US Publishes New Russian Financial Sanctions, Issues Warning to Foreign Banks

The Treasury Department said it designated Gazprombank Joint Stock Company and six of its foreign subsidiaries for serving as a “conduit” for Russia to buy items for its military. Russia also uses the bank, which is already subject to sanctions by Australia, Canada, New Zealand, and the U.K., to pay its soldiers and the families of soldiers killed in its war against Ukraine.

The U.S. also designated the bank’s subsidiaries: Luxembourg-based bank GPB International SA, Hong Kong-based GPB Financial Services Hong Kong Limited, Cyprus-based GPB Financial Services Limited and GPB-DI Holdings Limited, Switzerland-based Gazprombank Ltd, and South Africa-based GPB Africa and Middle East Pty Ltd.

Along with the new designations, the Office of Foreign Assets Control issued a new alert to highlight the sanctions risks foreign banks may face if they join Russia’s System for Transfer of Financial Messages, known as SPFS, which helps financial institutions “engaged in Russia’s financial system” communicate about payments.

OFAC said Russia uses SPFS, which is marketed as an alternative to the international SWIFT (Society for Worldwide Interbank Financial Telecommunication) network, to “maintain international financial connectivity, evade sanctions, and fund its war effort,” and is considered part of the Russian economy.

“This means that any foreign financial institution that joins or has already joined SPFS may be designated,” the agency said. “OFAC views joining SPFS after publication of this alert as a red flag and is prepared to more aggressively target foreign financial institutions that take such action.”

Treasury also sanctioned dozens of other Russian banks that it said allow Moscow to pay for sensitive technology and equipment, and it designated various securities registrars that it uses to evade Western sanctions on the country’s National Settlement Depository (NSD). Moscow recently issued a decree that requires securities held at the depository to be transferred to local registrars in a bid to avoid financial restrictions on the depository, but the U.S. and the U.K. have stressed that those transfers don’t necessarily mean those securities are unblocked (see 2410110003 and 2411130032).

An updated OFAC FAQ says “any securities in the possession or control of U.S. persons that are held at NSD should be treated as blocked, and dividends or other income received via NSD should be treated as blocked.”

OFAC also sanctioned officials working for the Central Bank of Russia along with staff members at the sanctioned VTB Bank’s branch in Shanghai, and the sanctioned Sberbank’s branch in New Delhi. They include Andrei Anisimov in New Delhi and Elena Fedkina, Ilya Lishenko and Roman Logov in Shanghai.

The agency said it “continues to investigate Russian and third-country nationals working at foreign branches, representative offices, and subsidiaries of Russian banks for designation.”

OFAC also published several general licenses:

• New General License 113 authorizes certain wind-down transactions with a range of the newly sanctioned entities, including Gazprombank, and any entities they own by 50% or more. Those transactions are authorized through 12:01 a.m. EST on Dec. 20.
• New General License 114 authorizes certain transactions related to the “divestment or transfer, or the facilitation of the divestment or transfer, of debt or equity issued or guaranteed” by Gazprombank, Interstate Bank or any entity they own by 50% or more. Those transactions are authorized through 12:01 a.m. EST on Dec. 20.
• Updated General License 53A, which replaces 53 (see 2211100016), will “ensure that diplomatic banking activities involving Gazprombank are not disrupted,” Treasury said. The license authorizes certain transactions “necessary to the compensation of employees of Russian missions, including payment of salaries and reimbursement of expenses,” involving Gazprombank. OFAC also issued a new FAQ to provide guidance on its authorizations for Russia-related diplomatic or consular missions.
• Updated General License 55C, which replaces 55B (see 2406260042), adds Gazprombank to the scope of certain transactions that are authorized related to the Sakhalin-2 project, an oil and gas development business based in Russia. Those transactions are authorized through 12:01 a.m. EDT on June 28.

A new FAQ stresses that the new banking sanctions won’t “negatively impact” personal, non-commercial remittances to or from Russia.

“There remain a number of non-sanctioned Russian banks, subsidiaries of foreign banks, and money service businesses that can continue to process legitimate transactions, including non-commercial, personal remittances,” OFAC said. It also said U.S. and foreign banks can continue processing transactions related to those remittances as long as they don’t involve sanctioned parties.