Russian private military company Wagner Group led by Yevgeniy Prigozhin and the target of multiple U.S. sanctions (26/01/2023)

Sanctions Target Wagner’s Global Support Network, Russia’s Military Complex, Putin Cronies

WASHINGTON — Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is taking additional actions to degrade the Russian Federation’s capacity to wage war against Ukraine by sanctioning eight individuals and 16 entities, and four aircraft.  Today’s action, concurrent with additional sanctions actions by the Department of State, targets the infrastructure that supports battlefield operations in Ukraine, including producers of Russia’s weapons and those administering Russian-occupied areas of Ukraine.  Notably, today’s actions include the designation of persons that support Russian defense-related entities. 

“As sanctions and export controls on Russia from our international coalition continue to bite, the Kremlin is desperately searching for arms and support – including through the brutal Wagner Group – to continue its unjust war against Ukraine,” said Secretary of the Treasury Janet L. Yellen. “Today’s expanded sanctions on Wagner, as well as new sanctions on their associates and other companies enabling the Russian military complex, will further impede Putin’s ability to arm and equip his war machine.”

DESIGNATING THE WAGNER GROUP AS A SIGNIFICANT TRANSATIONAL CRIMINAL ORGANIZATION

PMC Wagner (Wagner Group) is a Russian private military company led by Yevgeniy Prigozhin, a Putin crony and the target of multiple U.S. sanctions. Wagner Group has been involved in Kremlin-backed combat operations around the world in support of Putin’s war on Ukraine. As Russia’s military has struggled on the battlefield, Putin has resorted to relying on the Wagner Group to continue his war of choice. The Wagner Group has also meddled and destabilized countries in Africa, committing widespread human rights abuses and extorting natural resources from their people. Today, the Wagner Group is being redesignated pursuant to Executive Order (E.O.) 13581, as amended by E.O. 13863, for being a foreign person that constitutes a significant transnational criminal organization. Wagner personnel have engaged in an ongoing pattern of serious criminal activity, including mass executions, rape, child abductions, and physical abuse in the Central African Republic (CAR) and Mali.

In light of the transcontinental threat posed by the Wagner Group, Treasury is concurrently redesignating the Wagner Group pursuant to E.O. 13667 for being responsible for or complicit in, or having engaged in, the targeting of women, children, or any civilians through the commission of acts of violence, or abduction, forced displacement, or attacks on schools, hospitals, religious sites, or locations where civilians are seeking refuge, or through conduct that would constitute a serious abuse or violation of human rights or a violation of international humanitarian law in relation to the CAR. These actions also advance the implementation of President Biden’s “Memorandum on Promoting Accountability for Conflict-Related Sexual Violence (CRSV),” which directs federal agencies to leverage existing sanctions authorities to hold perpetrators of CRSV accountable and combat rampant impunity for these egregious acts.

On June 20, 2017, OFAC designated the Wagner Group pursuant to E.O. 13660 for being responsible for or complicit in, or having engaged in, directly or indirectly, actions or policies that threaten the peace, security, stability, sovereignty, or territorial integrity of Ukraine, and on November 15, 2022, the Department of State designated the Wagner Group pursuant to E.O. 14024 for operating in the defense and related materiel sector of the Russian Federation economy.  The Wagner Group has also been sanctioned by Australia, Canada, Japan, the United Kingdom, and the European Union.

DISRUPTING THE WAGNER GROUP’S GLOBAL NETWORK

Treasury is also designating numerous entities and individuals on multiple continents that support the Wagner Group’s military operations. 

Joint Stock Company Terra Tech (Terra Tech) is a Russia-based technology firm that supplies space imagery acquired by commercially active satellites, as well as aerial images acquired by unmanned systems.  Changsha Tianyi Space Science and Technology Research Institute Co. LTD (Spacety China) is a People’s Republic of China (PRC)-based entity that has provided Terra Tech synthetic aperture radar satellite imagery orders over locations in Ukraine. These images were gathered in order to enable Wagner combat operations in Ukraine. In addition, OFAC today took action against Spacety Luxembourg S.A. (Spacety Luxembourg), Spacety China’s Luxembourg-based subsidiary. Joint Stock Company Research and Production Concern BARL (AO BARL) is a Russian space company supporting Russia’s military activities in Ukraine.  AO BARL has shared foreign high-resolution satellite imagery with Russia’s military.

Terra Tech and AO BARL are being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy. Spacety China is being designated pursuant to E.O. 14024 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of Terra Tech. Spacety Luxembourg is being designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Spacety China.

As a part of this action, Treasury is also designating persons in the CAR and the United Arab Emirates (UAE) that are connected to the Wagner Group’s operations in CAR.  The Department of State is amplifying this action by concurrently designating two persons pursuant to E.O. 14024. Wagner Group personnel first deployed to CAR in January 2018 purportedly to “train” CAR military and security forces. Since then, the Wagner Group has used entities it controls – Officer’s Union for International Security and Sewa Security Services – to provide a veneer of legitimacy for the presence of Wagner Group personnel in CAR, operating under the guise of “instructors.” Wagner Group personnel have perpetrated numerous instances of human rights abuses against civilians in the CAR, including mass summary executions, rape, arbitrary detention, torture, and displacement of civilians. Moreover, the Wagner Group controls numerous gold and diamond mines in CAR, while raiding and plundering others. The Wagner Group has denied access to CAR government officials seeking to inspect mining operations at Wagner Group-controlled sites.

Sewa Security Services (Sewa) is a CAR-based security company controlled by the Wagner Group that provides protection for senior CAR government officials. Sewa has also claimed to provide “instructors” for “training exercises” in CAR. Sewa is being designated under E.O. 13667 for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, PMC Wagner, a person whose property and interests in property are blocked pursuant to E.O. 13667.

Officer’s Union for International Security (OUIS) is a Wagner Group front company operating in CAR. Based in Russia, OUIS claims to represent Russian “instructors” in CAR. Starting in early 2021, the Wagner Group used OUIS to obscure an increase of Wagner Group personnel operating in CAR. OUIS is being designated under E.O. 13667 for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, PMC Wagner, a person whose property and interests in property are blocked pursuant to E.O. 13667.

Aleksandr Aleksandrovich Ivanov (Ivanov) is a Russian national and the director of OUIS. As director, Ivanov provided an official response to a United Nations report that accused Russian “instructors” of committing human rights abuses in CAR. Ivanov is being designated under E.O. 13667 for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, PMC Wagner, a person whose property and interests in property are blocked pursuant to E.O. 13667.

Kratol Aviation (Kratol) is a UAE-based aviation firm. The Wagner Group uses Kratol-provided aircraft to move personnel and equipment between the CAR, Libya, and Mali. Kratol is being designated under E.O. 13667 for having materially assisted, sponsored, or provided financial, material, logistical, or technological support for, or goods or services in support of, PMC Wagner, a person whose property and interests in property are blocked pursuant to E.O. 13667.

Valery Nikolayevich Zakharov (Zakharov) is a Russian national and Wagner Group employee, who served as the National Security Advisor to CAR’s President, serving in both roles simultaneously. During his tenure as the CAR’s National Security Advisor, Zakharov influenced the strategic direction of the Wagner Group in the CAR, while advising CAR’s President on security matters. Zakharov is being designated under E.O. 13667 for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, PMC Wagner, a person whose property and interests in property are blocked pursuant to E.O. 13667.

SANCTIONING RUSSIA’S DEFENSE INDUSTRIAL COMPLEX, INCLUDING THOSE SUPPORTING PREVIOUSLY SANCTIONED RUSSIAN FEDERATION DEFENSE-RELATED ENTITIES

Treasury is also designating the following targets to further degrade Russia’s war machine. 

JSC Aviacon Zitotrans (Aviacon Zitotrans) is a Russian cargo airline that has handled cargo shipments for sanctioned Russian Federation defense entities. Additionally, Aviacon Zitotrans has shipped military equipment such as rockets, warheads, and helicopter parts all over the world.  For instance, Aviacon Zitotrans has shipped defense materiel to Venezuela, Africa, and other locations. As one example of its efforts, as of September 2022, Aviacon Zitotrans sought to use a Turkish company and Turkish diplomats to facilitate the sale of Russian defense equipment abroad on behalf of Rosoboroneksport OAO, a U.S.-designated Russian Federation state-owned defense firm. Aviacon Zitotrans is being designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel and aerospace sectors of the Russian Federation economy.  OFAC identified as property in which Aviacon Zitotrans has an interest four Russia-registered Ilyushin aircraft with tail numbers RA-76842, RA-76502, RA-76846, and RA-78765.

AO Ural Civil Aviation Factory (UCAF) has developed the Altius unmanned aerial vehicle (UAV) for Russia’s Ministry of Defense. UCAF has specifically leveraged personnel to repair UAVs used in Russia’s full-scale invasion of Ukraine. UCAF is being designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy.

Joint Stock Company National Aviation Service Company (NASC) is a Russia-based state-owned enterprise that repairs and maintains aircraft and electronic equipment. Per a Russian Federation presidential decree, NASC was designated as Russia’s state intermediary for the service of Russian military aircraft supplied abroad. Despite existing restrictions against Russia’s military-industrial complex, NASC has represented itself as not subject to sanctions for the purpose of facilitating Russian defense contracts. NASC is being designated pursuant to E.O. 14024 for operating or having operated in the aerospace sector of the Russian Federation economy.

LLC Research & Production Enterprise Prima (Prima) is a Russia-based entity that develops and produces communication equipment for Russian-manufactured helicopters and airplanes. Prima is being designated pursuant to E.O. 14024 for operating or having operated in the aerospace sector of the Russian Federation economy.

Federal State Unitary Enterprise Scientific and Production Enterprise Gamma (Gamma) is a Russia-based technology entity that carries out work in the interest of the U.S.-designated Federal Security Service (FSB) and the Ministry of Defense of the Russian Federation. Gamma is being designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel and technology sectors of the Russian Federation economy.

Alan Valeryevich Lushnikov (Lushnikov) is the largest shareholder and president of the U.S.-designated Kalashnikov Concern, the original manufacturer of the AK-47 assault rifle.  Lushnikov indirectly owns 75 percent of Kalashnikov Concern’s shares with the remaining 25 percent being owned by U.S.-designated State Corporation Rostec. Lushnikov is being designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy.

LLC TKKH-Invest (TKKH-Invest) is the financial vehicle through which Lushnikov owns shares in Kalashnikov Concern. Lushnikov owns 100 percent of TKKH-Invest, and TKKH-Invest owns 75 percent of Kalashnikov Concern. TKKH-Invest was designated pursuant to E.O. 14024 for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, Lushnikov, a person whose property and interests in property are blocked pursuant to E.O.14024.

JSC Aerospace Defense Concern Almaz-Antey (Almaz-Antey) is a Russia-based state-owned enterprise that designs, develops and manufactures anti-aircraft, anti-missile, and non-strategic missile defense systems.  OFAC first designated Almaz-Antey on July 16, 2014, pursuant to E.O. 13661.  Today, OFAC redesignated Almaz-Antey pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy. 

Yan Valentinovich Novikov (Novikov) is a Russian national and the Director General and CEO of Almaz-Antey. Novikov is being designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy, and for being or having been a leader, official, senior executive officer, or member of the board of directors, of the Government of the Russian Federation (GoR).

OFAC will continue to target Russia’s efforts to resupply its weapons and sustain its war of aggression against Ukraine and destabilizing activities worldwide, including any foreign individuals or entities that assist the Russian Federation in those efforts.

TARGETING PUTIN’S CRONIES AND THEIR FAMILY MEMBERS

OFAC also sanctioned Rustam Nurgaliyevich Minnikhanov (Minnikhanov), a Russian national and the chairman of the board of U.S.-designated Tupolev Public Joint Stock Company, which produces strategic bombers for Russia’s armed forces. Minnikhanov is also the longtime head of Tatarstan, a federal subject of the Russian Federation. Minnikhanov is being designated pursuant to E.O. 14024 for being or having been a leader, official, senior executive officer, or member of the board of directors of the GoR and for operating or having operated in the defense and related materiel and aerospace sectors of the Russian Federation economy.

Much of Minnikhanov’s property is formally registered in the name of his wife, Gulsina Akhatovna Minnikhanova (Minnikhanova). Minnikhanova’s main asset is Obshchestvo s Ogranichennoi Otvetstvennostyu Luchano (Luciano), a hotel and spa complex in Kazan, a city in the Russian Federation. In 2016, a non-governmental organization (NGO) in Russia accused Minnikhanov and Minnikhanova of accepting bribes in the form of investment in Luciano and a mansion in Kazan. The same NGO estimates that the Minnikhanov family owns properties worth almost $50 million, spread across Russia, France, and the United Arab Emirates.

Minnikhanova is being designated pursuant to E.O. 14024 for being a spouse of Minnikhanov.  Luciano was designated pursuant to E.O. 14024 for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, Minnikhanova.

HOLDING RUSSIA ACCOUNTABLE FOR ILLEGAL ATTEMPTED ANNEXATION

A critical aspect of Putin’s war against Ukraine is Russia’s effort to control – including through sham annexation referendums – Russia-occupied areas of Ukraine.  As a part of promoting accountability for those involved in this aspect of Russia’s war effort, Treasury is designating two Russian Federation Presidential Administration (PA) officials involved in these reprehensible efforts. 

Aleksandr Dmitrievich Kharichev (Kharichev) and Boris Yakovlevich Rapoport (Rapoport) are Russian Federation PA officials associated with U.S.-designated Sergei Kiriyenko. The PA subdivision led by Kharichev was tasked with hiring personnel to administer Russia-occupied areas of Ukraine’s Donbas region.

Kharichev’s subordinate Rapoport, who is also closely tied to U.S.-designated former PA official Vladislav Surkov, has been engaged in nefarious activity on behalf of the Kremlin for years, including supporting electoral campaigns of Kremlin-backed candidates and implementing Kremlin policy related to self-proclaimed breakaway republics in Ukraine and Georgia. Most recently, Rapoport prepared the sham annexation referendums staged in September 2022 in the Donetsk, Kherson, Luhansk, and Zaporizhzhia oblasts of Ukraine.

Kharichev and Rapoport are being designated pursuant to E.O. 14024 for being or having been leaders, officials, senior executive officers, or members of the board of directors of the GoR. Kharichev and Rapoport have also been sanctioned by the European Union, Switzerland, and the United Kingdom.

The Department of State is concurrently taking a number of actions under E.O. 14024. It is  designating five entities and one individual linked to the Wagner Group and is also designating 23 individuals and entities for their status as government officials, their involvement in the extended networks of designated persons, and/or for being a part of Russia’s military industrial complex. Additionally, the Department of State is identifying two yachts and one aircraft as blocked property. 

SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of the individuals above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked. All transactions by U.S. 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, or exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

The power and integrity of OFAC sanctions derive not only from the ability to designate and add persons to the SDN List but also the willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish but to bring about a positive change in behavior.