Remarks by Secretary of the Treasury Janet L. Yellen at the Economic Club of New York (ECNY)

As Prepared for Delivery 

Thank you. It is a tremendous honor to receive the Peter G. Peterson Leadership Excellence Award and to join the ranks of the distinguished group of policymakers who are its previous awardees. I’m also very glad to have the chance to speak to all of you today at a venue that, since 1907, has served as one of the country’s premier fora for discussion of domestic and global issues.

I last spoke here at the Economic Club of New York in 2016 as Chair of the Federal Reserve. I discussed a topic that was then at the heart of my work: the Federal Reserve’s pursuit of maximum employment and price stability. Today, I will similarly focus on a topic I see as core to my work and to the Biden Administration’s agenda: expanding our economy’s capacity to produce over the medium and long-term and doing so in a manner that is inclusive and environmentally sound. I first spoke about this strategy, which I have called modern supply-side economics, over two years ago at Davos. Today, I’d like to reflect on how we’ve applied it since, and specifically the roles played by the public and private sectors in boosting our nation’s competitiveness and economic strength.

We have seen a historic economic recovery since the start of this Administration. Economic growth has proven resilient and strong in recent quarters. The labor market remains healthy, with low unemployment rates. Prime-age labor force participation now exceeds its pre-pandemic high. Inflation is down nearly two-thirds from its peak and we expect it to moderate further as rents and other critical price pressures stabilize.

American businesses have contributed to this recovery, starting with their role in helping distribute pandemic relief funds. As we recovered from the pandemic, business fixed investment grew even faster than our economy as a whole and now constitutes over 13 percent of our GDP. We’ve also had three record years of new business applications.

There of course remain challenges: Americans are concerned about the cost of living and too many families find it hard to make ends meet. Addressing this remains President Biden’s top priority.

As we have driven our recovery, we have also worked to strengthen financial stability and respond to urgent issues at home and abroad. Here too, the private sector has been crucial. We solicit views from business leaders in the financial sector as we finance the operations of the Federal government and pursue ongoing collaboration with the private sector to respond to cyber incidents and conduct cybersecurity exercises, as two of many examples. The U.S. business community has also been key to our response to Russia’s invasion of Ukraine, including as we continue to work to crack down on Russian sanctions evasion.

While driving a historic recovery and responding to urgent issues, the Biden Administration has also kept in mind the need to promote stronger and more inclusive growth over a longer timeframe, and as we face an increasingly complex and dynamic global economic landscape.

Our ability to compete and spur growth requires us to tackle longstanding structural challenges. Over decades, the United States saw slowing productivity growth, entrenched income inequality, and significant deindustrialization, with communities in many parts of the country becoming hollowed out. Labor force participation of prime age individuals without a college degree declined. There was a rise in deaths of despair. For too long, too many American workers and American businesses haven’t been able to reach their full potential to contribute to our country’s strength.

Throughout my career, I have seen and participated in robust debates about the proper relationship between the government and businesses in addressing the challenges we’ve faced. We have learned through experience that heavy-handed central planning through government dictates is not a sustainable economic strategy. But neither is traditional supply-side economics, which ignores the importance of public infrastructure, education and workforce training, and government-supported basic research. Traditional supply-side economics wrongly assumes that policies such as tax cuts for those at the top and deregulation will fuel growth and prosperity for the nation at large.

Instead, it’s been clear to President Biden and me that our economic strategy cannot be driven by either the public or private sector alone. Modern supply-side economics embraces government collaboration with the private sector, targeting public interventions to create a supportive environment for business and fuel private sector investments. We have also used public policy to address climate change and to encourage the private sector to reach people and places that had historically not received sufficient investment. This broad-based approach brings benefits not just for American workers and families but for businesses and the economy as a whole.

I will focus today on how we are applying modern-supply side economics to spur greater U.S. competitiveness and growth across three key areas: infrastructure, human capital and labor force participation, and investments in R&D and strategic industries.

I. Physical and Digital Infrastructure

I will start with infrastructure, an important contributor to our economy’s productive capacity. According to one analysis, a 10 percent increase in the stock of core physical infrastructure increases productivity by more than 2 percent.

Yet when President Biden came into office, infrastructure investment as a share of GDP had fallen by more than 40 percent since the 1960s. We should be able to travel between major U.S. cities with ease, assume the goods we order will arrive on time, and find talent to support scaling businesses. Instead, airports became outdated, ports were constrained, and there was uneven access to high-speed internet. I have heard the business community repeatedly emphasize the obstacles these shortfalls cause and how they hinder our competitiveness. There is widespread consensus that our country’s outdated infrastructure slowed the flow of people and goods, holding back the U.S. economy.

The Biden Administration is making massive investments to change this. The Bipartisan Infrastructure Law is enabling ambitious projects to improve America’s roads, ports, and highways. It’s also our government’s largest-ever push toward affordable and universal internet access. This is in addition to the American Rescue Plan’s many investments, including a Treasury program for internet and other critical capital projects that will reach over 2 million American households and businesses. In total, state and local capital investment as a share of state and local spending grew more from 2022 to 2024 than in any two year period since 1979.

The private sector is making complementary investments. Real private spending on construction for transportation, for example, began to rise shortly after the Bipartisan Infrastructure Law was passed, arresting a years-long decline. Over the past two years, it has increased by almost 20 percent. This is the scale of investments needed to help drive our future growth.

Our investments are also advancing our core objective of reaching people and places that had been left behind. Historically, we had seen higher infrastructure investment in states with higher median household incomes. That’s not what’s happening now. Treasury analysis shows that Bipartisan Infrastructure Law funding is going in greater amounts to states with lower median household incomes and the lowest-rated infrastructure, where improvements are most needed. And funding has been spread broadly. For example, while only five states accounted for about two-thirds of investment in public transit in 2019; those five states account for only 40 percent of Bipartisan Infrastructure Law funding.

This matters not only because of fairness. Reaching people and places that had been left behind also has the potential to yield larger aggregate gains under the basic economic premise that returns to investment in any given place exhibit diminishing returns. Put simply, investing in people and places where there had not been sufficient opportunity can yield the largest bang for the buck.

II. Labor Force

Alongside infrastructure, the labor force is of course a critical factor in our economy’s capacity to produce—and therefore to our nation’s competitiveness and strength.

Here too, we’ve seen significant challenges. Labor-force participation, especially of men, has declined over the past two decades. The historic increase in women’s labor force participation was a success story—contributing meaningfully to our country’s growth—but women still face significant challenges to full participation, such as lack of affordable childcare.

There are also significant barriers to the availability and accessibility of good jobs. In the 1970s, three out of four jobs required at most a high school diploma. Now, two out of three jobs require more than a high school diploma, limiting opportunity for the majority of Americans over 25 who do not have college degrees. There also had not been enough investment in alternative pathways to good jobs. Workforce development funding to states, adjusted for inflation, declined by 30 percent from 2001 to the end of 2020.

Like poor infrastructure, inaccessibility of higher education and workforce development has not only affected the lives of individuals and families. In my engagements with businesses, I hear about the difficulty they have had finding the right talent to fuel growth.

So the Biden Administration is making generational investments and pursuing policies to change this as well. Treasury has encouraged using State and Local Fiscal Recovery Funds for workforce development. The Inflation Reduction Act provides tax incentives for companies to hire apprentices, supporting the expansion of these pathways. And, in line with modern supply-side economics, the President’s Budget proposes ambitious policies to support strengthening the labor force, from guaranteeing affordable, high-quality childcare to expanding grants to reduce the cost of college.

Across the country, these programs are being implemented and scaled with a particular focus on meeting private sector demand. In fact, potential employers are often directly engaged in developing and delivering training and then hiring from that training pool. In Milwaukee and Cleveland, Rockwell Automation offers a twelve-week program to equip veterans with technical skills for advanced manufacturing jobs. In Idaho, Micron expanded its first-ever Registered Apprenticeship program. And last month in Arizona, I visited Mesa Community College to learn about their Semiconductor Technician Quickstart program, taught by Intel employees.

As with infrastructure, we care not only about boosting the supply of a key “factor of production” but also about reaching people and places where there previously was not sufficient opportunity. Across the country, we are encouraging workforce development programs to target populations that have traditionally faced barriers to employment and emphasizing best practices such as providing wraparound services like transportation stipends and childcare. Again, this is motivated not just by a commitment to fairness but by an understanding that reaching those who had not had opportunity can bring much greater economic gains.

III. R&D and Investments in Strategic Industries

I will end with our efforts to boost spending on research and development and to bolster American competitiveness in cutting-edge industries like semiconductors and clean energy.

R&D has significant economic benefits: One recent study found that government R&D accounts for roughly one fourth of business sector productivity growth since World War II. Yet there is ample evidence it is undersupplied, including due to a significant decline in federal R&D spending. In 2020, the government’s R&D spending was less than 1 percent of GDP, half of what it was in the 1960s. And the U.S. share of global R&D has declined: It was 31 percent in 2020, compared to 69 percent in 1960.

The U.S. has more generally been widely perceived as suffering a loss of international competitiveness in key industries such as semiconductors and clean energy. This partly is a result of concerted foreign subsidy programs which have not only caused economic losses but have also exacerbated economic insecurity. Insufficient investment in key industries had also made our critical supply chains too vulnerable. We have seen the consequences of this in recent years, such as in the shortage of goods and their volatile prices in the context of the pandemic and Russia’s invasion of Ukraine.

In response to these challenges, we have pursued a strategic combination of direct investments and market-based incentives.

The CHIPS and Science Act authorized funding to restore America’s leadership in semiconductor manufacturing, including substantial investments in research and development. The Inflation Reduction Act is far and away our most ambitious effort to address the existential threat from climate change. Instead of broad-based tax cuts for top earners and corporations, it works by offering significant tax incentives to fuel private investment in the clean energy transition. Global investment in clean energy reached a record level of over $1.7 trillion in 2023, offering massive opportunities for American workers and businesses. We are providing the private sector with the stability needed over long enough time horizons to invest in clean energy, with the understanding that government intervention can then be scaled back as clean energy technologies become cost competitive. I have heard from many American businesses that these incentives are allowing them to pursue projects that otherwise would not have been viable.

We have worked to fuel private sector involvement in the transition to clean energy in other ways as well, from releasing the Principles for Net-Zero Financing and Investment last fall to guide financial institutions pursuing the transition to net zero to publishing just last month key principles to support the development of high-integrity voluntary carbon markets.

We are starting to see the impacts of our policies. There has been an especially notable surge in manufacturing construction since the IRA and CHIPS and Science Act were enacted. The composition of business investment growth has shifted dramatically, with factory construction contributing almost one third and “computer, electrical, and electronic factories” the key source of the increase. These are the industries that the CHIPS Act and the IRA support, including semiconductors and batteries for electric vehicles. And this surge in manufacturing construction is unique to the United States, suggestive evidence that the legislation is likely having its intended impact.

More generally, private companies have announced over $850 billion in manufacturing and clean energy investments since the start of this Administration. And the private sector is responding to policies designed to spur investment in a wide swathe of the United States. The IRA offers an Energy Community Bonus: a greater tax credit for projects in communities historically reliant on fossil fuels such as coal. Since the IRA was passed, $4.5 billion of investments per month has been announced in these communities, compared to $2 billion announced before the IRA. The IRA also offers a Low-Income Communities Bonus, which also seems to be having its intended impact. Since the IRA was passed, 75 percent of announced clean energy investments have been in counties with median incomes below the U.S. aggregate median income. And 84 percent have been in counties with college graduation rates below the U.S. aggregate rate. This broad reach contrasts sharply to the outcomes that we saw under traditional supply-side economics.

Our approach to increasing competitiveness in key domestic industries has been criticized as protectionist. Some see the United States as withdrawing from the global economic stage. I’d argue in response that, since the start of this Administration, we have acted on our belief that global integration, including through trade, continues to be broadly beneficial for American consumers and businesses. We do not intend to withdraw from global markets.

But there are significant risks relating to overconcentrated supply chains and we should especially respond when foreign subsidies threaten the viability of domestic firms in strategic sectors. At President Biden’s direction, I have been particularly focused on responsibly managing the U.S. economic relationship with China.

Countries around the world look to the state of our two economies, but also our interactions, because they are crucial to global growth. Together, China and the United States represent 40 percent of global output and have the two largest financial systems in the world. I believe that America’s fundamental economic strength means that the United States has nothing to fear from healthy economic competition. As I hear frequently from American businesses, China represents a huge market for American manufacturers and firms, supporting over 700,000 American jobs. President Biden and I reject the notion that “decoupling” would be in any way beneficial for the American economy. At the same time, we can only realize the potential benefits of our economic relationship if there is a level playing field.

I am particularly concerned about China’s enduring macroeconomic imbalances. China is a global outlier in terms of its very high saving rate: 45 to 50 percent of GDP for roughly 20 years. This is roughly twice the OECD average. Such high savings reflect a lack of sufficient domestic consumption demand and risk leading to an expansion in China’s external surplus. At present, China is directing an increasing share of savings into manufacturing. Specifically, China’s industrial policies channel savings into unusually high investment rates in select industries, leading to excess capacity.

This dynamic is a problem for China, as excess capacity usually indicates the presence of economic inefficiencies as resources are trapped in less productive firms and industries. Indeed, the share of firms losing money has been rapidly increasing, recently hitting a level not seen since the early 2000s. China already accounts for 30 percent of the world’s manufacturing output. It cannot rapidly grow that share without causing displacement globally. And China cannot assume that the rest of the world will rapidly absorb huge quantities of excess production to the detriment of domestic industries in other countries.

This overcapacity threatens American firms and workers, along with those around the world. We saw in the past how overcapacity can decimate businesses here at home. We are now seeing the risks of that happening again, in key industries that matter to our long-term growth, such as electric vehicles, lithium-ion batteries, and solar, but also across a range of manufacturing industries. The scale of China’s subsidies and industrial policies is hard to quantify due to lack of transparency, but even conservative estimates suggest that they far exceed that of other countries, which is why we see economies ranging from advanced to emerging markets launch trade investigations. And China’s overcapacity risks our supply chains being artificially overconcentrated, posing additional security and economic concerns. China also pursues a variety of unfair trade practices—from restrictive investment policies to economic coercion—that further undermine fair competition.

If China continues on this path, I fear that its policies may interfere significantly with our efforts to build a healthy economic relationship. I have heard these concerns from American and foreign businesses. So, even as we maintain our broad trade and investment relationship with China, I will continue to represent the interests of American workers and businesses and press my Chinese counterparts on these issues bilaterally and multilaterally. I did that during my trip to China in April and at the G7 last month. At the same time, the United States will also continue pursuing an approach I have called friendshoring, which involves deepening ties with a wide range of trusted partners and allies in order to diversify our supply chains and support long-term growth. This also creates significant opportunities for our private sector.

IV. Conclusion

Ultimately, I believe the modern supply-side economics approach, applied to the areas I’ve spoken about today and to others, is putting us on the right path to building an economy that serves us well for the long-term. Collaboration between the public and private sectors is at the heart of this approach. I have seen the potential of such collaboration throughout my career and we have worked over the past three years to realize it.

The challenges we face are deeply rooted. It will take time for the investments the public and private sectors are making to fully pay off. As we look ahead, we will continue to partner with American businesses, especially as we navigate shifts: from geopolitics, to the ongoing energy transition, to developments in cyber and artificial intelligence. I believe our efforts will help us regain our economic strength in areas where we have underinvested and extend it further in other areas, and to do so in a way that benefits all Americans. I look forward to our continued work.

Thank you again for having me and for this honor.

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Acting Comptroller Testifies on FDIC Work Culture

Treasury Releases New Analysis Showing Historically Strong U.S. Business Investment in the Post-COVID Expansion

WASHINGTON — Today, the U.S. Department of the Treasury’s Office Economic Policy released an analysis that shows American businesses are doing well not simply because their earnings are high, but because they are investing those earnings productively. The Biden Administration has made creating favorable conditions for business investment a critical competent of the post-COVID economic agenda. The CHIPS & Science Act and Inflation Reduction Act explicitly encourage private investment, while other Administration efforts increase competition and reduce barriers to entry for new firms. Business investment strengthens our economy’s long-run productivity while creating space for higher-quality jobs.

This analysis comes before Secretary Yellen’s remarks to the Economic Club of New York on Thursday, June 14, where she’ll discuss President Biden’s Investing in America Agenda and the ways the Administration is partnering with the private sector to spur growth across the country.

Highlights from the analysis: 

  • American business investment is outperforming expectations in the post-pandemic expansion; businesses have invested $430 billion more since 2019 than if investment had followed historical patterns. Despite high interest rates that increase firms’ borrowing costs, real American business investment has outperformed three key benchmarks: typical behavior in economic expansions, post-COVID consensus forecasts, and the conventional accelerator models that economists use to forecast investment. 
  • Factory building (construction for manufacturing) has contributed almost one third of business investment growth since the pandemic. Factory building did not contribute to business investment growth on average from 1973 to 2021, but since then it has contributed a third of overall business investment growth. Intellectual property investment has also grown, while conventional equipment investment has slowed. With factory building concentrated in the computer, electrical, and electronic sector, the trend appears to be related to the CHIPS Act and the Inflation Reduction Act. 
  • The outlook for future business investment growth is encouraging: firms are observing persistently high returns to their capital, and founders are starting new businesses at historic rates. Today’s persistently high returns to capital give businesses confidence that their investments will pay off in the future and negate the idea that public investments are crowding out private capital. These high returns are persisting even as the Administration works to rein in non-competitive monopolistic practices that may have boosted these returns in the past. Business founders are showing confidence in the investment outlook, as applications for new businesses surge above pre-pandemic rates.

Read the full analysis here.

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U.S. Department of the Treasury Announces More Than $1 Billion in Upfront Savings for Consumers on Electric Vehicle Sales

Total Consumer Savings on Fuel and Maintenance of Up To $3.2 Billion; Estimated Savings of $18,000 to $24,000 Over Life of Vehicle

WASHINGTON – Today, the U.S. Department of the Treasury and IRS announced consumers have saved more than $1 billion in upfront costs on their purchase of more than 150,000 clean vehicles since January 1, 2024, marking a major milestone in the Biden-Harris Administration’s work to lower transportation costs for Americans.

This milestone translates to consumers saving $1,750 annually on average on fuel and maintenance costs, or $21,000 of discounted savings over the typical 15-year lifespan of a vehicle, compared to a comparable gasoline vehicle. For the more than 150,000 vehicle sales that have used the upfront discount to date, this equates to around $262 million annually on fuel and maintenance costs, and up to $3.2 billion in costs over the life of the vehicles.

Since the passage of President Biden’s Inflation Reduction Act, the U.S. has experienced significant growth in the clean vehicle industry. In 2023, the U.S. saw around 1.5 million passenger clean vehicle (battery electric, fuel cell, plug-in hybrids) sales – the highest annual total ever, and a 50 percent year-over-year increase from 2022. Today’s announcement demonstrates the significant related cost savings Americans are benefitting from as a result.

“President Biden’s Inflation Reduction Act is lowering costs for electric vehicle purchases, with more than $1 billion in upfront savings for American consumers since January. This discount is increasing consumer choices and creating new opportunities for companies to expand their customer base,” said Secretary of the Treasury Janet L. Yellen. “Consumers are saving up front and over time, with $1,750 savings on gas and maintenance each year and $21,000 saved over the lifetime of a vehicle.”

The Inflation Reduction Act created a mechanism to transfer the 30D clean vehicle credit of up to $7,500 and 25E previously owned clean vehicle credit of up to $4,000 to registered dealers. This mechanism gives consumers a significant upfront discount and extends the reach of the credits by making the credit available at the point of sale rather than when buyers file their taxes. Researchers have found that consumers overwhelmingly prefer an immediate rebate at point of sale. 

Since this mechanism went into effect on January 1, 2024, more than $1 billion in financial benefits to consumers at the point-of-sale have been realized through the clean vehicle advance payment program for both new clean vehicles and used clean vehicles. More than 150,000 advance payments have been issued, including more than 125,000 for tax credits related to new clean vehicles. The option to transfer the tax credit to the dealer is very popular, with more than 90 percent of new clean vehicle transactions and approximately 80 percent of used clean vehicle transactions reported through IRS Energy Credits Online involving a transfer of the credit to the dealer.

Building on analysis from Energy Innovation Policy & Technology, Treasury’s Office of Economic Policy estimates that, when discounting expected annual savings over the 15-year lifespan of a vehicle, owners of electric vehicles will save $18,000 to $24,000 more than if they had purchased a comparable gasoline vehicle instead. Fuel is the largest contributor to these savings.[1] Although both gas and electricity costs vary markedly by geography, fuel costs per mile are typically substantially lower for electric vehicles than for similar gas-powered vehicles. For example, for a set of cars that have both electric and gas-powered versions, the average gasoline cost per 1000 miles is $120 for the gas-powered versions, twice as much as the $60 cost for electricity per 1000 miles for the electric versions.[2]

In addition, maintenance costs are typically 40 percent lower for EVs than for gas-powered cars. According to the same report by Energy Innovation Policy & Technology, vehicle maintenance costs are assumed to be roughly $0.06 per mile for EVs and $0.10 per mile for gas-powered cars, due in part to expenditures on engine oil, transmission service, spark plugs, and engine filters.

For more information on the Inflation Reduction Act’s clean vehicle tax credits, please click here.

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[1] Applying a 3.5 percent discount rate to annual fuel and maintenance savings of $1,500 to $2,000 per year.

[2] To calculate this, we used the published fuel ratings MY2022 electric- and gas-powered versions of the Hyundai Kona, Ford F150, Kia Niro, Volvo XC40 and the Nissan Versa/Leaf, and the average U.S. residential cost of $0.17 per kWh, and $3.49 per gallon as published here and here, pulled on June 6, 2024

As Russia Completes Transition to a Full War Economy, Treasury Takes Sweeping Aim at Foundational Financial Infrastructure and Access to Third Country Support

Over 300 new sanctions issued across Treasury and State

Foreign financial institutions that support Russia’s war economy face greater risk of sanctions

WASHINGTON — As President Biden and Group of Seven (G7) Leaders prepare to meet this week in Italy, the U.S. Department of the Treasury is issuing sweeping new measures guided by G7 commitments to intensify the pressure on Russia for its continued cruel and unprovoked war against Ukraine. Today’s actions ratchet up the risk of secondary sanctions for foreign financial institutions that deal with Russia’s war economy; restrict the ability of Russian military-industrial base to take advantage of certain U.S. software and information technology (IT) services; and, together with the Department of State, target more than 300 individuals and entities both in Russia and outside its borders—including in Asia, the Middle East, Europe, Africa, Central Asia, and the Caribbean—whose products and services enable Russia to sustain its war effort and evade sanctions. 

“Russia’s war economy is deeply isolated from the international financial system, leaving the Kremlin’s military desperate for access to the outside world,” said Secretary of the Treasury Janet L. Yellen. “Today’s actions strike at their remaining avenues for international materials and equipment, including their reliance on critical supplies from third countries. We are increasing the risk for financial institutions dealing with Russia’s war economy and eliminating paths for evasion, and diminishing Russia’s ability to benefit from access to foreign technology, equipment, software, and IT services. Every day, Russia continues to mortgage its future to sustain its unjust war of choice against Ukraine.” 

Treasury is targeting the architecture of Russia’s financial system, which has been reoriented to facilitate investment into its defense industry and acquisition of goods needed to further its aggression against Ukraine. Treasury is also targeting more than a dozen transnational networks laundering gold for a designated Russian gold producer, supporting Russia’s production of unmanned aerial vehicles (UAVs), and procuring sensitive and critical items such as materials for Russia’s chemical and biological weapons program, anti-UAV equipment, machine tools, industrial machinery, and microelectronics. Today’s action also takes further steps to limit Russia’s future revenue from liquefied natural gas. 

The State Department is targeting over 100 entities and individuals engaged in the development of Russia’s future energy, metals, and mining production and export capacity; sanctions evasion and circumvention; and furthering Russia’s ability to wage its war against Ukraine.

NEW SECONDARY SANCTIONS RISK 

On December 22, 2023, President Biden expanded Treasury’s tools to disrupt and degrade Russia’s war machine by authorizing Treasury to impose sanctions on foreign financial institutions for aiding Russia’s military-industrial base. Today, Treasury is broadening the definition of Russia’s military-industrial base to include all persons blocked pursuant to Executive Order (E.O.) 14024. This means that foreign financial institutions risk being sanctioned for conducting or facilitating significant transactions, or providing any service, involving any person blocked pursuant to E.O. 14024, including designated Russian banks such as VTB Bank Public Joint Stock Company (VTB) and Public Joint Stock Company Sberbank of Russia (Sberbank). This expanded definition reflects Treasury’s assessment that Russia has re-oriented its economy and marshalled all parts of its government toward supporting its reprehensible war effort. Foreign financial institutions face sanctions risk for continuing to facilitate transactions involving Russia’s military-industrial base. Financial institutions should review OFAC’s updated sanctions advisory for practical guidance on how to identify sanctions risks and implement corresponding controls.

FOREIGN LOCATIONS OF DESIGNATED RUSSIAN BANKS

To help clarify the risk foreign financial institutions face by conducting or facilitating significant transactions or providing any service involving Russia’s designated banks, OFAC has updated the Specially Designated Nationals and Blocked Persons List (SDN List) information for five sanctioned Russian financial institutions, to include the addresses and aliases of their foreign locations. 

Specifically, OFAC has updated the listings for Promsvyazbank Public Joint Stock Company to include its locations in Beijing, People’s Republic of China (PRC), Bishkek, Kyrgyz Republic, and New Delhi, India; for State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank to include its locations in Beijing, PRC and Mumbai, India; for Sberbank to include its locations in Beijing, PRC and New Delhi and Mumbai, India; for VTB to include its locations in New Delhi, India, and Beijing and Shanghai, PRC; and for VTB Capital Holdings Closed Joint Stock Company to include its location in Hong Kong, PRC.

SOFTWARE AND IT-RELATED SERVICES PROHIBITIONS

In coordination with the U.S. Department of Commerce and in line with G7 efforts to disrupt the Russian military-industrial base’s reliance on foreign IT systems, Treasury has taken steps to restrict the Russian military-industrial base’s access to certain software and IT-related services. To implement this policy, Treasury, in consultation with the Department of State, has issued a new determination under Executive Order (E.O.) 14071, which prohibits the supply to any person in the Russian Federation of (1) IT consultancy and design services; and (2) IT support services and cloud-based services for enterprise management software and design and manufacturing software. The determination will take effect on September 12, 2024. 

The United States strongly supports the free flow of information and communications globally, and these actions are not intended to disrupt civil society and civil telecommunications.  Despite the new prohibitions, OFAC continues to maintain authorizations for certain telecommunication and internet-related transactions, as well as humanitarian transactions, under General Licenses 6D and 25D, which mitigate the impacts to Russian civil society and protect public access to information communications technology.  

RUSSIAN FINANCIAL INFRASTRUCTURE

The Moscow Exchange (MOEX) operates Russia’s largest public trading markets for equity, fixed income, derivative, foreign exchange, and money market products, as well as Russia’s central securities depository and the country’s largest clearing service provider. U.S.-designated Russian President Vladimir Putin has approved a series of measures to further attract capital through MOEX from both Russian and non-Russian persons from “friendly countries”—expanding opportunities for both Russians and non-Russians to profit from the Kremlin’s war machine by making investments in Russian sovereign debt, Russian corporations, and leading Russian defense entities, including U.S.-designated State Corporation Rostec, Public Joint Stock Company United Aircraft Corporation (UAC), Kamaz Publicly Traded Company (Kamaz), Irkut Corporation Joint Stock Company, Uralvagonzavod, and Joint Stock Company Russian Helicopters.

The National Clearing Center (NCC) is the central counterparty and clearing agent for, and a subsidiary of, MOEX. NCC is supervised by the Central Bank of the Russian Federation (CBR).

The Non-Bank Credit Institution Joint Stock Company National Settlement Depository (NSD) is Russia’s central securities depository and is a subsidiary of MOEX. NSD provides bank account services, registration of over-the-counter trades, and liquidity management services. The European Union (EU) previously sanctioned NSD in June 2022.

Gas Industry Insurance Company Sogaz (Sogaz) is an insurance company that provides insurance to Russian military personnel and personnel of leading defense entities, including U.S.-designated UAC, Joint Stock Company Experimental Design Bureau Novator, and Federal State Enterprise Ya M Sverdlov Plant. Sogaz has also been sanctioned by Australia, Canada, the EU, New Zealand, and the United Kingdom (UK).

Joint Stock Company Russian National Reinsurance Company (RNRC) is a Russian state-owned reinsurance provider that was created in 2016 to provide protection for sanctioned persons. RNRC has also been sanctioned by the EU and UK.

MOEX, NCC, NSD, Sogaz, and RNRC were designated pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy. Sogaz was also designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy. 

SANCTIONS EVASION, CIRCUMVENTION, AND BACKFILL

Russia relies on complex transnational supply chains to feed its war machine and enable production of materiel to sustain its war effort. Similar networks also attempt to evade sanctions using convoluted schemes to move money and other valuable goods and assets. Today’s action targets more than a dozen of these types of networks, designating more than 90 individuals and entities across Russia, Belarus, the British Virgin Islands, Bulgaria, Kazakhstan, the Kyrgyz Republic, the PRC, Serbia, South Africa, Türkiye, and the United Arab Emirates (UAE).  

For more information on these targets, please see Annex 1.

RUSSIA’S DOMESTIC WAR ECONOMY

Russia has transformed into a war economy in which companies across the spectrum of Russian industry contribute to Russia’s war effort. Today’s action reflects the intricate landscape of Russia’s domestic war economy by targeting more than 100 entities that operate or have operated in the defense and related materiel, manufacturing, technology, transportation, or financial services sectors of the Russian Federation economy.

For more information on these targets, please see Annex 2.

LIMITING RUSSIA’S FUTURE REVENUE FROM LIQUEFIED NATURAL GAS

Guided by commitments made by President Biden and G7 leaders to limit Russia’s future energy revenues and impede Russia’s development of future energy projects, today Treasury is targeting entities involved in three liquefied natural gas (LNG) projects that Russia hopes to bring online in the future: the Obsky LNG, Arctic LNG 1, and Arctic LNG 3 projects. Today’s action also includes designations of three entities involved in either construction of natural gas-related projects or manufacturing specialized equipment for LNG transportation, as well as the identification of seven under-construction LNG vessels. 

For more information on these targets, please see Annex 3.

ANNEX 1: SANCTIONS EVASION, CIRCUMVENTION, AND BACKFILL

Aero-HIT Network

Limited Liability Company Aero-HIT (Aero-HIT) is a Khabarovsk, Russia-based company that has purchased equipment and components to produce several modifications of the Veles multi-rotor first person view strike drone. Aero-HIT-manufactured Veles drones have been used by Russian forces based in Kherson against Ukrainian targets. The Veles drones can be used as an attack drone, as optical reconnaissance devices, or as part of an electronic reconnaissance system. Russia-based Andrei Andreevich Anisimov (Anisimov) is the Director General of Aero-HIT. In his capacity as Director General, Anisimov has worked to expand production of unmanned aerial vehicles (UAVs) for use by Russian forces. PRC-based Shenzhen Huasheng Industry Co Ltd has contracted with Aero-HIT to supply UAV components for Aero-HIT. Russia-based Obshchestvo S Organichennoi Otvetstvennostyu Renovatsio-Invest (Renovatsio-Invest) procured PRC-manufactured UAVs on behalf of Aero-HIT. Renovatsio-Invest has also attempted to provide similar services of procuring PRC-manufactured UAVs to other entities in the Russian military-industrial base. 

Aero-HIT, Anisimov, Shenzhen Huasheng Industry Co Ltd, and Renovatsio-Invest were designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy.

Russian Machine Tool Evasion Network

Russia-based Newton-ITM is a supplier and producer of metalworking equipment and high-precision parts for the aerospace industry. Russian national Dmitrii Vladimirovich Alikhanov (Alikhanov) is the director of Newton-ITM. Alikhanov has worked with European machine tool manufacturers to illicitly procure machinery for Russian end-users. Alikhanov has used Kyrgyz Republic-based Obshchestvo s Ogranichennoy Otvestvennostyu Nova Proekt (Nova Proekt) as a falsified end-user to procure machine tools for Russian end-users.A number of foreign intermediaries, including Türkiye-based Safes Lojistik Ithalat Ihracat Sanayi Ticaret Limited (Safes Lojistik), PRC-based Chongqing Fagima Electromechanical Equipment Co Ltd (Chongqing Fagima), and Hong Kong-based GBL International Logistics Co Ltd (GBL), helped to ship foreign-origin machine tools to Newton-ITM.

Newton-ITM, Alikhanov, Nova Proekt, Safes Lojistik, Chongqing Fagima, and GBL were designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy.

Russian Intelligence Procurement Network

Russia-based Silk Way Rally Association (Silk Way) holds an annual off-road rally race that the U.S.-designated Russian Main Intelligence Directorate (GRU) uses as a front for intelligence operations. The GRU has given awards to Russian national Bulat Akhatovich Yanborisov (Bulat), the head of Silk Way, for his work. Bulat appears to use his properties in Europe as transit points for GRU officers. Bulat, who is Silk Way’s CEO and general director, alongside his son Amir Bulatovich Yanborisov (Amir), use Silk Way’s logistical infrastructure to procure anti-UAV and radioelectronic warfare equipment for use on the battlefield in Ukraine.

Silk Way, Bulat, and Amir were designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy. 

Nikolai Levin Network

U.S.-designated OOO Mayak (Mayak) assists Russian companies in circumventing sanctions through Mayak’s trading houses and consolidated warehouses in Europe, delivering parallel imports from Europe, Türkiye, and the UAE. Russian national Nikolai Aleksandrovich Levin (Levin) is the General Director and owner of Mayak and has used a network of companies to facilitate the import of U.S. and foreign electronics, industrial materials, and other goods into Russia. Levin is the Director and owner of Serbia-based Bassire Group DOO Beograd (Bassire Group) and is the sole executive of Thailand-based NAL Solutions Company Limited (NAL Solutions). Türkiye-based Expert Machinery Kimyasal Urunler Ticaret Limited Sirketi (Expert Machinery) is co-owned by Levin and has sent over $500,000 worth of high priority HS code goods to Mayak and Russia-based OOO TAV (TAV), including machines for the reception, conversion, and transmission of data and integrated electronic circuits. TAV buys and delivers imported goods and offers all types of cargo transportation all over Russia and is owned by Russian national Aleksandr Vasilyevich Tanchev (Tanchev). Tanchev is the Director of Hong Kong-based Tavit Hong Kong Co Limited (Tavit), which has sent over $2 million worth of U.S.-made goods to Mayak. 

Levin, Expert Machinery, and Tavit were designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy. TAV and Tanchev were designated pursuant to E.O. 14024 for operating or having operated in the transportation sector of the Russian Federation economy. Bassire Group and NAL Solutions were 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, Levin.

Sudakov Gold Laundering Network 

Russian national Andrey Dmitriyevich Sudakov (Sudakov), an employee of U.S.-designated Russian state-owned gold producer Public Joint Stock Company Polyus (Polyus), and his Hong Kong-based associate Mu Xiaolu (Mu), engaged in a complex, multi-layered laundering scheme whereby payments from the sale of Russian-origin gold were converted into fiat currency and cryptocurrencies through numerous UAE and Hong Kong-based front companies. The scheme used numerous Hong Kong-based trading companies, including Holden International Trading Limited (Holden) and Taube Precious HK Limited (Taube) to route payments related to gold sales through foreign financial institutions back into the Russian financial system. The scheme also used UAE-based front company Red Coast Metals Trading DMCC (Red Coast) to obfuscate payments from the sale of Russian-origin gold. Additionally, the scheme involved Hong Kong-based VPower Finance Security Hong Kong Limited (VPower) to transport the Russian-origin gold. 

Sudakov, Mu, Holden, Red Coast, Taube, Red Coast, and VPower were designated pursuant to E.O. 14024 for operating or having operated in the metals and mining sector of the Russian Federation economy.

Chichenev Microelectronics Procurement Network

Alexey Chichenev (Chichenev) is a Russian national who manages a large-scale microelectronics procurement network based in Hong Kong. Chichenev has used his network of Hong-Kong based import-export companies, including Superchip Limited (Superchip) and Kvantek Limited (Kvantek), to ship millions of dollars’ worth of electronic integrated circuits and other high-priority technology items to Russia. Chichenev is the director and 100 percent owner of Superchip. Chichenev is also the director of Olax Finance Limited, Saril Overseas Limited, and Bargawine (Hong Kong) Limited.

Superchip and Kvantek were designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy. Chichenev was 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 Superchip. Olax Finance Limited, Saril Overseas Limited, and Bargawine (Hong Kong) Limited were 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, Chichenev.

Elecom Network

Limited Liability Company Elecom (LLC Elecom) is a Russia-based electronic component manufacturer that has imported high-priority items, including electronic integrated circuits, from foreign companies. Pako International Trading (Pako International) is a Hong Kong-based company that has shipped high-priority items, including electronic integrated circuits and transformers, to Russian companies including LLC Elecom and U.S.-designated Limited Liability Company Promelektro Engineering (Promelektro Engineering). Valetudo Limited (Valetudo) is a Hong Kong-based company that has shipped high-priority items, including electronic integrated circuits and capacitators, to Russian companies including LLC Elecom and Promelektro Engineering. LLC Elecom, Pako International, and Valetudo were designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Training the Wagner Group

Brett Warrick Mac Donald (Mac Donald) and Shaun Louw (Louw) are South African nationals who, throughout mid-2023, arranged and oversaw the execution of a training program on survival techniques for U.S.-designated Private Military Company ‘Wagner’ (the Wagner Group) personnel in the Central African Republic. Mac Donald and Louw were 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, the Wagner Group, a person whose property and interests in property are blocked pursuant to E.O. 14024.

Unmanned Systems Procurement Network

Russia-based Limited Liability Company Unmanned Systems (Unmanned Systems) is a designer and manufacturer of unmanned aircraft systems that have been used as reconnaissance drones by the Russian military. Russia’s military industrial base uses Unmanned Systems and an extensive network of Russian and foreign intermediary companies to purchase microelectronics and high-tech equipment produced abroad. Hong Kong-based Infinite Force Cargo Service HK Limited (Infinite Force) has sent camera lenses for unmanned aircraft to Unmanned Systems as well as high-priority items such as electronic integrated circuits, tantalum capacitors, and multilayer ceramic capacitors to other Russian end-users, including U.S.-designated Silkway Limited Liability Company.PRC-based Shanghai Transit International Forwarding Agency Co Ltd (Shanghai Transit)offers delivery via its own container trains to various Russian cities. Shanghai Transit has provided over $180,000 worth of high-priority items, including electronic integrated circuits, tantalum capacitors, and multilayer ceramic capacitors, to Russia-based end-users, including those supplying equipment to Unmanned Systems. 

Unmanned Systems was designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy. Infinite Force and Shanghai Transit were designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy. 

ARP Investments 

Russia-based Limited Liability Company Severnaya Zvezda (Severnaya Zvezda) is a producer and supplier of semiconductors and tantalum capacitors critical to Russia’s war effort. Severnaya Zvezda’s principal supplier is British Virgin Islands-based ARP Investments Limited (ARP), which has made hundreds of shipments of electronic components to Russia since February 2022. ARP has engaged in transactions with U.S.-designated, Serbia-based Kominvex DOO Beograd (Kominvex). Kominvex’s transactions exhibited typologies indicative of possible trade-based money laundering.

Severnaya Zvezda and ARP were designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Elekkom Logistik Network

Russia-based Elekkom Logistik is an official distributor, dealer, and partner of leading foreign and domestic manufacturers of electro-technical products. Elekkom Logistik is part of a wide network of intermediaries supplying the Russian defense industry with foreign-made electronic components and materials used in the production of UAVs and has worked to procure ATXMEGA256A3-AU microchips. PRC-based Shenzhen Youxin Technology Co Ltd (Shenzhen Youxin) has provided more than half a million dollars’ worth of electronic integrated circuits, tantalum capacitors, and multilayer ceramic capacitors to Elekkom Logistik, in addition to chips found in Russian reconnaissance UAVs. 

Elekkom Logistik and Shenzhen Youxin were designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

UAV Proliferation 

KVAND ISOOO is a Belarus-based developer of drone technology that has designed and tested loitering munition UAVs, and has jointly designed and tested surveillance UAVs with the Belarusian government.  KVAND IS OOO has shipped drone technology to the Russian defense establishment. Siarhei Tytsyk is the co-owner and director of KVAND IS OOO. Additionally, Freshvale EOOD, a Bulgaria-based UAV manufacturer, marketed Russian UAVs with offensive capabilities, such as weapons systems and missiles to an African country. KVAND IS and Freshvale EOOD were designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy. Siarhei Tytsyk was 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 KVAND IS OOO.  

Ostec Group Sanctions Evasion Network

In May 2022, OFAC sanctioned entities comprising the Ostec Group, a Russian technology consortium and military contractor that supports Russian producers of various missile systems and aerial bombs, alongside its principal suppliers in Europe. Following those designations, new routes have emerged to attempt to enable the Ostec Group to acquire much-needed technology and equipment. 

Russia-based Fabcenter LLC (Fabcenter), which shares a location with the Ostec Group and whose general director and owner has worked for the Ostec Group for more than a decade, has become a major recipient of goods in Ostec Group’s stead. Fabcenter is a construction company that specializes in the design and construction of production facilities and cleanrooms for the electronics industry.

The Ostec Group’s suppliers have shifted to sending goods—primarily semiconductor production machines, soldering and welding machines, and other technology and equipment—to Fabcenter after previously shipping to Ostec Group entities like U.S.-designated Ostec-Arttool Ltd, Ostec SMT Ltd, and Ostec-Integra Ltd.

Kazakhstan-based KBR Tekhnologii TOO (KBR Tekhnologii) has made hundreds of shipments to Fabcenter, Ostec-Arttool Ltd, Ostec-SMT Ltd, and Ostec-Integra Ltd. The co-founder of KBR Technologies is a longtime employee of U.S.-designated Evgueni Kostiouk, the owner of one the Ostec Group’s previous top suppliers, U.S.-designated Inter-Trans Spolka z Ograniczona Odpowiedzialnoscia

Türkiye-based Alptech Makina Sanayi Limited Sirketi (Alptech) and Hong Kong-based New Horizons Trading Limited (New Horizons) have made hundreds of shipments to Fabcenter and dozens of shipments to Ostec-Arttool Ltd. KBR Technologies, Alptech, and New Horizons were all established between May and August 2022.

Other Russia-based companies that have received shipments from KBR Technologies, Alptech, and New Horizons include Kseoprom, which manufactures materials and equipment related to the production of electronics; manufacturing equipment wholesaler Niceberg Limited Liability Company (Niceberg), established in June 2023; and manufacturing equipment wholesaler Powertech Limited Liability Company (Powertech), established in July 2023.

Fabcenter was designated pursuant to E.O. 14024 for operating or having operated in the construction sector of the Russian Federation economy. KBR Tekhnologii was designated for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Fabcenter, Ostec-Arttool Ltd, Ostec-SMT Ltd, and Ostec-Integra Ltd. Alptech and New Horizons were designated for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Fabcenter and Ostec-Arttool Ltd. Kseoprom, Niceberg, and Powertech were designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy.

DP Microchip Network

Russia-based Design Partner Microchip LLC (DP Microchip) imports electronic components, including high-priority Harmonized System (HS) code goods. DP Microchip collaborated with multiple U.S.-designated entities in Russia to procure electronic components from outside of Russia. Türkiye-based Platform Endustriyel Gida Insaat Elektronik Ve Madencilik Dis Ticaret Limited Sirketi (Platform Endustriyel) and Onyad Bilgisayar Ticaret Limited Sirketi (Onyad Bilgisayar) and PRC-based Yiwu Xinglu Import and Export Co Ltd (Yiwu Xinglu) have together made dozens of shipments of integrated circuits and other electronics to DP Microchip.

DP Microchip, Platform Endustriyel, Onyad Bilgisayar, and Yiwu Xinglu were designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

AK Microtech’s PRC Intermediaries

On July 20, 2023, OFAC designated Russia-based Limited Liability Company AK Microtech (AKM), which specializes in transferring foreign semiconductor technology to Russian microelectronics production companies, including entities that provide microelectronics to the Russian defense industry. On September 14, 2023, OFAC designated AKM’s owner and director, Andrei Rostislavovich Khokhlun (Khokhlun), and another Russia-based company owned by Khokhlun, Limited Liability Company Keko R (Keko R).

PRC-based Hangzhou Keming Intelligent Technology Co Ltd (HKIT) has made dozens of shipments to AKM as well as shipments to Keko R. The shipments have included technology such as film used in the production of electronic components.

PRC-based Shenzhen C S Im Export Ltd (Shenzhen CSI) is a prolific supplier of technology to AKM, including high-priority items such as machines and apparatus for the manufacture of boules or wafers and electrical transformers, static convertors, and inductors. Shenzhen CSI has helped AKM divert technology to Russia.

PRC national Ting Chen (Chen) is the managing director and owner of Shenzhen CSI. Chen was also involved in a sanctions evasion scheme in which AKM sought to acquire technology via Shenzhen CSI. Chen also owns Hong Kong-based Way Good Technology Limited (Way Good).

Hong Kong-based Kekotech Equipment Limited (Kekotech) has also been used to provide goods to AKM. In addition to Shenzhen CSI, Chen is also affiliated with Kekotech.

PRC national Lap Shun Lee (Lee) has represented Shenzhen CSI in many of its dealings with AKM, including schemes in which AKM sought to evade sanctions against Russia.

HKIT, Shenzhen CSI, Chen, and Lee were designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy. Way Good was designated pursuant to E.O. 14024 for being owned or controlled by, or having acted for or purported to act for or on behalf of, directly or indirectly, Chen. Kekotech was 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, AKM, a person whose property and interests in property are blocked pursuant to E.O. 14024.

Maksim Ermakov

Maksim Yuryevich Ermakov (Ermakov), previously designated pursuant to E.O. 14024, ran a procurement network to obtain microchips for Russian state-owned enterprises, including a state-owned technology company that makes electronic warfare systems for the Russian military. Ermakov was designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy. Ermakov has also been sanctioned by the UK.

Chimmed Group Network

Chimmed Group is the leading group of Russian companies that supplies Russian customers with a wide range of chemicals and lab equipment. Chimmed Group maintains an extensive network of members and affiliates to procure U.S.- and Western-origin equipment and consumables for Russian entities connected to the country’s biological and chemical weapons programs, including the Federal State Budgetary Establishment 33 Central Scientific Research Test (33rd TSNII), Federal State Budgetary Establishment 27 Scientific Center (27th Scientific Center), and Federal State Budgetary Institution 48 Central Scientific and Research Institute (48th TSNII). Chimmed Group also supplies materials—including raw materials that can be used for the production of chemical and biological weapons—to special laboratories that are a part of the Federal Security Service (FSB) that were implicated in the poisoning of Alexey Navalny. 

Russia-based Obshchestvo S Ogranichennoi Otvetstvennostyu Torgovy Dom Khimmed (TD Khimmed) and Obshchestvo S Ogranichennoi Otvetstvennostyu Analiticheskaya Manufaktura (Analiticheskaya Manufaktura) are affiliates of the Chimmed Group.  Analiticheskaya Manufaktura attempted to provide equipment to the 48th TSNII. Russia-based companies Obshchestvo S Ogranichennoi Otvetstvennostyu Rusmedtorg (Rusmedtorg) and Obshchestvo S Ogranichennoi Otvetstvennostyu Medstandart (Medstandart) have been closely associated with the Chimmed Group and share a delivery address. Individuals associated with the Chimmed Group purchased biological goods via Medstandart and chemicals via Rusmedtorg. Medstandart has supplied U.S. origin reagents to the Chimmed Group and attempted to provide laboratory goods to the 33rd TSNII.  

Russia-based Obshchestvo S Ogranichennoi Otvetstvennostyu Elyuentlaboratoriz (Elyuentlaboratoriz) procured U.S.- and Western-origin equipment and consumables for the 27th Scientific Center and 48th TSNII. 

Türkiye-based Biopharmist Medikal Urunler Dis Ticaret LTD STI (Biopharmist) exported laboratory items to affiliates of the Chimmed Group, including Elyuentlaboratoriz, Rusmedtorg, and Medstandart.  

Chimmed Group, TD Khimmed, Analiticheskaya Manufaktura, Rusmedtorg, Medstandart, Elyuentlaboratoriz, and Biopharmist were designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy.

Intermediaries Supplying Laser Companies 

Russia-based Leningrad Laser Systems (LLS) is involved in the supply, integration, and development of innovative solutions in the fields of lasers and fiber optics in Russia. LLS and U.S.-designated Russia-based laser product manufacturer Lassard are contractors for the U.S.-designated All-Russian Scientific Research Institute Of Experimental Physics’ (VNIIEF’s) Institute of Laser Physics Research. VNIIEF performs experimental testing of Russia’s nuclear weapons. Lassard is an industrial enterprise offering full-cycle manufacturing of laser technology and optical equipment with potential for military and weapons applications. Russia-based Cryotrade Engineering is a supplier of cryogenic equipment, cryogenic instruments, and analytical equipment from leading manufacturers. LLS and Cryotrade Engineering have previously been contracted by U.S.-designated L.D. Landau Institute for Theoretical Physics of Russian Academy of Sciences, a quantum computing research center. China-based Gker Laser Technology Co Ltd (Gker Laser) has sent hundreds of thousands of dollars’ worth of goods, including laser diodes, optical fiber, and lasers, to Lassard. China-based Jinan Kewei Optics Co Ltd (Jinan Kewei) has sent hundreds of high priority HS code goods to LLS and U.S.-designated electronics company Staut Company Limited, including electronic integrated circuits, tantalum capacitors, and multilayer ceramic capacitors.

LLS, Gker Laser, and Jinan Kewei were designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy. Cryotrade Engineering was designated pursuant to E.O. 14024 for operating or having operated in themanufacturing sector of the Russian Federation economy. 

PRC-based Suppliers to Russian Military-Industrial Base

Analog Technology Limited (Analog Technology) is a Hong Kong-based electronic component distributor with locations in the PRC and India that has shipped high-priority items, including electronic integrated circuits, to Russian companies including U.S.-designated LLC Spetselservis and Limited Liability Company Spetsvoltazh. Analog Technology was designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Shandong Oree Laser Technology Co., Ltd. (Shandong Oree) and Zhejiang Zhenhuan CNC Machine Tool Co., Ltd. (Zhejiang Zhenhuan CNC) are PRC-based machine tool companies that have shipped metalworking machines and other related equipment to Russia. Shandong Oree and Zhejiang Zhenhuan CNC were designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy.

PRC-based Chongqing Xianuofugeluode International Trade Co Ltd (CXI Trade) has made dozens of shipments of technology, including integrated circuits, to Russia since February 2022. CXI Trade has also acquired technology for Russian military-industrial base entities. CXI Trade was designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Enka Trading Limited is a Hong Kong-based wholesaler with expertise in electronic devices and components that has facilitated the procurement of electronic components, including integrated circuits, for Russian end-use. Enka Trading Limited was designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

PRC-based Shandong Ki Forest New Advanced Co Ltd (Shandong Ki Forest) has made thousands of shipments of high-priority technology to Russia, including semiconductor devices, electronic integrated circuits, tantalum capacitors, transformers, converters, and inductors. Shandong Ki Forest’s primary customers in Russia are Reomaks Limited Liability Company (Reomaks), a supplier of industrial and specialized electronic components, and Solard, an importer of electronic components. Shandong Ki Forest, Reomaks, and Solard were designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Hong Kong-based HK Nicest Electric Technology Co Limited (HK Nicest) has sent over 100 shipments of high-priority items to Russia-based end-users, including electronic integrated circuits, tantalum capacitors, and multilayer ceramic capacitors. HK Nicest has supplied equipment to Russia-based end-users supplying the Russian defense industry with electronics to produce aviation equipment. One of HK Nicest’s Russian buyers has been U.S.-designated Russian electronics company Streloi Ekommerts. HK Nicest was designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

PRC-based Daytek Chongqing International Trade Co Ltd (Daytek) has acquired advanced technological equipment for Russian military-industrial base end-users. PRC national Yi Xuan Wu (Wu) is the director of Daytek. Wu has helped Russian counterparts evade sanctions and acquire technology for the Russian military-industrial base. Daytek and Wu were designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Türkiye-Based Suppliers to Russian Military-Industrial Base  

Türkiye-based SSGCTM CNC Takim Tezgahlari Makine Sanayi Ve Ticaret Limited Sirketi (SSGCTM CNC) has provided over $6 million worth of goods to U.S.-designated Russian manufacturing company Limited Liability Company I Machine Technology (I Machine), including computer numerical controlled (CNC) machine tools. Türkiye-based Minyon Kesici Takimlar Makine Sanayi Ve Ticaret Limited Sirketi (Minyon Kesici) has sent over 600 shipments to Russia-based end-users, with shipments including tools used for metal processing and CNC machine tools, including over $800,000 worth of CNC machine tools to I Machine. 

Türkiye-based Gepa Uluslararasi Ticaret Limited Sirketi (Gepa) has provided over $4 million worth of goods to U.S.-designated Russian manufacturing company Alfa Machinery Group, including various machine tools and related equipment.

Türkiye-basedKamilhan Lojistik Dis Ticaret Limited Sirketi (Kamilhan Lojistik) has sent over $3 million worth of high priority HS code goods, including electronic integrated circuits and machines for the reception, conversion, and transmission of data, to U.S.-designated Russian electronics company Limited Liability Company Trade House Kyutek.

Türkiye-based CPS Proses Kontrol Urunleri Sanayi Ve Ticaret Anonim Sirketi (CPS Proses) has shipped German and U.S.-manufactured machine and welding equipment to U.S.-designated Russian technology company and defense contractor Ostec EC Ltd

Türkiye-based RMB Yapi Insaat Taahhut Sana Yi Ve Ti Caret Limited Sirketi (RMB Yapi) has sent hundreds of thousands of dollars’ worth of remote-controlled unmanned aerial vehicles (UAVs) as well as programmable controllers for UAVs and lithium-ion batteries to Russian end-users.

Türkiye-based Taksan Makina Sanayi Ve Ticaret Anonim Sirketi (Taksan Makina) has sent over $700,000 worth of goods, including metal-working centers and machine tools, to U.S.-designated Russian manufacturing company Limited Liability Company Pumori Northwest

(Pumori Northwest), a major provider of metalworking equipment and machine tools to the

Russian defense industry. Türkiye-based Dener Ithalat Ihracat Ve Dis Ticaret Anonim Sirketi (Dener Ithalat) has sent over $300,000 worth of goods to Pumori Northwest, including metalworking centers and a metalworking machine tool.  

SSGCTM CNC, Minyon Kesici, Gepa, Taksan Makina, and Dener Ithalat were designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy. Kamilhan Lojistik, CPS Proses, and RMB Yapi were designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

ANNEX 2: RUSSIA’S DOMESTIC WAR ECONOMY

The following Russia-based persons were designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy:

  • Aktsionernoe Obshchestvo Kazanskoe Opytnoe Konstruktorskoe Byuro Soyuz manufactures weapons and ammunition. 
  • Aktsionernoe Obshchestvo Nauchno Proizvodstvennoe Obyedinenie Poisk manufactures fuses for projectiles, artillery, and missiles. 
  • Birtrans transports Russian military equipment, including armed personnel carriers and tanks. 
  • East West Conversion develops and sells armaments and military equipment. 
  • Federal Research and Production Center Nizhny Novgorod Research Institute of Radio Engineering Joint Stock Company produces radar equipment used by the Russian Army.
  • Joint Stock Company Federal Scientific and Production Center Scientific Research Institute of Applied Chemistry develops and manufactures pyrotechnic systems used for the protection of armored vehicles, aviation, and marine objects.
  • Joint Stock Company KB Luch (KB Luch) designed the Korsar, also known as the Corsair UAV system, which is used by the Russian Ministry of Defense for surveillance, aerial reconnaissance, patrol and observation, and target acquisition. The KB Luch-designed Korsar has been used by Russian forces in Ukraine.
  • Joint Stock Company Murom Machine Building Plant Production Association manufactures weapons and ammunition. 
  • Joint Stock Company Scientific and Production Association Impuls produces automated controls systems used by the Russian Armed Forces and Strategic Missile Forces.
  • Joint Stock Company Solikamsk Plant Ural manufactures gunpowder and explosives.
  • Joint Stock Company Voronezh Central Design Bureau Polus develops and produces radio monitoring equipment used by the Russian Army and Navy.
  • Limited Liability Company Geoscan manufactures UAVs used in Russia’s war against Ukraine.  
  • Limited Liability Company Kingisepsky Machine Building Plant develops unmanned explosive-carrying boats.
  • Limited Liability Company Military Transportation transports Russian military equipment, military vehicles, and air defense systems. 
  • Limited Liability Company Roboavia Unmanned Systems manufactures an attack UAV used by the Russian military. 
  • Limited Liability Company Russian Eagle manufactures and sells weapons, ammunition, and ordnance.
  • Moran Security Group Ltd (Moran) offers armed security services and has operated under contract to Russian state-owned enterprises. Russian national Alexey Badikov is Moran’s Chief Executive Officer.
  • OOO Sepo Zem produces electronic control systems for military aircraft engines. 
  • PAO Radiofizika develops, tests, produces, installs, maintains, repairs, and sells armaments and military equipment. 
  • Research and Production Association Named After AS Popov manufactures and develops advanced military communication equipment used by the Russian Ministry of Defense.
  • Research and Production Enterprise Kaluga Based Instrument Making Plant Typhoon Joint Stock Company manufactures radio systems and weapons systems used by the Russian Armed Forces.
  • Samarskii Zavod Kommunar manufactures weapons, ammunition, small arms, ordnance, and explosives.
  • Scientific Production Center of Anti-Terrorist and Forensic Equipment Spektr AT LLC develops, produces, and supplies thermal imaging systems and surveillance and inspection equipment used by the Russian Ministry of Internal Affairs (MVD) and U.S.-designated Federal Security Service (FSB).
  • Ship Repair Yard of the Black Sea Fleet of the Ministry of Defense of the Russian Federation services minesweepers, corvettes, frigates, and other warships.
  • Special Materials Corporation develops and produces personal armor protection products used by the Russian Ministry of Defense and the FSB.
  • VM Trans Group of Companies LLC transports Russian military equipment. 
  • Taiber OOO developed drone technology for “kamikaze” drones.

Additionally, Joint Stock Company Shipbuilding Plant Named after B Ye Butoma (Butoma), located in illegally Russian-occupied Crimea, Ukraine, builds warships for Russia’s Black Sea Fleet. Butoma was designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy.

The following Russia-based entities were designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy:

  • Aktsionernoe Obshchestvo Malmyzhskii Zavod Po Remontu Dizelnykh Dvigatelei overhauls engines for U.S.-designated Kamaz, a supplier of armored vehicles to Russia’s military, and is involved in machining and the repair of machinery and equipment. 
  • Aktsionernoe Obshchestvo Moven NN manufactures and supplies ventilation, climate, and refrigeration equipment for shipbuilding facilities and markets its goods to Russian military customers.
  • Scientific and Production Association of Automatics Named after Academician Na Semikhatov develops and manufactures control systems and radio-electronic equipment and markets its goods to Russian military customers.
  • Aktsionernoe Obshchestvo NPTS Spetselektronsistemy manufactures 3D structures and micromodules, including semiconductors, and is located at Technopolis Moscow, a special economic zone managed by U.S.-designated Joint Stock Company Special Economic Zone Technopolis Moscow.
  • Aktsionernoe Obshchestvo Sinara Transportnye Mashiny sells machinery, repairs and maintains vehicles, including tracked machines, and works with the Government of the Russian Federation.
  • JSC The Special Boiler Design Bureau designs, manufactures, and repairs boiler equipment for naval use. 
  • Aktsionernoe Obshchestvo Strela manufactures electrical equipment and holds a license from the Russian Ministry of Defense.
  • Alyans Riteil manufactures metal structures, metal barrels, fabricated metal, and fasteners. Alyans Riteil markets fittings used in special military equipment.  
  • AOProton Impuls manufactures semiconductors, diodes, transistors, and special purpose machinery. AO Proton Impuls also manufactures circuit boards, a critical component in Russian UAVs.
  • AO Proton PM manufactures jet engines and liquid missile engines.
  • Armorgrupp manufactures armored vehicles. 
  • Astrosib repairs electronic, precision, and optical equipment and produces optical instruments. 
  • Avtonomnoe Uchrezdenie Tekhnopark Mordoviya facilitates the production and assembly of UAVs and operates an industrial park that hosts producers of electronic warfare equipment. 
  • Belogorodskaya Shipyard Limited Liability Company manufactures berthing complexes and crane vessels and markets its goods to Russian military customers.
  • DD Imeks builds, repairs, and maintains ships and conducts machining activities.
  • Elektroradioavtomatika JSC manufactures fastening products for cable runs and electrical equipment, electrical connectors and electrical distribution devices, and markets its goods to Russian military customers.
  • Gruppa Kompanii Astrokupol develops automated shelters for special-purpose optical equipment. 
  • Gruppa Promavto manufactures special-purpose vehicles, including vehicles for Russia’s Ministry of Internal Affairs.
  • Joint Stock Company Alekseev Central Hidrofoil Design Bureau manufactures high-speed vessels, hydrofoils, hovercrafts, and amphibious platforms, and markets its goods to Russian military customers.
  • Joint Stock Company Factory Crizo manufactures electrical equipment for the Russian Navy, including products installed on surface vessels and submarines.
  • Joint Stock Company Novaya Era manufactures electric power systems for ships and vessels of the Russian Navy.  
  • Joint Stock Company NPO Stekloplastic manufactures multifunctional fiber-based materials and state-of-the-art composites with military applications.  
  • Joint Stock Company OboronAuto manufactures armored vehicles marketed to Russian military customers.
  • Joint Stock Company Omskiy Nauchno Issledovatelskiy Institut Priborostroeniya produces electronic warfare systems and specialized communication systems. 
  • Joint Stock Company Polema manufactures crude iron, steel, tubes, pipes, and steel bars and holds a license for explosive and chemically hazardous production.
  • Joint Stock Company Research and Implementation Enterprise Protek manufactures radar equipment.
  • Joint Stock Company Research and Production Center Vigstar manufactures electronic components and markets its products to Russian military customers.
  • Joint Stock Company Soedinitel manufactures hermetic and corrosion-resistant connectors and cable fittings, and markets its goods to Russian military customers.
  • Joint Stock Company SR Space manufactures engines and develops UAVs and UAV detection and suppression systems. 
  • Joint Stock Company the Central Research Institute Kurs designs shipboard electronic weaponry and onboard equipment for ship-based aircraft and missile weapons.  
  • Joint Stock Company Tizol manufactures non-combustible insulation materials and structural fire protection systems for shipbuilding, including for military projects.
  • Joint Stock Corporation Shipbuilding and Ship Repair Technology Center is a shipbuilding company that provides support for combat ship design and construction and manufactures valves and fittings for all types of ships and vessels.
  • JSC Research and Production Company Magneton manufactures magnets and industrial magnetic systems used by the Russian Ministry of Defense.
  • JSC Resurs manufactures fixed resistors, resistor sets, microwave resistors, and absorbers, which it markets to Russian military customers.
  • Lifors  designs and manufactures electric accumulators and batteries and sells voltage regulators, which are critical components in Russian UAVs. 
  • Limited Liability Company Carbontex manufactures composites from 3D weaved volumetrically reinforced all-woven preforms, which it markets to Russian military customers.
  • Limited Liability Company Merkator Holding manufactures machinery and equipment, including snow removal machines used by the Russian Ministry of Defense.
  • Limited Liability Company Neva Tool Factory manufactures nodes, parts, rotary-plunger hydraulic motors, and tools, which it markets to Russian military customers.
  • Limited Liability Company Plastik Stroymarket manufactures anticorrosive materials, integrated waterproof mixtures, adhesives, and sealants, which it markets to Russian military customers.
  • Limited Liability Company Production Plant Named After Shaumyan manufactures lubrication oils and greases approved for use in weapons and military equipment by the Russian Ministry of Defense.
  • Limited Liability Company Rosizolit produces components for UAVs and supplies composite materials to the Russian military-industrial base.
  • Limited Liability Company Scientific and Production Association of Structural Materials Prometey manufactures ship fittings, deck equipment, as well as various marine equipment, including pneumatic tankers, spires, hatch closures, and steering machines, and markets its goods to Russian military customers. 
  • Limited Liability Company Scientific Production Company Advent produces rotary support devices and ship structures for clients including Russian government agencies.
  • Limited Liability Company Volgograd Ship Engineering Plant produces ship portholes, hatches, viaducts, fittings for ventilation, and air conditioning systems used for equipping Russian military surface vessels and ships.
  • LKKA Company Limited produces springs and wires and markets its products to the Russian Armed Forces.
  • Lyskovskii Elektrotekhnicheskii Zavod manufactures printed circuit boards and power tools and produces generators for Russia’s military industry.
  • Limited Trade Development Chimtech-R manufactures sealant materials supplied to the Russian military-industrial base.
  • Marine Equipment Engineering Corporation JSC manufactures integrated combat information and control systems, radar and sonar equipment, and navigation and communication systems.
  • Microem  manufactures connectors and cable assemblies for all types of applications and components for computer and server equipment. Microem imports components used in Russian UAV navigation modules.
  • Nauchno Proizvodstvennaya Firma Trekol manufactures all-terrain vehicles and markets its vehicles to Russian military customers.  
  • Nauchno Proizvodstvennoe Obyedinenie Gorizont develops and manufactures optical electronic modules, industrial computers, and anti-drone systems.
  • OOO Gazprommash manufactures machinery and holds licenses for the operation of explosive production facilities. 
  • OOO Soyuz Podshipnik manufactures bearings, including for U.S.-designated Russian military armored vehicle supplier Kamaz. 
  • OOOValcom develops and manufactures high-precision intelligent sensors and integrated automation systems for specialized vessels, including icebreakers and naval vessels.
  • Otkrytoe Aktsionernoe Obshchestvo Vladimirskii Zavod Elektropribor manufactures metal structures and electronic printed circuits and is a partner of U.S.-designated JSC Aerospace Defense Concern Almaz-Antey, a Russian state-owned enterprise that designs, develops, and manufactures anti-aircraft, anti-missile, and non-strategic missile defense systems.
  • PJSC Rostov Optical and Mechanical Plant manufactures night vision devices for fire control systems in armored military equipment. 
  • PKP Segment Energo produces cables meant to operate in extreme conditions that are marketed to Russian military customers.  
  • Public Joint Stock Company Priboy produces automated submarine radios.
  • Regional Center of Laser Technologies CJSC is involved in 3D laser cutting, laser welding, and processing of titanium and markets its products to Russian military customers.  
  • Research And Production Company Micran Joint Stock Company manufactures electronic devices, radar systems, test and measurement equipment, and mobile and complex communication solutions.
  • Rezonit manufactures printed circuit boards, which are critical components used in Russian UAVs.  
  • Rotor  works with aircraft and electrical equipment and is involved in the production of electrotechnics and electronics.
  • Shiprepairing And Shipbuilding Corporation JSC manufactures, repairs, and maintains vessels and related equipment for the Russian Navy.
  • Sitem manufactures metal structures, fabricated metal products, and machinery. Sitem supplies, designs, and installs surveillance systems, perimeter protection systems, and supplies thermal imaging equipment. 
  • Technology Research Centre Ank LTD develops and manufactures sealed accumulators and battery products, including lithium-ion storage batteries for unmanned and manned underwater vehicles.
  • TPK Vostok Resurs manufactures specialized materials and works with specialized machines. TPK Vostok Resurs has received items from U.S.-designated  Yantai Iray Technology Co Ltd, a supplier of telescopic and thermal sights to Russia.
  • Troitsk Crane Plant Limited Liability Company produces specialized equipment for shipbuilding and ship repair and markets its products to Russian military customers.
  • Ural Metal Processing Company LTD manufactures packaging tapes, pipes, and steel profiles used to package military-industrial complex loads.

The following Russia-based persons were designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy:

  • Aktsionernoe Obshchestvo Kontsern Radiostroeniya Vega is a Russian government enterprise that develops, produces, and repairs radio electronic systems and equipment, as well as special-purpose systems and components.
  • Federal State Autonomous Scientific Institution Central Research and Experimental and Design Institute of Robotics and Technical Cybernetics is a Russian government institution that conducts work in robotics, photonics, and optoelectronic systems.
  • Institute of High Current Electronics Siberian Branch Russian Academy of Sciences develops devices and technologies for electronics, plasma physics, quantum electronics, and photonics, and has participated in a conference hosted by a U.S.-designated Russian weapons laboratory.
  • Joint Institute for High Temperatures of the Russian Academy of Sciences researches energy efficient technologies and combustion, detonation, and explosions, and has participated in a conference hosted by a U.S.-designated Russian weapons laboratory.
  • Joint Stock Company Institute for Networking Technology develops software and markets its secure multiservice networks and communication infrastructure to the Russian Armed Forces.
  • Joint Stock Company Sitronics KT develops ship control systems and geographic information systems marketed to Russian military customers.
  • Limited Liability Company Farad supplies electronic components, including transistors, which are a component in Russian UAVs.
  • Limited Liability Company GK Triz Robotics develops software for robotics and offers simulators to provide experience in the field of robotics and computer numerical control (CNC) for milling and tuning.
  • Limited Liability Company Prime Radar Technology develops UAV detection and suppression technology and portable jammers.
  • Limited Liability Company RevolEMC (RevolEMC) provides information security services for information systems and information facilities and produces and supplies anechoic chambers and shielded telecommunication cabinets.  
  • Limited Liability Company Yuzhpolymetal Holding produces mobile technology for chemical analysis used by the Russian Ministries of Internal Affairs and Defense and the FSB.
  • LLC Applied Mechanics specializes in engineering and radio-electronics, and produces radio-electronics, high-precision mechanisms including hexapods, and motion simulators, which it markets to Russian military customers. 
  • Ostec Smart Technologies Limited Liability Company specializes in the implementation of technological solutions for electronics assembly and installation, and imports semiconductor production machines.
  • Paritet  sells electronics and computers and is involved in data processing and information technology.
  • Research and Manufacturing Association Development of Innovative Technologies develops aircraft computing equipment and software that it markets to Russian military customers.
  • Special Design Bureau of Electric Instrument Engineering LLC produces instruments used for electrotechnical equipment diagnostics and electric modules that it markets to Russian military customers.
  • Timkom imports field-programmable gate arrays from the PRC.
  • Zakrytoe Aktsionernoe Obshchestvo Zolotoi Shar is one of the largest Russian suppliers of imported electronic components.

Russia-based Limited Liability Company Bank Tochka (Bank Tochka), founded in 2023, provides financial services to an organization that supports Russian combat troops and to an entity that provides ammunition to Russian military personnel. Bank Tochka was designated pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy.

Russia-based Ekodor is involved in transportation activities, including cargo handling, transport forwarding, and rail transport. Ekodor was designated pursuant to E.O. 14024 for operating or having operated in the transportation sector of the Russian Federation economy.

ANNEX 3: LIMITING RUSSIA’S FUTURE REVENUE FROM LIQUEFIED NATURAL GAS

The following Russia-based persons were designated pursuant to E.O. 14024 for operating or having operated in the construction sector of the Russian Federation economy:

  • Aktsionernoe Obshchestvo RusGazDobycha is implementing the construction of a natural gas processing and liquefaction facility in Russia.
  • Arktik SPG 1 manages and supervises construction projects and is developing a gas production site.
  • Limited Liability Company Obsky Gas Chemical Complex is implementing the construction of a gas production and processing site in Russia.
  • OOO Gazprom Invest designs and constructs gas industry facilities.

Russia-based Arktik SPG 3 is involved in geological exploration, including prospecting and evaluation of mineral deposits. Arktik SPG 3 also mines clay, sand, kaolin, gravel, and other minerals. Artktik SPG 3 was designated pursuant to E.O. 14024 for operating or having operated in the metals and mining sector of the Russian Federation economy.

Russia-based Limited Liability Company International Innovation Center for Marine Structures and Ship Repair (International Innovation Center) manufactures enclosed sections of vessels for U.S.-designated shipbuilder Limited Liability Company Shipbuilding Complex Zvezda (Zvezda), which is involved in the construction of specialized liquefied natural gas (LNG) tankers. International Innovation Center was designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy.

Russia-based Regent Baltica Company Limited (Regent Baltica) manufactures cryogenic isothermal panels for LNG storage. Regent Baltica was designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy.

U.S.-designated Joint Stock Company Sovcomflot (Sovcomflot) is the operator of four LNG tankers that are currently under construction. The following four vessels were identified pursuant to E.O. 14024 as property in which Sovcomflot, a person whose property and interest in property are blocked pursuant to E.O. 14024, has an interest:

  • Sergei Witte (IMO: 9904687)
  • Alexey Kosygin (IMO: 9904546)
  • Pyotr Stolypin (IMO: 9904675)
  • Zvezda 044 (IMO: 9904699)

U.S.-designated Zvezda is building an additional three LNG tankers at its shipyard. The following vessels were identified pursuant to E.O. 14024 as property in which Zvezda, a person whose property and interest in property are blocked pursuant to E.O. 14024, has an interest:

  • Zvezda 047 (IMO: 9918781)
  • Zvezda 046 (IMO: 9918779)
  • Zvezda 045 (IMO: 9904704)

SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of the persons 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. 

In addition, foreign financial institutions that conduct or facilitate significant transactions or provide any service involving Russia’s military-industrial base run the risk of being sanctioned by OFAC. For additional guidance, please see the updated OFAC advisory, “Updated Guidance for Foreign Financial Institutions on OFAC Sanctions Authorities Targeting Support to Russia’s Military-Industrial Base,” as well as OFAC Frequently Asked Questions (FAQs) 1146-1157.

The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the SDN List, but also from its 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. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s FAQ 897 here. For detailed information on the process to submit a request for removal from an OFAC sanctions list, please click here.

Any persons included on the SDN List pursuant to E.O. 14024 may be subject to additional export restrictions administered by the Department of Commerce, Bureau of Industry and Security (BIS).

For identifying information on the individuals and entities sanctioned today, click here. 

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Treasury Targets Corruption Network in Guyana

WASHINGTON — Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned members of one of Guyana’s wealthiest families, Nazar Mohamed (Nazar) and his son, Azruddin Mohamed (Azruddin), their company, Mohamed’s Enterprise, and a Guyanese government official, Mae Thomas (Thomas), for their roles in public corruption in Guyana.Additionally, OFAC designated two other entities, Hadi’s World and Team Mohamed’s Racing Team, for being owned or controlled by Mohamed’s Enterprise and Azruddin, respectively. These individuals and entities are sanctioned pursuant to Executive Order (E.O.) 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act and targets perpetrators of serious human rights abuse and corruption around the world.

“Today’s action underscores our commitment to holding accountable those who seek to exploit Guyana’s underdeveloped gold sector for personal gain,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “Treasury, in close coordination with our partners in U.S. law enforcement, will continue to take action to safeguard the U.S. financial system from abuse by corrupt actors.” 

These actions were conducted in coordination with Homeland Security Investigations New York Organized Crime Drug Enforcement Task Force (OCDETF) Strike Force, Diplomatic Security Service, Customs and Border Protection (CBP) Office of Intelligence – New York Operations, and the Federal Bureau of Investigation’s Miami Field Office, with assistance from HSI Miami, CBP Miami and New York Field Offices, New York City Police Department Intelligence Bureau, and the Drug Enforcement Administration. 

the MOHAMED’s Abuse of guyana’s GOLD industry

Gold is one of Guyana’s main exports, but it remains a highly fractured industry with small-scale gold mining operations in Guyana occupying a majority share of the country’s gold production. These small, family-owned businesses have informal relationships with larger purchasers and traders like Mohamed’s Enterprise. Once mined, Guyanese gold is sold and traded throughout international markets, including the United States, Canada, the United Arab Emirates, and the European Union. 

Nazar Mohamed founded Mohamed’s Enterprise in Guyana before expanding to the United States as a moneychanger and transitioned into gold trading, growing Mohamed’s Enterprise into one of Guyana’s largest gold exporters. In time, Azruddin Mohamed ultimately took over Mohamed’s Enterprise, which also now does business as “Confidential Cambio.” 

Azruddin and Mohamed’s Enterprise evaded Guyana’s tax on gold exports and defrauded the Guyanese government of tax revenues by under­declaring their gold exports to Guyanese authorities. Between 2019 and 2023, Mohamed’s Enterprise omitted more than 10 thousand kilograms of gold from import and export declarations and avoided paying more than $50 million in duty taxes to the Government of Guyana.

Mohamed’s Enterprise has bribed customs officials to falsify import and export documents, as well as to facilitate illicit gold shipments. Mohamed’s Enterprise had paid bribes to Guyanese government officials to ensure the undisrupted flow of inbound and outbound personnel that move currency and other items on behalf of Azruddin and Mohamed’s Enterprise.

In addition, Azruddin is the principal and owner of Team Mohamed’s Racing Team, a drag racing organization in Guyana. Hadi’s World is a Guyana-based subsidiary of Mohamed’s Enterprise. 

MOHamed’s COrruption enabled by guyanese officials

To conceal their illegal activity and operate with impunity, Azruddin and Mohamed’s Enterprise have engaged in extensive bribery schemes involving government officials in Guyana. This includes providing direct and recurring bribery payments to Guyanese government officials to ensure favorable treatment in criminal or civil matters that would otherwise suggest their involvement in illegal criminal activity. In return, corrupt officials receive cash and gifts for incidents that are overlooked. Additionally, Mohamed’s Enterprise has paid bribes to corrupt Guyanese government officials to facilitate the award of government contracts.

One such official, Mae Thomas, was the Permanent Secretary to Guyana’s Minister of Home Affairs from October 2020 through August 2023, and is the current Permanent Secretary of the Ministry of Labour. A corrupt Permanent Secretary could manipulate procurement processes to suit their preferred bidder by providing inside information at the early stages of evaluation. Access to a Permanent Secretary of any Ministry could afford contractors insight into upcoming projects and bid values. Permanent Secretaries can act as the legal authority to sign contracts on behalf of their ministry. 

While Permanent Secretary to Guyana’s Minister of Home Affairs, Thomas used her position to offer benefits to Mohamed’s Enterprise and Azruddin, among others, in exchange for cash payments and high-value gifts. Thomas misused her position to influence the award of official contract bids and the approval processes for weapons permits and passports on behalf of Mohamed’s Enterprise.

OFAC is designating Azruddin and Mohamed’s Enterprise for being persons who have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery, that is conducted by a foreign person.

OFAC is designating Nazar for being a foreign person who is or has been a leader or official of Mohamed’s Enterprise, an entity whose property and interests in property are blocked pursuant to E.O. 13818, as a result of activities related to Nazar’s tenure. 

OFAC is designating Team Mohamed’s Racing Team for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Azruddin.

OFAC is designating Hadi’s World for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Mohamed’s Enterprise.

OFAC is designating Thomas for being a foreign person who is a current or former government official, or a person acting for or on behalf of such an official, who is responsible for or complicit in, or has directly or indirectly engaged in, corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery.

SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of the designated persons described 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, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. 

In addition, financial institutions and other persons that engage in certain transactions or activities with the sanctioned entities and individuals may expose themselves to sanctions or be subject to an enforcement action. The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any designated person, or 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 OFAC’s ability to designate and add persons to the SDN List, but also from its 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. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897.  For detailed information on the process to submit a request for removal from an OFAC sanctions list.

GLOBAL MAGNITSKY

Building upon the Global Magnitsky Human Rights Accountability Act, E.O. 13818 was issued on December 20, 2017, in recognition that the prevalence of human rights abuse and corruption that have their source, in whole or in substantial part, outside the United States, had reached such scope and gravity as to threaten the stability of international political and economic systems. Human rights abuse and corruption undermine the values that form an essential foundation of stable, secure, and functioning societies; have devastating impacts on individuals; weaken democratic institutions; degrade the rule of law; perpetuate violent conflicts; facilitate the activities of dangerous persons; and undermine economic markets. The United States seeks to impose tangible and significant consequences on those who commit serious human rights abuse or engage in corruption, as well as to protect the financial system of the United States from abuse by these same persons.

Click here for more information on the individuals and entities designated today

###

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Treasury Targets Companies and Vessels Behind Illicit Houthi Shipments

WASHINGTON — Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) is sanctioning ten individuals, entities, and vessels, including tanker captains, in multiple jurisdictions that have engaged in the illicit transport of oil and other commodities, including for the network of Houthi financial facilitator Sa’id al-Jamal. This action targets maritime shipping and financial facilitators, several vessel managers and owners, and a company involved in forging shipping documents. Today’s action, the seventh round of sanctions targeting the network of Sa’id al-Jamal since October 2023, underscores the U.S. government’s commitment to isolating and disrupting the financing of international terrorist groups such as the Houthis. 

“The Houthis continue to leverage an expansive support network to facilitate their illicit activities, including hiding the origin of cargo, forging shipping documents, and providing services to sanctioned vessels,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “As we demonstrated with our military strikes last week, the United States government is committed to disrupting and degrading the Houthis’ ability to engage in attacks against commercial shipping and naval vessels, as well as target those who seek to facilitate these activities.”

Today’s action is being taken pursuant to the counterterrorism sanctions authority, Executive Order (E.O.) 13224, as amended. OFAC designated Sa’id al-Jamal pursuant to E.O. 13224, as amended, on June 10, 2021, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Iran’s Islamic Revolutionary Guard Corps – Qods Force (IRGC-QF). The IRGC-QF was designated pursuant to E.O. 13224 on October 25, 2007, for providing support to multiple terrorist groups. The U.S. Department of State designation of Ansarallah (commonly known as the Houthis) as a Specially Designated Global Terrorist group, pursuant to E.O. 13224, as amended, became effective on February 16, 2024.

HOUTHI SHIPMENTS

Houthi financier Sa’id al-Jamal, who goes by the Chinese alias “Caihong” (彩虹), or “Rainbow,” relies on a network of foreign shipping firms to sell and transport commodities to China, Syria, and other jurisdictions. United Arab Emirates (UAE)- and Oman-based Shark International Shipping L.L.C, under the leadership of its managing director John Britto Aruldhas, has worked with the Sa’id al-Jamal network to furnish forged shipping documents for vessels shipping commodities on behalf of the Houthis.

India-based Rayyan Shipping (OPC) Private Limited (Rayyan) has served as the manager and technical operator of the sanctioned Guyana-flagged vessel OLYMPICS (IMO: 9212759), formerly known as the LADY SOFIA, which continues to carry cargo for the Sa’id al-Jamal network. As of mid-May, the OLYMPICS, captained by Vivek Ashok Pandey, was operating under forged paperwork falsely indicating that the vessel was carrying Malaysian commodities that were loaded at a Malaysian port in late April. Pandey has captained the LADY SOFIA since it onboarded commodities on behalf of the Sa’id al-Jamal network in late January. The OLYMPICS remains in the East China Sea.  

Additionally, OFAC is designating Sa’id al-Jamal’s Yemen-based nephew ‘Abdallah Najib Ahmad al-Jamal (‘Abdallah al-Jamal), who manages money laundering operations for the Sa’id al-Jamal network. ‘Abdallah al-Jamal works with U.S.-designated money launderer Bilal Hudroj and sanctioned Yemeni exchange houses Davos Company for Exchange and Transfers and Al-Rawda Exchange and Money Transfers Company to move funds on behalf of Sa’id al-Jamal. ‘Abdallah al-Jamal has handled millions of dollars’ worth of currency that has been transferred to Yemen as part of these money laundering operations. 

Shark International Shipping L.L.C, Rayyan Shipping (OPC) Private Limited, Vivek Ashok Pandey, and ‘Abdallah Najib Ahmad al-Jamal are being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Sa’id al-Jamal. OFAC is designating John Britto Aruldhas pursuant to E.O. 13224, as amended, for having acted or purported to act for or on behalf of, directly or indirectly, Shark International Shipping L.L.C. 

ADDITIONAL ILLICIT SHIPMENTS

In addition, OFAC is designating Hong Kong-based Lainey Shipping Limited, the registered owner of the Panama-flagged JANET, and Panama-based Louis Marine Shipholding Enterprises S.A., the registered owner of the Panama-flagged BELLA 1, for their role in carrying sanctioned cargo on behalf of Hizballah-owned and OFAC-designated Concepto Screen SAL Off-Shore to Southeast Asia. Lainey Shipping Limited and Louis Marine Shipholding Enterprises S.A. are being designated, pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, the IRGC-QF. The JANET is being identified as blocked property in which Lainey Shipping Limited has an interest and the BELLA 1 as blocked property in which Louis Marine Shipholding Enterprises S.A. has an interest. 

OFAC is also designating Sandeep Singh Choudhary, the master of the vessel LA PEARL, which also operates under the name ELITE. OFAC identified the LA PEARL as property in which Saone Shipping Corporation has an interest on April 25, 2024. Saone Shipping Corporation was concurrently designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Sepehr Energy Jahan Nama Pars Company (SEJ). The LA PEARL is currently anchored off the coast of China following its delivery of sanctioned cargo. Sandeep Singh Choudhary is being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, SEJ.

SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of the designated persons described 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, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. 

In addition, financial institutions and other persons that engage in certain transactions or activities with the sanctioned entities and individuals may expose themselves to sanctions or be subject to an enforcement action. The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any designated person, or 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 OFAC’s ability to designate and add persons to the SDN List, but also from its 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. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897.  For detailed information on the process to submit a request for removal from an OFAC sanctions list.

Click here for more information on the individuals and entities designated today.

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Remarks by Deputy Assistant Secretary for International Financial Markets Nicholas Tabor on Recent Developments in U.S.-China Financial Regulatory Engagement, in Cambridge, Massachusetts June 6, 2024

Thank you very much to Harvard Law School, the Program on International Financial Systems, the China Development Research Foundation, and Professor Hal Scott for inviting me to speak.  I’m honored to join this week’s symposium.  

My remarks will focus on one element of the evolving U.S.-China relationship, the Financial Working Group co-chaired by the U.S. Treasury and People’s Bank of China, and the important progress that group has made in the last year.  But first, I will provide some background on the nearly two-year-long efforts towards improving bilateral communication and engagement on U.S.-China economic and financial issues.  

Background

When President Biden met President Xi in Bali in November 2022, he emphasized that the US and China must manage our competition responsibly and that such competition should not veer into conflict.  Both sides agreed to empower key senior officials to enhance communication on the macroeconomy and cooperation on issues like climate change and debt distress.[1]

Secretary Yellen has since laid out a roadmap for future Treasury engagement with China, following this vision and involving three principal objectives.[2]

  • First, the United States will secure its national security interests and those of its allies and partners, and the United States will protect human rights.  
  • Second, the United States seeks a healthy economic relationship with China that provides a level playing field for firms and workers in both countries.  
  • Third, the United States and China have a pressing responsibility to tackle the urgent global challenges of our day—including the key items of macroeconomic stability, climate change, and debt distress laid out by President Biden and President Xi in Bali.

Last July, Secretary Yellen took her first official trip to Beijing as Treasury Secretary, and had productive talks with senior Chinese officials on opportunities and challenges in the U.S.-China relationship.  She noted the importance of frank and in-depth discussions, especially on areas where there is disagreement, because it gives each side a better understanding of the other’s actions and intentions.  Following these talks, she noted her hope that the U.S. and China could move to “a phase in our relationship where senior-level diplomacy is simply taken as a natural element of managing one of the world’s most consequential bilateral relationships.”[3] 

During the trip, Secretary Yellen and Vice Premier He Lifeng also agreed that their teams should have more structured and consistent communication between these high-level meetings.[4]  That fall, they established two bilateral mechanisms for such communication: an Economic Working Group (EWG) and a Financial Working Group (FWG).  Since then, these two groups have worked in parallel to advance the objectives set by President Biden and Secretary Yellen.

Rationale for Engagement on Financial Policy Issues

Shortly after the Secretary’s trip, at another PIFS symposium last September, Assistant Secretary of the Treasury for International Finance Brent Neiman explained the rationale for the creation of these working groups.[5]  Since then, the FWG has met four times, with additional technical meetings in between each session.  I’ve had the opportunity to join each of those sessions, and to develop the group’s agenda with colleagues from across Treasury and the U.S. government.  That experience has clarified that regular, frank engagement between U.S. and Chinese financial authorities is valuable for promoting mutual understanding.  

A strong, well-functioning financial system is a public good.[6]  Its benefits accrue to all, because stable, resilient, well-functioning, and efficient markets contribute to stronger, more durable economic growth.  Its maintenance requires contributions by all, because risks in one country and corner of the global financial system can travel, quickly and unexpectedly, to many others. 

Maintaining a public good —in this case, keeping the financial playing field stable, level, and safe—requires ongoing and active coordination. In normal times, cooperation helps identify and address vulnerabilities as they emerge.  In crisis, it helps contain stress and restore calm.  In both contexts, cooperation requires both technical engagement and political accountability and support; it requires the hard work of identifying and understanding risks, and the equally hard work of marshaling support to address them.  Without either one, problems tend to grow faster; to spread to other parts of the financial system; and to become harder and costlier to solve. 

For this reason, the United States has an interest in international financial stability, and U.S. authorities engage actively to advance that interest.  This includes our membership and participation in multilateral groups, many of which China is also a member, like the Financial Stability Board (FSB), which the G20 created after the Global Financial Crisis to better address systemic risk.  However, for large, interconnected economies, bilateral engagement is an essential complement to multilateral engagement.  It lets us better understand each other’s policies, discuss their cross-border implications, and identify areas of mutual interest and concern.  Importantly, it has value even when agreement is lacking or communication is halting, because it lets each party convey information about its positions and its priorities. 

Above all, bilateral dialogue is an investment in navigating international financial crises.  Such crises are—to put it mildly—a bad time to meet new people and try new things.  They are moments when the actions of financial authorities become relevant to a much wider range of people, organizations, and jurisdictions.  They broaden the scope, and raise the stakes, of ongoing, immediate, and clear communication.  Navigating them requires strong working links between finance ministries, central banks, resolution authorities, and supervisors and regulators.  Those, in turn, take repeated, concerted, and early engagement, with the goal of spotting and working through challenges ahead of time.  The goal—always, and at best, a work in progress—is that “we know our counterparts, we know their system, they know ours,” and “if something were to go wrong, we know who to call.”[7]

Treasury has long held regular financial dialogues with other jurisdictions.  Given the stakes, it’s natural for us to also hold one with China.  The U.S. and China are two of the largest economies in the world.  Together, we account for some 40% of global banking assets, and we are the home authority to twelve of the world’s thirty global systemically important banks.[8]  The domestic financial stability of the U.S. and China has significant implications for global financial stability, and our policies have an outsized effect on how financial risks evolve globally.  Working directly with our Chinese counterparts can help advance many of Treasury’s priorities, including our financial stability objective, our climate goals, and the effectiveness of our global efforts to combat money laundering and illicit finance.  This is true even when our views on those priorities diverge.

Progress of the Financial Working Group

These goals informed the first virtual meeting of the Financial Working Group last October, where Treasury and the PBOC were joined by participants from their respective domestic regulatory agencies.[9]  The two sides discussed global financial stability, financial supervision and regulation, sustainable finance, and anti-money laundering.  

The second FWG meeting took place in November, on the margins of Secretary Yellen’s meetings with Vice Premier He in San Francisco and was the first time members of the FWG met face to face.  Participants continued conversations on financial and macroeconomic stability, and financial regulation and supervision—including non-bank financial intermediation—and began a new discussion on capital markets issues.  Following these meetings, Secretary Yellen and Vice Premier He agreed to intensify communication going forward, with three major objectives: to advance work on common solutions, to address disagreements where possible, and to avoid misperceptions contributing to unintended escalations.  They committed to work together on shared challenges, including economic growth, financial stability, regulatory issues, and climate change. 

Following this direction, the FWG also began a series of technical exercises.  These exercises are detailed working-level dialogues, which bring together senior staff and subject-matter experts from both countries, with the goal of developing a more detailed understanding of how authorities approach and operationalize their policy objectives.  Through these technical exercises, the FWG started—or in some cases, restarted—necessary conversations at the technical and operational level, which it could continue at its regular meetings.

The first two technical exercises were on climate scenario analysis and resolution planning frameworks for Global Systemically Important Banks, priority items identified by the FWG.  The exercises allowed for a broader set of participants than those that normally attend the FWG, including staff from other agencies, like the Federal Deposit Insurance Corporation for the discussions on resolution planning.  These technical exercises have continued to take place between subsequent meetings of the FWG. 

The PBOC hosted the third FWG in January of this year, in Beijing.[10]  The U.S. delegation, led by Assistant Secretary Neiman, also included Undersecretary for Domestic Finance Nellie Liang, FinCen Director Andrea Gacki, as well as other Treasury staff, and representatives from the Federal Reserve and the Securities and Exchange Commission.  This meeting took place over two days, which let the FWG further discuss previous topics and add new topics, including international financial institutions, cross-border payments and cross-border data.  The Treasury delegation also met with Vice Premier He and discussed the importance of continuing to deepen communication and cooperation between the two sides.

In April, Secretary Yellen took her second official trip to China.  Building on recent progress, she announced a new Joint Treasury-PBOC Cooperation and Exchange on Anti-Money Laundering.  This cooperation is intended to facilitate the sharing of best practices and information exchanges to address money laundering in our respective financial systems.  The inaugural session on anti-money laundering occurred in late April and will meet going forward under the auspices of the FWG.  Secretary Yellen also announced additional technical exercises for the FWG, including one on operational resilience in the financial sector, and one on financial stability implications from the insurance sector’s exposure to climate risks.[11] 

Later in April, Treasury hosted the fourth FWG meeting in Washington DC.  The session opened with a readout of a recent technical exchange that covered each jurisdictions’ approach to financial stability oversight.[12]  There were also sessions on banks’ liquidity risk management, financial stability and market developments, swap arrangement practices, cross-border payments and data, among other topics.  At this meeting, Treasury and the PBOC highlighted progress from their sustainable finance talks, and identified several areas of mutual interest in this space.  Both sides agreed on the importance of transition finance to support the decarbonization of various sectors, including as part of the voluntary commitments financial institutions may make to decarbonize.  The meetings concluded with both sides agreeing to continue to meet regularly and to hold additional technical exercises, including on the supervision and regulation on cross-border supply of financial services.

Conclusion

In these descriptions, you can hopefully see the beginnings of a cadence. In a little over a year, both countries have begun to establish new channels for communication on financial policy, across more parts of government, and moved engagement from the Presidential level to their subject-matter experts.  This process has let FWG participants begin building the relationships necessary for a mutual understanding of policy, identify areas where cooperation can yield mutual benefits, and provide the space to communicate clearly about areas of disagreement.  We have made progress, and there is still much work to be done. 

These are important steps towards realizing the vision outlined by President Biden and Secretary Yellen, of how to responsibly manage the U.S.-China relationship.  Doing so requires a common understanding of each other’s systems and priorities; a common willingness to express disagreement, even where serious; and a willingness to find and act on areas of mutual benefit.  The FWG is a valuable forum to pursue all three. Through it, the U.S. stands to advance its interest in a stable, well-functioning financial system—an interest we share with many other countries. 

Thank you. 

 

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[1]Readout of President Joe Biden’s Meeting with President Xi Jinping of the People’s Republic of China | The White House

[2]Remarks by Secretary of the Treasury Janet L. Yellen on the U.S. – China Economic Relationship at Johns Hopkins School of Advanced International Studies | U.S. Department of the Treasury

[3]Janet Yellen, Remarks after Beijing economic meetings, July 8, 2023 | US-China Institute (usc.edu)

[4]US Treasury relations with Chinese economic officials – OMFIF

[5]Remarks by Assistant Secretary for International Finance Brent Neiman at the Program on International Financial Systems’ U.S.-China Symposium in Hong Kong | U.S. Department of the Treasury

[6]Remarks by Secretary of the Treasury Janet L. Yellen at the Open Session of the meeting of the Financial Stability Oversight Council | U.S. Department of the Treasury; see also Masaaki Shirakawa, International Financial Stability as a Public Good (boj.or.jp).

[7]Yellen Heads To China Eying ‘Overcapacity’ Concerns | Barron’s (barrons.com)

[8]2023 List of Global Systemically Important Banks (G-SIBs) – Financial Stability Board (fsb.org)

[9]READOUT: First Meeting of the Financial Working Group Between the United States and the People’s Republic of China | U.S. Department of the Treasury

[10]READOUT: Third Meeting of the Financial Working Group Between the United States and the People’s Republic of China | U.S. Department of the Treasury

[11]Remarks by Secretary of the Treasury Janet L. Yellen at a Press Conference in Beijing, the People’s Republic of China | U.S. Department of the Treasury

[12]READOUT: Secretary of the Treasury Janet L. Yellen’s Bilateral Meeting with the Leadership of the U.S.-People’s Republic of China Economic and Financial Working Groups | U.S. Department of the Treasury

Media Advisory – FinCEN Director Andrea Gacki to Travel to Arizona for Beneficial Ownership Outreach Events

WASHINGTON – On June 11 and 12, Financial Crimes Enforcement Network (FinCEN) Director Andrea Gacki will travel to Phoenix and Tucson, Arizona, where she will participate in beneficial ownership reporting outreach events organized in partnership with Senator Kyrsten Sinema’s (I-AZ) office.

Under the Corporate Transparency Act—a bipartisan law enacted to curb illicit finance by supporting law enforcement efforts—many small businesses are now required to report basic information to the Federal government about the real people who ultimately own or control them. During both events, Director Gacki will meet with small business owners and other key stakeholders to discuss these new beneficial ownership reporting requirements. 

Filing is quick, secure, and free of charge. It is not an annual requirement: Unless a company needs to update or correct information, it only needs to file once. FinCEN expects that most companies will be able to file without the help of an attorney or accountant, and that the filing process for those with simple ownership structures may take 20 minutes or less. Companies that existed before 2024 have until January 1, 2025 to file, while companies created or registered in 2024 must file within 90 days of receiving creation/registration notice. More information, along with FinCEN’s E-Filing System, is available at https://www.fincen.gov/boi.

Opening remarks at both events are open to press, and Director Gacki will be available for interviews.

While in Tucson, Director Gacki will also lead a counter-fentanyl information exchange, which is closed to press. FinCEN’s Promoting Regional Outreach to Educate Communities on the Threat of Fentanyl (PROTECT) information-sharing series, held in U.S. cities that are highly impacted by the opioid epidemic, brings law enforcement agencies and financial institutions together to share typologies and approaches on combatting illicit fentanyl trafficking.  

 

Who: Financial Crimes Enforcement Network (FinCEN) Director Andrea Gacki

What: Beneficial ownership outreach events in Arizona 

Where:

Event 1

When: Tuesday, June 11, 9:30 – 11 a.m.

Where: Tucson Hispanic Chamber of Commerce, 823 E Speedway Blvd, Tucson

Event 2

When: Wednesday, June 12, 2 – 4 p.m.

Where: Phoenix College, Hacienda Conference Room (F121)
Parking: North parking lot, 3100-3148 N 11th Ave, Phoenix, AZ 85013

Media interested in covering this visit should RSVP to [email protected] by 5:00 p.m. ET on Monday, June 10, to ensure they receive any relevant logistical information.

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