The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has announced a sweeping series of sanctions targeting key components of Russia’s financial sector as part of continued efforts to undermine its ability to fund its war against Ukraine.

The measures include designations of major financial institutions, officials, and entities linked to Russia’s alternative financial messaging system.

Major Targets: Gazprombank and Subsidiaries

OFAC designated Gazprombank Joint Stock Company, one of Russia’s largest remaining non-designated banks, alongside its six foreign subsidiaries. Gazprombank serves as a critical channel for the Kremlin, facilitating payments for military equipment, soldier salaries, and compensation for war casualties.

The sanctioned subsidiaries include:

-GPB International SA (Luxembourg)

-GPB Financial Services Hong Kong Limited (Hong Kong)

-GPB Financial Services Limited and GPB-DI Holdings Limited (Cyprus)

-Gazprombank (Switzerland) Ltd (Switzerland)

-GPB Africa and Middle East Pty Ltd (South Africa)

These entities are now blocked under Executive Order (E.O.) 14024, which targets Russian financial operations supporting the war effort. All entities owned 50% or more by Gazprombank or its designated subsidiaries are also subject to sanctions.

Sanctions on Financial Messaging System (SPFS)

OFAC issued a new alert regarding sanctions risks associated with Russia’s System for Transfer of Financial Messages (SPFS), a Kremlin-created alternative to the SWIFT system. SPFS has been used to evade sanctions and maintain international financial connectivity.

Foreign financial institutions joining SPFS face heightened scrutiny and potential designation under E.O. 14024. OFAC considers SPFS participation post-alert issuance a red flag for sanctions evasion.

Designations of Additional Russian Banks and Securities Registrars

More than 50 small-to-medium-sized Russian banks and over 40 Russian securities registrars have been sanctioned. These measures aim to curb Russia’s access to international financial systems, preventing the transfer of funds needed for technology and military equipment.

Targeting Central Bank Officials

Eleven additional officials from the Central Bank of the Russian Federation (CBR) have been sanctioned. The designations build on earlier measures against CBR Governor Elvira Nabiullina and Deputy Governor Olga Skorobogatova, emphasizing the role of Russia’s financial technocrats in sustaining the war.

Action Against Foreign Branches of Russian Banks

OFAC’s latest measures include sanctions on personnel linked to VTB Bank Public Joint Stock Company’s Shanghai branch (VTB Shanghai) and Sberbank’s New Delhi branch. Key individuals include:

-Andrei Anisimov – Deputy Managing Director, Sberbank New Delhi

-Elena Fedkina – Relationship Manager, VTB Shanghai

-Ilya Lishenko – Senior Relationship Manager, VTB Shanghai

-Roman Logov – Deputy General Manager, VTB Shanghai

These actions target staff facilitating operations in foreign branches, reinforcing OFAC’s scrutiny of Russian financial activity abroad.

Facilitating Compliance

Concurrent with these sanctions, OFAC issued and amended several general licenses to ensure continuity in authorized activities, including diplomatic banking, humanitarian transactions, and non-governmental organization operations.

Broader Impact

Since February 2022, OFAC has designated numerous entities and individuals tied to Russia’s financial infrastructure, aiming to erode its capacity to sustain military aggression against Ukraine. Treasury Secretary Janet L. Yellen emphasized the significance of these measures:

“Today’s sanctions... will further diminish and degrade Russia’s war machine. We will continue to take decisive steps against any financial channels Russia uses to support its illegal and unprovoked war.” (ILKHA)