Washington, D.C. (September 6, 2023) – On August 11, 2023, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) announced a new set of Specially Designated Nationals (SDN) blocking sanctions on four prominent Russian businesspeople, as well as an association representing Russian business interests. This announcement, a year and a half after commencement of the Russian-Ukrainian conflict, shows that the sanctions landscape continues to evolve and pose continued legal risk.
This round of sanctions targeted four businesspeople closely involved with the Russian financial sector: Petr Aven, Mikhail Fridman, German Khan, and Alexey Kuzmichev. These individuals hold key roles within the Alfa Group, one of Russia's largest investment and financial services conglomerates. Fridman, Khan, and Kuzmichev co-founded the Alfa Group, while Aven served in various senior leadership positions.
In addition, OFAC sanctioned the Russian Union of Industrialists and Entrepreneurs (RSPP), a business association representing the interests of many Russian oligarchs. According to the Treasury Department, RSPP's activities included promoting "import substitution, technology independence, and technology development."
The four individuals have come under Western sanctions before: prior to this OFAC announcement, they were already sanctioned by Australia, Canada, the European Union, New Zealand, and the United Kingdom. In this latest round of sanctions, the individuals and RSPP were designated pursuant to Executive Order 14024, a 2021 directive authorizing sanctions against Russia for a range of harmful foreign activities. Aven, Fridman, Khan, and Kuzmichev were all designated because of their connection to the Russian financial services industry, while the RSPP was designated for its activities in the technology sector of the Russian economy.
As a result of these blocking sanctions, all U.S.-based property owned 50% or more by the sanctioned individuals is blocked and must be reported to OFAC. U.S. persons within the United States are prohibited from transacting with blocked persons or their property absent a license or exemption from OFAC.
As Western governments continue to issue new sanctions, legal risk remains high, but understanding the complexities of the sanctions regime remains essential to managing risk effectively. For example, despite being founded by Aven and Fridman, the Luxembourg-based investment firm LetterOne did not fall under the blocking sanctions. Since blocked persons like the four individuals here do not own more than 50% of the entity, it escaped this recent round of sanctions.
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