U.S. Sanctions Transkapitalbank, Virtual Currency Mining Company, & Evasion Network

Today, the U.S. Office of Foreign Assets Control (OFAC) designated Transkapitalbank, a privately-held Russian commercial bank, and its subsidiary, Investtradebank, as Specially Designated Nationals (SDNs). OFAC imposed blocking sanctions on the banks due to their role in facilitating U.S. dollar payments for sanctioned clients and the development of systems designed to evade U.S. and EU sanctions. U.S. persons are broadly prohibited from conducting business with the banksor with entities that are owned 50 percent or more by the newly designated SDNs without authorization from OFAC. U.S. persons must also formally “block” (freeze and report) any property or interests in property of the banks that are in theirpossession or control.

OFAC issued two temporary general licenses authorizing limited continued dealings with Transkapitalbank. First, OFAC issued a general license authorizing certain transactions involving Transkapitalbank that are destined to or originating from Afghanistan in order to support humanitarian relief efforts in that country. Second, OFAC issued a general license authorizing U.S. persons to wind down certain transactions involving Transkapitalbank and its majority-owned entities through 12:01 am EDT on May 20, 2022, subject to the limitations specified in the license.

OFAC also designated virtual currency mining company Bitriver AG and its Russian subsidiaries as SDNs today. As with the action against Transkapitalbank, the designation of Bitriver broadly prohibits U.S. persons and those in the United States from conducting transactions involving Bitriver or its property and interests in property, and requires U.S. persons to formally freeze any property or interests in property of Bitriver in their possession or control. OFAC designated Bitriver to prevent the company from obtaining imported computer equipment and conducting fiat payments necessary to support their business, reducing the ability of Russia to use virtual currencies to offset the impact of sanctions.
Evasion Network
Separately, OFAC updated sanctions on Russian oligarch Konstantin Malofeyev and designated a network of individuals and entities that support Malofeyev’s activities, including those related to sanctions evasion and misinformation campaigns.
New FAQ on Credit Cards
Today, OFAC also issued a new FAQ clarifying the obligations of credit card systems operators under U.S. Russia- and Belarus- related sanctions. U.S. credit card operators and acquirers are prohibited from processing transactions involving listed foreign financial institutions absent authorization from OFAC. OFAC also indicates that non-U.S. operators whose payment cards are issued by listed foreign financial institutions would be exposed to U.S. sanctions risks to the extent that those payment cards are used in the United States. Accordingly, OFAC encourages U.S. persons, including credit card systems operators, to exercise caution and adopt due diligence processes for dealings with non-U.S. operators known to host payment cards issued by sanctioned financial institutions, and whose cards are accepted in the United States.