Treasury Targets Financial and Operational Support Networks for Attempts to Evade U.S., International Sanctions
Treasury Takes New Step of Designating a Virtual Currency Mining Company
WASHINGTON – Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated entities and individuals involved in attempts to evade sanctions imposed by the United States and its international partners on Russia. OFAC designated Russian commercial bank Transkapitalbank and a global network of more than 40 individuals and entities led by U.S.-designated Russian oligarch Konstantin Malofeyev, including organizations whose primary mission is to facilitate sanctions evasion for Russian entities. OFAC also designated companies operating in Russia’s virtual currency mining industry, reportedly the third largest in the world. This is the first time Treasury has designated a virtual currency mining company.
“Treasury can and will target those who evade, attempt to evade, or aid the evasion of U.S. sanctions against Russia, as they are helping support Putin’s brutal war of choice,” said Under Secretary for Terrorism and Financial Intelligence Brian E. Nelson. “The United States will work to ensure that the sanctions we have imposed, in close coordination with our international partners, degrade the Kremlin’s ability to project power and fund its invasion.”
RUSSIAN BANK AT THE HEART OF SANCTIONS EVASION
Public Joint Stock Company Transkapitalbank (TKB) is a Russian privately owned commercial bank that has operated since 1992. TKB representatives have offered services to several banks in Asia, including within China, and the Middle East, and suggested options to evade international sanctions. For example, to avoid detection and sanctions-derived restrictions, TKB has offered its clients the ability to conduct transactions via its proprietary Internet-based banking system, known as TKB Business, an alternative communication channel to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network, including for the purpose of processing U.S. dollar payments for sanctioned clients. TKB has also sought to create a settlement hub in Asia without involving U.S. or European banks in the clearing process.
TKB is being designated pursuant to Executive Order (E.O.) 14024 for operating or having operated in the financial services sector of the Russian Federation economy. TKB subsidiary Joint Stock Company Investtradebank was also designated today 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, TKB. All entities owned 50 percent or more, directly or indirectly by TKB, are subject to blocking under E.O. 14024 even if not identified by OFAC. Concurrent with this action, OFAC issued two general licenses (GL) related to TKB, including a wind down GL and a GL to continue for six months certain transactions that are destined for or originating from Afghanistan, in support of efforts to address the humanitarian crisis.
DISRUPTING WORLDWIDE SANCTIONS EVASION AND MALIGN INFLUENCE
Today, OFAC also targeted a worldwide sanctions evasion and malign influence network led by Russian oligarch Konstantin Malofeyev (Malofeyev). OFAC first designated Malofeyev in 2014 pursuant to E.O. 13660 for being responsible for or complicit in, or for having engaged in, actions or polices that threaten the peace, security, stability, sovereignty, or territorial integrity of Ukraine; and for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, the so-called Donetsk People’s Republic. Malofeyev has also been sanctioned by Australia, Canada, the European Union (EU), Japan, New Zealand, and the United Kingdom (UK).
At the time of his 2014 designation, OFAC noted that Malofeyev funded separatist activities in Eastern Ukraine and was one of the main sources of financing for Russians promoting separatism in Crimea. In recent years, Malofeyev, covertly or through intermediaries, supported pro-Russian activities that undermine democracy, interfere in elections, and degrade security and stability in a host of countries. Malofeyev served as an intermediary between the Government of the Russian Federation (GoR) and pro-Russia politicians abroad, facilitated funding for or directly financed pro-Russia politicians and opinion makers, and worked to create institutions that could advance Russia’s interests in the European Union from within.
Today, OFAC designated Malofeyev pursuant to E.O. 14024 for having acted or purported to act for or on behalf of, directly or indirectly, the GoR.
Additionally, on April 6, 2022, the U.S. Department of Justice charged Malofeyev with conspiracy to violate U.S. sanctions and violating U.S. sanctions in connection with his hiring of a U.S. citizen to work for him in operating television networks in Russia and Greece and attempting to acquire a television network in Bulgaria. Malofeyev also allegedly conspired to illegally transfer a $10 million investment he made in a U.S. bank to a business associate in Greece.
All entities owned 50 percent or more, directly or indirectly, by Malofeyev are subject to blocking under E.O. 14024, even if not identified by OFAC.
Malofeyev’s Global Sanctions Evasion Network
Subject to sanctions by the U.S. and a number of other jurisdictions, Malofeyev has needed to rely on a vast global network of cut-outs and proxies to attempt to evade sanctions and conduct malign influence activities. Today, OFAC is taking action against that support network.
The Autonomous Noncommercial Organization for the Study and Development of International Cooperation in the Economic Sphere International Agency of Sovereign Development (IASD), registered in Moscow, markets itself as a financial advisory structure that offers services, like debt restructuring, to African governments. In practice, IASD, in close coordination with the GoR, pursues deals around the world to facilitate business opportunities for sanctioned Russian companies and to enrich Malofeyev himself.
IASD was designated 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, Malofeyev.
IASD is supported by an extensive staff of Russian nationals, including:
- Mikhail Ilich Yakushev (Yakushev), IASD’s chief of staff, served as an intermediary between GoR officials and the IASD and worked to advance IASD interests in Africa and Asia.
- Alexey Anatolyevich Subbotin (Subbotin) traveled with Malofeyev on IASD business to Africa and conducted IASD business in Southeast Asia, in addition to participating in the Russia-Africa Forum, in which IASD was a general partner.
- Malofeyev relied on Moldovan and Russian national Aleksandr Okulov (Okulov), a member of IASD’s supervisory board, who traveled to Africa as part of IASD delegations with Malofeyev. Okulov is associated with several companies located in the Middle East.
- Artem Samoylov (Samoylov), an IASD legal advisor, worked on IASD’s behalf in Asia.
- Alexey Aleksandrovich Kupriyanov (Kupriyanov) traveled with Malofeyev on IASD business to Asia, and Nikita Melikov (Melikov) traveled to Africa and Asia on IASD business.
OFAC designated Yakushev, Subbotin, Okulov, Samoylov, Kupriyanov, and Melikov pursuant to E.O. 14024 for having acted or purported to act for or on behalf of, directly or indirectly, IASD.
Four companies located in Chisinau, Moldova, were also targeted today: financial services company Agent de Asigurare Lider Asig Societate cu Raspundere Limitata (Lider Asig); financial company Organizatia de Creditare Nebancara Lider Leasing SRL (Lider Leasing); OKAF Trading Societatea cu Raspundere Limitata (OKAF Trading), which operates in a number of fields, including the provision of civil and non-offensive military equipment; and property services company Societatea cu Raspundere Limitata Project Invest Company (Project Invest).
Lider Asig, Lider Leasing, OKAF Trading, and Project Invest were designated 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, Okulov.
IASD’s business is not just limited to Africa and Asia. A Singapore-based management consultancy, MGI PTE Ltd, facilitated IASD’s activities in Cuba. MGI PTE Ltd was designated 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, IASD.
Joint Stock Company Marshal.Global (MarGlo) is a Moscow-based financial company linked to a number of Malofeyev associates. MarGlo’s mission is to provide a wide range of financial services for or on behalf of sanctioned Russian companies that would allow those firms to evade sanctions.
MarGlo was designated pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy, and also for being responsible for or complicit in, or for having directly or indirectly engaged or attempted to engage in, deceptive or structured transactions or dealings to circumvent any United States sanctions, including through the use of digital currencies or assets or the use of physical assets, for or on behalf of, or for the benefit of, directly or indirectly, the GoR.
Russian national Mikhail Aleksandrovich Leshchenko, MarGlo’s general director, was designated pursuant to E.O. 14024 for being or having been a leader, official, senior executive officer, or member of the board of directors of MarGlo.
Malofeyev’s Malign Influence Ecosystem
Russia-based company Tsargrad OOO (Tsargrad) is a cornerstone of Malofeyev’s broad malign influence network. Tsargrad spreads pro-Kremlin propaganda and disinformation that is amplified by the GoR. Tsargrad served as an intermediary organization between pro-Russian European politicians and GoR officials, and recently pledged to donate more than $10 million to support Russia’s unprovoked war against Ukraine.
Tsargrad was designated 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, Malofeyev.
Russian national Pavel Vladimirovich Kuzmin (Kuzmin) provided legal services to Malofeyev in multiple capacities, including as IASD’s legal chief and the director of legal services at Tsargrad. Kuzmin was designated pursuant to E.O. 14024 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Malofeyev, and also for being or having been a leader, official, senior executive officer, or member of the board of directors of Tsargrad.
Analiticheski Tsentr Katekhon OOO (Katekhon), located in Moscow, presents itself as a think tank but is in fact a proliferator of anti-Western and pro-Kremlin disinformation and propaganda that clearly targets fringe audiences in the West. Katekhon actively disseminates disinformation meant to undermine Western solidarity as well as a variety of conspiracy theories, some of which are anti-Catholic or anti-Semitic. In recent months Katekhon has published extreme anti-Ukraine content, including articles that recommend different ways to divide Ukraine’s territory, suggest Russian military control is the only way to save Ukraine, and falsely claim the Government of Ukraine (GoU) is developing biological weapons and has perpetrated a systemic genocide against residents of the Donbas region.
Katekhon was designated 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, Tsargrad.
Yakushev, the IASD chief of staff, is also Katekhon’s general director. He was additionally designated pursuant to E.O. 14024 for being or having been a leader, official, senior executive officer, or member of the board of directors of Katekhon.
The anti-Ukraine language endorsed by Tsargrad and Katekhon is typical for Malofeyev, who recently called the GoU “demoniac clowns” and advocated for Russians to rally around President Vladimir Putin in support of Russia’s further invasion of Ukraine. That rhetoric is also promoted and propagated by the All-Russian Public Organization Society for the Promotion of Russian Historical Development Tsargrad (Tsargrad Society), a Russia-registered organization which has been accused of involvement in espionage on behalf of Russia. Tsargrad Society, formerly known as the Double-Headed Eagle Society, advocates for Russia to return to a monarchical system of government and counts among its core principles revanchist aims like the “reunification of the Russian people” and “returning the Russian Empire to its historical borders”—to include, in Tsargrad Society’s opinion, Ukraine, Belarus, the Baltic States, Moldova, Central Asia, and the Caucasus.
OFAC designated the Tsargrad Society 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, Malofeyev.
A number of other mostly Russia-based companies, many of which are registered at the same addresses, are part of Malofeyev’s Tsargrad network:
- Teshilovo OOO and Spetsinvestservis OOO (Spetsinvestservis) were designated 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, Malofeyev.
- Imenie Tsargrad OOO (Imenie), Tsargrad-Media OOO (Tsargrad-Media), and Russia-occupied Crimea-based Kurort Livadiya OOO were designated 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, Tsargrad.
- Tsargrad Park OOO (Tsargrad Park), Kurort Tsargrad Spas-Teshilovo OOO, Zareche-Oka OOO, Proizvodstvenno-Stroitelnaya Kompaniya SNM, Imperiya 19-31 OOO (Imperiya), and Ekoferma Zareche OOO were designated 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, Imenie.
- Tsargrad-Kultura OOO was designated 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, Tsargrad-Media.
- Kontur OOO and Tureya OOO were designated 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, Imperiya.
The above firms are led by Russian nationals, including Spetsinvestervis general director Yevgeniy Yuryevich Gadetskiy (Gadetskiy), MarGlo-affiliated Imperiya general director Roman Viktorovich Nechiporuk (Nechiporuk), and Tsargrad-Media and Tsargrad Park general director Natalya Aleksandrovna Tyurina (Tyurina).
Gadetskiy was designated pursuant to E.O. 14024 for being or having been a leader, official, senior executive officer, or member of the board of directors of Spetsinvestservis. Nechiporuk was designated pursuant to E.O. 14024 for being or having been a leader, official, senior executive officer, or member of the board of directors of Imperiya. Tyurina was designated pursuant to E.O. 14024 for being or having been a leader, official, senior executive officer, or member of the board of directors of Tsargrad-Media and Tsargrad Park.
Malofevev’s Family
Russian national Kirill Konstantinovich Malofeyev (Kirill) is Malofeyev’s son and owns several Russia-based companies, including Limited Liability Company Vladeks Kholding (Vladeks Kholding), Limited Liability Company Vladeks (Vladeks), and Limited Liability Company Russian Digital Solutions (Rus.Digital). Malofeyev was involved in the creation of Vladeks, which was intended to be a cryptocurrency exchange project.
Kirill was designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy. Vladeks Kholding, Vladeks, and Rus.Digital were designated 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, Kirill.
Russian national Ilya Anatolyevich Markov (Markov) is the general director of Vladeks Kholding. Markov was designated pursuant to E.O. 14024 for being or having been a leader, official, senior executive officer, or member of the board of directors of Vladeks Kholding.
TARGETING RUSSIA’S VIRTUAL CURRENCY MINING INDUSTRY
Treasury is also taking action against companies in Russia’s virtual currency mining industry. By operating vast server farms that sell virtual currency mining capacity internationally, these companies help Russia monetize its natural resources. Russia has a comparative advantage in crypto mining due to energy resources and a cold climate. However, mining companies rely on imported computer equipment and fiat payments, which makes them vulnerable to sanctions.
The United States is committed to ensuring that no asset, no matter how complex, becomes a mechanism for the Putin regime to offset the impact of sanctions.
Virtual currency mining company Bitriver was founded in Russia in 2017 and currently operates out of three offices across Russia. In 2021, Bitriver shifted legal ownership of its assets to a Switzerland-based holding company. OFAC designated this holding company, Bitriver AG, pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.
OFAC additionally designated 10 Russia-based subsidiaries of Bitriver AG 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, Bitriver AG: OOO Management Company Bitriver, OOO Bitriver Rus, OOO Everest Grup, OOO Siberskie Mineraly, OOO Tuvaasbest, OOO Torgovy Dom Asbest, OOO Bitriver-B, OOO Bitriver-K, OOO Bitriver-North, and OOO Bitriver-Turma.
STATE DEPARTMENT VISA ACTIONS
These sanctions are coordinated with further action taken today by the Department of State. The United States is imposing visa restrictions on 635 Russian nationals who are involved in suppressing dissent in Russia and abroad, who have been involved in activities that threaten the territorial integrity of Ukraine, and who have been involved in human rights abuses in prison facilities and places of unofficial detention in Russia-controlled areas of the Donbas region of Ukraine. Further, the Department of State is imposing visa restrictions on three Russian Federation officials for involvement in gross violations of human rights, and on 17 individuals responsible for undermining democracy in Belarus. For further information on these actions, please see the official State Department statement.
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 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.
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