Russia

The Administration issued the largest designation package in months, with nearly 170 designations from Treasury and State targeting Russia’s defense industrial base, financial institutions, military suppliers, and others. Democratic People’s Republic of Korea (DPRK or North Korea) leader Kim Jong Un’s visit to Russia dominated headlines during the reporting period, and the sanctions designations may have been a response to that meeting. It was reported that Russia is seeking a replenishment of conventional munitions from North Korea, and the Biden Administration has warned North Korea that it could face additional sanctions if these arms deliveries were to take place, as it would violate not only U.S. but also UN sanctions against North Korea. In August, the U.S. designated “three entities tied to a sanctions evasion network attempting to support arms deals between Russia and the Democratic People’s Republic of Korea.” Another area to watch is the UN Security Council, where during the reporting period Russia blocked the extension of Mali-related sanctions, and whether Russia plans any additional actions with respect to UN sanctions against the DPRK. 

Russia’s move to a digital ruble (see August Sanctions Watch) will continue to be an issue, and Binance’s reported promotion of its platform in Russia despite an ongoing Department of Justice investigation into Binance for alleged violation of U.S. sanctions with its services in Russia, may refocus attention on this issue. Two areas of potential activity relevant to new sanctions or sanctions enforcement actions center around the art market, and the status of Ukrainian children in Russia. Last month, the Ukrainian government launched an effort to “identify art, collectibles, and luxury goods currently owned by sanctioned persons to alert art market participants if a sanctioned person attempts to transact in the art market.” In July, Canada sanctioned Mikhail Piotrovsky, the Director of the State Hermitage Museum in Russia for supporting Russia’s war in Ukraine. Given the direction both in Ukraine and with respect to Canada, and the Administration’s focus on the art market to evade sanctions, the Administration may increase the number of designations in this particular area. Another area that may see additional expansions with respect to sanctions designations by the Administration is related to Russia’s forced deportation of Ukrainian children. During the reporting period, the U.S. designated two entities and 11 individuals for their respective roles in the deportation of Ukrainian children, and Ukraine is reportedly working on another round of sanctions with a focus on targeting Russian elites involved in the forced deportation of Ukrainian children.  

The Administration also continued to focus on Russia sanctions evasion networks, particularly surrounding export controls. The Department of Commerce issued a temporary denial order suspending the export privileges of three individuals and four entities located in Cyprus, Latvia, Tajikistan, and Russia for allegedly being part of a Russia-based illicit procurement network providing U.S.-sourced technology to the Russian military. The Financial Crimes Enforcement Network (FinCEN) also released a financial trend analysis with suspected Russian export restrictions violations drawing attention to the jurisdictions of China and Hong Kong as being particularly important to supplying sensitive U.S.-origin goods to Russia.