Financial Crime World

Russia’s Military-Industrial Complex Linked to International Firms in Sanctions Action

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has announced a new wave of sanctions against several international companies and individuals with ties to Russia’s military-industrial complex.

Targeted Entities and Individuals

The sanctions include:

  • Firov, a Turkish company that has supplied US-made products to Russia’s defense industry
  • Azu International Ltd Sti, a Turkish-based electronics firm that has shipped foreign-origin electronics technology to Russia
  • Aeromotus Unmanned Aerial Vehicles Trading LLC, a UAE-based company that has sent DJI technology to Russian importers
  • Hulm Al Sahra Electric Devices Trading, a UAE-based wholesaler of electrical appliances that has exported US-origin semiconductors to Russia

International Investment Bank (IIB) Sanctioned

The sanctions also extend to the International Investment Bank (IIB), a Russia-controlled financial institution in Budapest, Hungary. The IIB has been accused of enabling Russia’s intelligence presence in Europe and facilitating corruption and illicit finance.

Designations and Prohibitions

  • Firov was designated for its ties to Dexias Türkiye
  • Azu International, Aeromotus, and Hulm Al Sahra were targeted for operating or having operated in the technology and electronics sectors of the Russian Federation economy
  • The IIB was sanctioned for its role in facilitating corruption and illicit finance
  • Three current or former executives of the IIB - Nikolay Kosov, Georgy Potapov, and Imre Laszloczki - were also designated for their involvement with the bank

The sanctions prohibit US persons from engaging in transactions with these entities and individuals, and freeze any assets they may have in the United States.

Sanctions Implications

As a result of today’s action:

  • All property and interests in property of the designated persons that are in the United States or in the possession or control of US persons must be reported to OFAC
  • Any entities owned 50% or more by one or more blocked persons are also blocked
  • All transactions by US persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons are prohibited unless authorized by a general or specific license issued by OFAC

Goal of Sanctions

The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the Specially Designated Nationals and Blocked Persons (SDN) List, please refer to OFAC’s Frequently Asked Question 897 here.