OFAC Warns About Foreign Subsidiaries Helping Russia Evade Sanctions
The Office of Foreign Assets Control published a new alert this week detailing Russian attempts to evade sanctions by opening new overseas branches and subsidiaries.
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OFAC said sanctioned Russian entities are using third countries to evade sanctions and purchase items for its military, including by opening new overseas branches and subsidiaries for Russian financial institutions. The agency said it has a “variety of tools” to target these new entities, and it warned foreign regulators and banks to be “cautious about the establishment of, or any dealings with, new overseas branches or subsidiaries of Russian financial institutions,” including new companies that aren’t themselves sanctioned.
Although OFAC said it’s not looking to target transactions helping to move certain food, agriculture, medicine and energy and provide certain telecommunications services, it said “efforts to open new branches or subsidiaries of Russia financial institutions should be viewed as a red flag for attempted Russian sanctions evasion.”
Any foreign banks dealing with these branches or subsidiaries -- including by maintaining accounts, transferring funds, or providing payment processing or insurance services -- “should be aware of the significant sanctions risks associated with facilitating Russia’s efforts to evade sanctions and abuse of the global financial system to fund its unjust war,” the agency said.