial base and its capacity to sustain aggression in Ukraine. The U.S. government’s actions, in coordination with international allies, aim to isolate Russia economically while imposing significant costs on those aiding its war efforts.

Read full report: https://home.treasury.gov/news/press-releases/jy2785