Two of the sanctioned companies are based in Switzerland and South Korea, which have their own Russian sanctions. The companies sanctioned for supplying the Russian military are mainly based in China, the UAE and Turkey.
The United States (US) Department of the Treasury’s Office of Foreign Assets Control (OFAC) released a list of 150 entities that are sanctioned for doing business with certain Russian companies. Either “blocking or short-of-blocking sanctions” were placed on companies that do business with the Russian military-industrial complex.
Some of the sanctioned companies, which did business directly or indirectly with the Russian military, are based in countries that have shown support for Ukraine. Many of the companies on the list also do business with US-based entities, hence the sanctions.
The sanctions placed on each company vary by case. Some companies may have their exports to the United States totally blocked. This is according to an executive order signed by Joe Biden in April 2021 during a state of emergency, prior to the Ukraine-Russia conflict. However, the sanctions were explicitly influenced by the G7 meeting which occurred earlier this month.
The G7 meeting occurred on December 6th, when world leaders from Canada, France, Germany, Italy, Japan, the United Kingdom and the United States met to discuss global issues, and the Ukrainian conflict took center stage in the discussion. The statement made along with the G7 meeting made clear that tightening sanctions became a priority, and that new sanctions would be instituted by 2024.
Swiss wholesaler sanctioned
An electronics company based in Switzerland was sanctioned: Thamestone SA. The company describes itself as a “trading partner” firm and wholesaler, facilitating trade between companies across different regions. According to OFAC, Thamestone helped send hundreds of shipments to Russia-based Streloi Ekommerts, a wholesaler of electronic equipment and parts to the Russian military-industrial complex.
Switzerland has publicly shown its support for Ukraine, and is a part of the European Free Trade Agreement (EFTA), which agreed on the European Union’s (EU) trade sanctions against Russia. The EU and the EFTA notably have stricter bans against trading with Russia than the US, and can impose total blocks on trading for European companies. OFAC’s announcement were the first sanctions set on Thamestone SA for trading with Russian military officials.
On Wednesday, the Swiss government announced that they are “following international sanctions on Russian assets closely.” They are looking at developing new rules thanks to the recent G7 meeting and the EU’s directive. However, they have not reached a conclusion as the EU’s directive has not passed yet. Neither Thamestone SA nor the list in question were mentioned. Given the EFTA’s agreement with EU sanctions, Switzerland may undertake action against Thamestone SA.
Korean individual under scrutiny
Another listed entity is a South Korean individual, Dongjin Lee, who set up “front companies and complex payment networks” in order to obfuscate his business with the Russian military. Lee is marked as the procurement agent for Russian company AK Microtech, a company which provides electronics for companies who distribute to the Russian military.
Since the announcement, the South Korean government has begun an investigation into Lee’s business affairs. South Korea pledged to aid Ukraine in the ongoing conflict and is a financial contributor to their side. Recently, they increased aid to Ukraine to 394 million USD per year.
Future sanctions
Though OFAC’s list included over one hundred and fifty entities, these were not the strictest measures we have seen taken against Russian business. The EU placed stricter bans, sanctioning any European company that has almost any contact with Russia.
As a result of the recent G7 meeting, new sanctions against Russian international trade are to be implemented.
“We will introduce import restrictions on non-industrial diamonds, mined, processed, or produced in Russia, by January 1, 2024,” said the G7’s collective statement.
Besides the aforementioned companies, the vast majority of the companies sanctioned by OFAC are based in China, the United Arab Emirates (UAE) and Turkey. China remains neutral in the conflict, according to their own press release, however, they have been the Russian military’s largest supplier of electronics. The UAE and Turkey are also partners with the Russian military.
