On November 21, 2024, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) placed Gazprombank – Russia’s largest remaining non-designated bank – and more than 50 other Russian banks on its Specially Designated Nationals and Blocked Persons (SDN) List. As a result, US persons are prohibited from directly or indirectly engaging in any transaction or dealing involving Gazprombank or the other newly designated banks, unless authorized by OFAC or exempt from US sanctions. This includes participating in funds transfers that may involve any of these entities as the originating, intermediary, or beneficiary financial institution. By virtue of OFAC’s 50 Percent Rule, this prohibition also applies to any entity that is directly or indirectly owned 50% or more by any of these banks or other SDNs (whether individually or in the aggregate), regardless of whether that entity itself is identified on the SDN List.
Companies that continue to engage in permissible activities in or with Russia should closely scrutinize all payment channels to assess the potential impact of these new designations. US financial institutions that identify the involvement of any of these banks in a funds transfer may be required to block the payment (i.e., freeze and place in a segregated account) and report that action to OFAC.
Although OFAC has issued a general license authorizing certain wind-down activities involving these banks for a limited duration, that general license would not necessarily apply to, inter alia, new wire transfer requests, even if related to preexisting business. OFAC has advised that there remain a number of non-sanctioned Russian banks, subsidiaries of foreign banks, and money services businesses that can continue to process legitimate transactions.
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