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WASHINGTON – The United States and the People’s Republic of China held the sixth meeting of the Financial Working Group (FWG) on the sidelines of the IMF-World Bank Annual Meetings in Washington on October 28. The meeting was co-led by Brent Neiman, Assistant Secretary for International Affairs at the U.S. Treasury, and Xuan Changneng, Deputy Governor of the People’s Bank of China.

The two sides discussed macroeconomic and financial conditions in both countries, as well as China’s recent stimulus efforts. Assistant Secretary Neiman and Deputy Governor Xuan also received readouts from FWG technical exercises on international macroeconomic data reporting, strengthening communication in the event of banking stress, and climate and insurance risk. The Joint Treasury-People’s Bank of China Cooperation and Exchange on Anti-Money Laundering also held its third meeting as part of the FWG. Both sides raised issues of concern.

U.S. Secretary of the Treasury Janet L. Yellen received a brief update from the FWG on its discussions. She noted the FWG’s role in the responsible management of the bilateral relationship.

The FWG is one of two working groups formed by Secretary Yellen and Vice Premier He Lifeng of the People’s Republic of China in 2023. The FWG reports directly to Secretary Yellen and Vice Premier He.

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WASHINGTON — Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned five Mexican nationals and two Mexico-based entities linked to La Linea, a violent Mexico-based drug trafficking organization responsible for trafficking fentanyl and other deadly drugs into the United States. Today’s action was coordinated closely with the Drug Enforcement Administration and the Government of Mexico, including La Unidad de Inteligencia Financiera (UIF), Mexico’s Financial Intelligence Unit.

“President Biden and Vice President Harris are committed to using every tool at our disposal to target and disrupt the cartels peddling deadly fentanyl on our streets. If La Linea continues to directly contribute to the proliferation of deadly fentanyl throughout our communities, Treasury will continue to use every took in our arsenal to go after their criminal activity,” said Deputy Secretary of the Treasury Wally Adeyemo. “The United States, in close coordination with our Mexican partners, remains committed to doing everything we can to hold these groups to account and to disrupt their ability to profit from and ultimately operate these criminal schemes.”

Treasury plays a leading role in countering the trafficking of fentanyl and other illicit drugs as part of President Biden’s Unity Agenda, leveraging its expertise to fight illicit financing and financial crimes to disrupt the flows of money that criminal organizations rely on to operate. Over the past two years, Treasury has sanctioned more than 350 targets for involvement in drug trafficking activities at all stages of the supply chain, from major cartel leaders to under-the-radar labs, transportation networks, and chemical suppliers. Last year, Secretary Yellen launched the Counter-Fentanyl Strike Force, which brings together Treasury’s expertise and resources in fighting financial crime, led by the Office of Terrorism and Financial Intelligence (TFI) and IRS Criminal Investigation (CI). Secretary Yellen has also engaged with international partners to combat fentanyl trafficking, including during her travel to Mexico last year. In April, Secretary Yellen also announced the launch of an exchange with the People’s Republic of China to enhance cooperating in combatting money laundering associated with drug trafficking and other crime.

LA LINEA’S EMERGENCE AS A VIOLENT REGIONAL POWER

La Linea began as an armed wing of the Juarez Cartel intended to help the drug trafficking organization defend its border territories in and around Ciudad Juarez in the state of Chihuahua, Mexico. Today, La Linea operates in Ciudad Juarez, where it has access to drug trafficking and human smuggling routes across the U.S.-Mexico border. La Linea taxes other Mexican drug trafficking organizations to move their merchandise through the Juarez Valley and generates other revenue via synthetic drug trafficking, illegal logging, and car theft in Chihuahua, Mexico. Associates of La Linea are also involved in human trafficking across the United States. In November 2019, La Linea members murdered nine American citizens, including six children, in the Mexican state of Sonora. In addition, La Linea and the Cartel Jalisco Nueva Generacion (CJNG) have been working together since September 2023, with CJNG serving as La Linea’s source-of-supply for cocaine, methamphetamine, and fentanyl.

In 2004, the President identified the Juarez Cartel as a significant foreign narcotics trafficker pursuant to the Kingpin Act. On December 15, 2021, OFAC also designated the Juarez Cartel pursuant to E.O. 14059, at which time La Linea was added as an alias of the Juarez Cartel. 

In 2015, OFAC sanctioned CJNG pursuant to the Kingpin Act for playing a significant role in international narcotics trafficking. CJNG was subsequently designated pursuant to Executive Order (E.O.) 14059 on December 15, 2021.

LACERATING LA LINEA’S LEADERSHIP

Today, OFAC is designating various leaders and senior members in La Linea’s current organizational structure. 

Josefa Yadira Carrasco Leyva (Carrasco Leyva) is a senior member of La Linea who is involved in narcotics trafficking, human trafficking, and weapons smuggling. Jorge Adrian Ortega Gallegos (Ortega Gallegos) is a high-ranking member of La Linea who previously was indicted in the United States District Court for the District of New Mexico for drug conspiracy charges.

Heber Nieto Fierro (Nieto Fierro) is a drug trafficker and money launderer for La Linea. He owns or controls two companies that are also being designated today, R.y H. El Remate, Sociedad Anonima de Capital Variable, and Soluciones Tecnologicas y Paqueteria Tres, Sociedad Anonima de Capital Variable.

Jesus Salas Aguayo (Salas Aguayo) is a La Linea associate who controls a plaza in Chihuahua, Mexico, for the cartel. He previously was indicted in the United States District Court for the District of New Mexico for drug conspiracy charges. Adrian Aguayo is a La Linea associate who controls a plaza in Chihuahua, Mexico for the cartel.

OFAC sanctioned Carrasco Leyva, Ortega Gallegos, Nieto Fierro, Salas Aguayo, and Adrian Aguayo pursuant to E.O. 14059 for having engaged in, or attempted to engage in, activities or transactions that have materially contributed to, or pose a significant risk of materially contributing to, the international proliferation of illicit drugs or their means of production. OFAC sanctioned R.y H. El Remate, Sociedad Anonima de Capital Variable, and Soluciones Tecnologicas y Paqueteria Tres, Sociedad Anonima de Capital Variable pursuant to E.O. 14059 for being owned, controlled, or directed by, or having acted or purported to act for or on behalf of, directly or indirectly, Nieto Fierro. 

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. U.S. persons may face civil or criminal penalties for violations of E.O. 14059 and the Kingpin Act. Non-U.S. persons are also prohibited from causing or conspiring to cause U.S. persons to wittingly or unwittingly violate U.S. sanctions, as well as engaging in conduct that evades U.S. sanctions. OFAC’s Economic Sanctions Enforcement Guidelines provide more information regarding OFAC’s enforcement of U.S. sanctions, including the factors that OFAC generally considers when determining an appropriate response to an apparent violation.

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 here. For detailed information on the process to submit a request for removal from an OFAC sanctions list, please click here.

For more information on the individuals and entities designated today, click here.

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The Committee convened in a closed session at the Department of the Treasury at 9:00 a.m.  All members were present.  Heather Masciotti from Citigroup was also present to assist the Committee Chair.  Under Secretary for Domestic Finance Nellie Liang, Fiscal Assistant Secretary David Lebryk, Assistant Secretary for Financial Markets Josh Frost, Deputy Assistant Secretary for Federal Finance Brian Smith, Director of the Office of Debt Management Fred Pietrangeli, and Deputy Director of the Office of Debt Management Tom Katzenbach welcomed the Committee.  Other members of Treasury staff present were Dini Ajmani, Nahiomy Alvarez, Burcu Duygan Bump, Chris Cameron, Nicholas Chisholm, Dave Chung, Gabriella Csepe, Chris Kubeluis, Jeff Rapp, Andrew Schwartz, Joshua Stachura, Renee Tang, Thomas Teles, Laura Thrift, John Tuttle, and Chris Varvares.  Federal Reserve Bank of New York staff members Ellen Correia Golay, Oliver Giannotti, and Kyle Watson were also present. 

Director Pietrangeli reviewed receipts and outlays during FY2024.  Receipts totaled $4.92 trillion, which represents an increase of $479 billion (11%) year-over-year.  This increase was due to higher non-withheld and corporate taxes following an extension of several federal tax deadlines from FY2023 into FY2024, the new Corporate Alternative Minimum Tax (CAMT), and growth in wages and employment.  Outlays totaled $6.75 trillion, an increase of $617 billion (10%) year-over-year, which was largely attributable to higher gross interest on the public debt as well as cost-of-living adjustments to Social Security and other transfer payments.

Pietrangeli then turned to privately-held net marketable borrowing projections.  Primary dealer estimates for the next two fiscal years were marginally higher than previous estimates, with the median aggregate estimate for FY2025-FY2026 approximately $128 billion higher than last quarter.  Dealers voiced uncertainty regarding borrowing needs in FY2025 and FY2026, citing the path of monetary and fiscal policy, the duration of System Open Market Account (SOMA) redemptions, and the economic outlook. 

Deputy Director Katzenbach reviewed primary dealers’ expectations for coupon issuance, which had not significantly changed since July. All primary dealers expected nominal coupon issuance to remain unchanged at the November refunding.  Looking ahead, most continued to think that modest increases might be needed sometime between late-2025 and 2026.  However, several dealers cited uncertainty about borrowing needs and the expiration of the current debt limit suspension at the beginning of 2025 as possible complicating factors. 

Debt Manager Stachura summarized primary dealers’ views on current TIPS market conditions and whether Treasury should increase TIPS issuance in CY2025. Although several dealers commented that demand for TIPS, especially from retail investors, had weakened with the reduction in inflation, nearly all primary dealers felt that the market could absorb additional supply. Dealers overwhelmingly recommended that any increases to existing benchmark tenors should occur in the 5-year or 10-year tenors, and emphasized the importance of increasing sizes gradually. Most dealers seemed open to the prospect of a new TIPS benchmark in the short end of the curve while noting questions regarding potential auction scheduling in light of the current monthly auction cycle.

Under Secretary Liang welcomed Joe Demetrick, Sara Devereux, Greg Peters, and Scott Rofey as the newest members of the Committee.  Liang then provided a brief update on debt management and other Treasury priorities.

Debt Manager Chisholm then reviewed the results of recent Treasury buybacks. Since the launch of the program in May, Treasury has purchased more than $50 billion of securities across 25 operations.  While Treasury purchased the maximum par amount of $5 billion in each of the four cash management buybacks, Chisholm noted that Treasury only purchased the maximum amount in 11 of the 21 liquidity support buybacks. Chisholm explained that purchasing less than the maximum amount was consistent with Treasury’s price-sensitive approach for evaluating offers.

Chisholm subsequently reviewed primary dealers’ views on Treasury’s recent cash management buybacks. Chisholm noted that dealers’ feedback was generally positive and focused on the results and metrics that Treasury publishes after each operation. Dealers suggested that cash management buybacks helped to dampen volatility in both Treasury’s cash balance and Treasury bill auction sizes but cautioned that the modest initial size of cash management buybacks limited their effect. Dealers also stated that Treasury’s cash management purchases were supportive of liquidity in the one-month to two-year nominal coupons sector and provided similarly constructive feedback on the liquidity support buybacks that Treasury conducted during the latest refunding quarter. Finally, dealers expect Treasury to conduct another round of cash management buybacks in December 2024 and April 2025 during periods of high fiscal inflows and suggested that there is market capacity to increase the size of cash management buybacks.

The Committee then discussed the first charge addressing the efforts of the Inter-Agency Working Group on Treasury Market Surveillance (IAWG) to enhance Treasury market resilience. The presenting member pointed to several positive indicators, including: robust Treasury market liquidity, smooth market functioning through the regional banking crisis in 2023, the availability of funding liquidity for leveraged investors, improvements across Treasury market liquidity metrics, and greater availability of public data to strengthen investor confidence and improve transparency. However, the presenting member also noted limited growth in dealer intermediation capacity relative to issuance, slowing demand for Treasuries from some categories of investors, and the growing role of principal trading firms in market intermediation. Finally, the presenting member proposed additional initiatives for consideration, such as central clearing of the Federal Reserve’s Standing Repo Facility, exemption of Treasuries from the supplementary leverage ratio, and greater focus in stress testing on the risks generated by month-end spikes in trading volume. Several features of the Treasury market were discussed by attendees during the presentation, including: the use of futures versus cash Treasuries by asset managers, the role of Treasury securities in bank portfolios, as well as the evolution and implications of passive index investing. 

The Committee adjourned at 11:50 a.m. for lunch.

The Committee reconvened at 1:20 p.m. 

Upon reconvening, the Committee turned to a presentation on digital assets and the Treasury market. The presenting member began by discussing the reasons for, and impact of, the rapid growth in cryptocurrency market capitalization over the past several years. The presenting member observed that because most stablecoin collateral reportedly consists of either Treasury bills or Treasury-backed repurchase agreement transactions, the growth in stablecoins has likely resulted in a modest increase in demand for short-dated Treasury securities. 

Subsequently, the presenting member reviewed both ongoing and proposed efforts related to the tokenization of Treasuries. Broadly speaking, tokenization attempts to represent ownership of a Treasury security using blockchain or distributed ledger technology. The Committee then engaged in a discussion of the costs and benefits of tokenization of Treasuries. On the one hand, tokenization could lead both to operational improvements and to innovation in the Treasury market. On the other hand, tokenization presents possible technological, operational, regulatory, and financial stability risks. In view of these risks, the presenting member argued that tokenization in the Treasury market would likely require the development of a privately controlled and permissioned blockchain managed by a trusted government authority. The presenting member concluded by observing that, in spite of potential risks, the growth in digital assets over the past several years currently has only marginal implications for both Treasury issuance and the health of the Treasury market. 

The Committee then discussed its financing recommendation for the upcoming quarters and advised that Treasury maintain nominal coupon and FRN auction sizes at current levels.  Finally, the Committee recommended gradual increases to TIPS auction sizes.

The Committee adjourned at 2:50 p.m.

The Committee reconvened at 3:00 p.m.

Finally, the Chair summarized key elements of the Committee report for Deputy Secretary Adeyemo and followed with a brief discussion of recent market developments.

The Committee adjourned at 3:35 p.m.

_________________________________

Brian Smith

Deputy Assistant Secretary for Federal Finance

United States Department of the Treasury

October 29, 2024

Certified by:

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Deirdre Dunn, Chair

Treasury Borrowing Advisory Committee

October 29, 2024

 

Treasury Borrowing Advisory Committee Quarterly Meeting

Committee Charge – October 29, 2024

Fiscal Outlook

Taking into consideration Treasury’s short, intermediate, and long-term financing requirements, as well as the variability in financing needs from quarter to quarter, what changes, if any, do you recommend to Treasury issuance?  Please also provide perspectives regarding market expectations for Treasury issuance, the effects of changes in SOMA holdings, the evolution of Treasury holdings by different types of investors, as well as auction calendar construction.

Treasury Market Resilience 

Since 2021, the Inter-Agency Working Group on Treasury Market Surveillance (IAWG) has been conducting an extensive program of analysis and policymaking to enhance Treasury market resilience.  The IAWG has organized around five workstreams and issued four annual reports highlighting its progress (2024, 2023, 2022, 2021).  Please comment on the effectiveness of the IAWG efforts to date.  To what extent will the policies that have been or are being implemented improve Treasury market resilience?  In which areas are additional policy changes needed? Please elaborate.

Digital Assets and the Treasury Market 

Please comment on the effects of the growth in digital assets on the Treasury market.  Please summarize existing efforts at using blockchain technology or tokenization for Treasury market related applications.  How might blockchain technology be used to innovate or improve on Treasury market operations? What are the potential benefits and costs of tokenization of Treasuries? What effects might these trends have on recommended Treasury issuance or the health of the Treasury secondary market?

Financing this Quarter

We would like the Committee’s advice on the following:

• The composition of Treasury notes and bonds to refund approximately $116.4 billion of privately-held notes maturing on November 15, 2024.
• The composition of Treasury marketable financing for the remainder of the October-December 2024 quarter.
• The composition of Treasury marketable financing for the January-March 2025 quarter.

Sanctions target individuals and entities in 17 jurisdictions; Deputy Secretary calls on countries to take similar action against enablers of Russia’s military-industrial base

WASHINGTON — Today, the U.S. Department of the Treasury sanctioned 275 individuals and entities involved in supplying Russia with advanced technology and equipment that it desperately needs to support its war machine. Today’s action targets both individual actors and sprawling sanctions evasion networks across 17 jurisdictions, including India, the People’s Republic of China (PRC), Switzerland, Thailand, and Türkiye. In addition to disrupting global evasion networks, this action also targets domestic Russian importers and producers of key inputs and other materiel for Russia’s military-industrial base.

“The United States and our allies will continue to take decisive action across the globe to stop the flow of critical tools and technologies that Russia needs to wage its illegal and immoral war against Ukraine,” said Deputy Secretary of the Treasury Wally Adeyemo. “As evidenced by today’s action, we are unyielding in our resolve to diminish and degrade Russia’s ability to equip its war machine and stop those seeking to aid their efforts through circumvention or evasion of our sanctions and export controls.”

The Department of State is also targeting sanctions evasion and circumvention in multiple third countries, including several PRC-based companies exporting dual-use goods that fill critical gaps in Russia’s military-industrial base and entities and individuals in Belarus related to the Lukashenka regime’s support for Russia’s defense industry. State is also targeting several senior Russian Ministry of Defense officials and defense companies and those supporting Russia’s future energy production and exports. 

SANCTIONS EVASION, CIRCUMVENTION, AND BACKFILL

Thanks to the unprecedented international sanctions regime implemented by the United States and its global partners, Russia is ever more reliant on complex and expensive transnational schemes to procure critical technological and manufacturing components and machinery it needs to create its own weapons production capability. This includes sensitive dual-use goods such as those cited in the Department of Commerce’s Bureau of Industry and Security’s multilateral Common High Priority List (CHPL), developed by the United States, European Union, Japan, and the United Kingdom. Today’s action by Treasury disrupts a number of those schemes by designating more than 120 individuals and entities, including those involved in illicit procurement networks and the financial facilitators that support them. Financial facilitators such as trust and corporate formation service providers—several of which were sanctioned today—are key nodes in sanctions evasion ecosystems, and actions against them can act as force multipliers by rippling disruptive effects through multiple sanctions evasion networks simultaneously.

Many of today’s designations were enabled or informed with support from Treasury’s Financial Crimes Enforcement Network (FinCEN). 

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

RUSSIA’S MILITARY-INDUSTRIAL BASE 

Treasury is also targeting more than 150 Russia-based defense and related materiel, technology, manufacturing, and aerospace companies that procure or produce finished military products or key components, precursors, and machinery that enable Russia to build or maintain the weaponry it uses against Ukraine. 

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

 

ANNEX 1:  SANCTIONS EVASION, CIRCUMVENTION, AND BACKFILL

Russian Defense Procurement Networks Operating in Türkiye

OFAC is targeting 14 entities and nine individuals, based primarily in Türkiye, that have facilitated the procurement of advanced weapons, components, and ammunition on behalf of Russian end-users critical to bolstering Russia’s military campaign, including the Russian Ministry of Defense and state-owned defense companies. This action, intended to disrupt Russian procurement efforts, comes after extensive consultation with the Government of Türkiye. The United States is committed to taking all necessary measures to protect the U.S., Turkish, and international financial systems.

Mirex Network

Türkiye-based Mirex Havacilik ve Savunma Sanayi Ticaret Anonim Serketi (Mirex) and its chairman, Turkish national Ozgur Hasan Celik (Celik), have been involved in contracts with Russian government-affiliated defense companies to deliver and facilitate electronic warfare system demonstrations in Russia. Mirex has led efforts to locally assemble and manufacture equipment for Russian defense companies in Türkiye. Celik is the manager and co-owner of Bulgaria-based GNO Investment LTD OOD (GNO Investment), which he uses to facilitate Mirex’s defense production and procurement activities. Celik is also the manager and co-owner of Bulgaria-based Mirex BG LTD OOD (Mirex BG). 

Celik has also worked with U.S.-designated Russian defense conglomerate State Corporation Rostec (Rostec)’s representative in Türkiye, Aleksey Viktorovich Gureyev (Gureyev), on efforts to manufacture Russian defense equipment in Türkiye using Mirex. Russian national Mikhail Alekseyevich Klementyev (Klementyev) works alongside Gureyev as the Rostec Deputy representative in Türkiye.

Mirex is being designated pursuant to Executive Order (E.O.) 14024 for operating or having operated in the defense and related material sector of the Russian Federation economy. Celik is being designated pursuant to E.O. 14024 for having acted or purported to act for or on behalf of, directly or indirectly, Mirex. GNO and Mirex BG are being 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, Celik. Gureyev and Klementev are being designated pursuant to E.O. 14024 for having acted or purported to act for or on behalf of, directly or indirectly, Rostec.

GRU-linked Turkish Company

Türkiye-based New Way Group Global Danismanlik Ticaret Limited Sirketi (New Way) has been used by Russia’s U.S.-designated Main Intelligence Directorate (GRU) to facilitate shipments of U.S.-origin microelectronics and production and testing equipment to Russia. 

New Way is being designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy.

Sanlitun Network

Russian national Alexander Vladimirovich Kalinin (Kalinin), Turkish national Ahmet Furgan Albayrak (Albayrak), and U.S.-designated individual Anselm Oskar Schmucki (Schmucki) used their Türkiye-based company Sanlitun Yatirim Dis Ticaret Limited (Sanlitun) to acquire Western electronic components for Russian customers, including for Russian state defense orders. Albayrak, a director of Sanlitun, worked with Kalinin to submit equipment orders through Sanlitun for Russia, falsifying the end use of the equipment on at least one occasion. 

Sanlitun is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy. Kalinin and Albayrak are being designated pursuant to E.O. 14024 for having acted or purported to act for or on behalf of, directly or indirectly, Sanlitun.

Greek national Petros Nikolaos Contoguris (Contoguris) worked with Kalinin at Sanlitun to arrange for the export of hazardous material using U.S.-designated Russian metals company Aktsionernoe Obshchestvo Evraz Vanadi Tula (Tula). Contoguris designed a convoluted and obfuscated way to import the substance to evade international sanctions. Contoguris also worked with Kalinin to provide refurbished gas turbines to Russia through Sanlitun, and Contoguris and Kalinin have supported multiple Russian customers. 

Contoguris is being designated pursuant to E.O. 14024 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Kalinin.

Nitrocellulose Shipments

Russia-based freight logistics company LLC AM Logistics (AM Logistics) has taken delivery of multiple shipments of nitrocellulose, a chemical compound that is a key ingredient in modern gunpowder, explosives, and artillery shells, in Russia. Türkiye-based SLD Lojistik Ic ve Dis Ticaret Limited Sirketi (SLD Lojistik) has conducted several large shipments of nitrocellulose to Russian companies, including AM Logistics. Russian national Daria Aleksandrovna Shachenok (Shachenok) is the director and owner of AM Logistics and the 50-percent owner of SLD Lojistik.

AM Logistics is being designated pursuant to E.O. 14024 for operating or having operated in the transportation sector of the Russian Federation economy. SLD Lojistik is being designated pursuant to E.O. 14024 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, АМ Logistics. Shachenok is being designated pursuant to E.O. 14024 for being or having been a leader, official, senior executive officer, or member of the board of directors of, AM Logistics.

Tool Company Gut

Russia-based Tool Company Gut Limited Liability Company (Tool Company Gut) has imported computer numerically controlled (CNC) machine tools and components, high priority items crucial to Russia’s war efforts, from Türkiye-based entities. Tool Company Gut has historically supplied tools and parts to entities in the Russian defense sector and has continued to contract and interact with Russian defense sector entities. Russia-based Limited Liability Company Mobula (Mobula), which is co-located with Tool Company Gut, has imported interchangeable tools for hand- or machine-tools from Türkiye-based entities. Türkiye-based Modulsan Makina Kesici Takim ve Disli Sanayi Ticaret Limited Sirketi (Modulsan) has exported manufacturing articles for making metal-cutting tools to Russia, including to Tool Company Gut. 

Tool Company Gut, Mobula, and Modulsan are being designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy.

Türkiye-based AYTT CNC Takim Tezgahlari Makine Sanayi ve Ticaret Limited Sirketi (AYTT CNC), managed by Turkish national Gurhan Aydin, has wittingly exported tool products and CNC machine tools and components to Russia, including to Tool Company Gut and U.S.-designated Limited Liability Company I Machine Technology (I Machine). Turkish national Recep Cetin Aydin co-owns AYTT CNC and the U.S.-designated Türkiye-based entities SSGCTM CNC Tezgahlari Makine Sanayi ve Ticaret Limited Sirketi (SSGCTM CNC) and Minyon Kesici Takimlar Makine Sanayi ve Ticaret Limited Sirketi (Minyon Kesici), which have exported items, including lathes, to entities in Russia’s manufacturing sector. 

AYTT CNC is being designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy. Gurhan Aydin is being designated pursuant to E.O. 14024 for being or having been a leader, official, senior executive officer, or member of the board of directors, of AYTT CNC. Recep Cetin Aydin is being designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy.

Electronic Integrated Circuits

Türkiye-based company BRK Uluslararasi Nakliyat ve Ticaret Limited Sirketi (BRK Uluslararasi) is a logistics services company that has exported items on the CHPL to Russia, including electronic integrated circuits, which are critical to the production of advanced Russian precision-guided weapons systems. Türkiye-based companies BP Dis Ticaret ve Danismanlik Limited Sirketi (BP Dis Ticaret) and Sinerji Endustriyel Ekipman ve lnsaat Malzemeleri Dis Ticaret Limited Sirketi (Sinerji Endustriyel Ekipman) have also exported electronic integrated circuits to Russia.

BRK Uluslararasi is being designated pursuant to E.O. 14024 for operating or having operated in the transportation sector of the Russian Federation economy. BP Dis Ticaret and Sinerji Endustriyel Ekipman are being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Uzay Group and LSS Global Customers

U.S.-designated Türkiye-based companies Uzay Group Dis Ticaret Limited Sirketi (Uzay Group) and LSS Global Insaat Sanayi ve Ticaret Limited Sirketi (LSS Global) have supplied Russia-based wholesalers with items on the CHPL: 

• Russia-based Elit Limited Liability Company (Elit) is a wholesaler that has imported items on the CHPL, including from Uzay Group. Elit’s imports include integrated circuits, which are Tier 1 items of highest concern due to their critical role in the production of advanced Russian precision-guided weapons systems. Elit also has a history of supplying electrical connectors to U.S.-designated Russian state-owned military equipment manufacturer Konstruktorskoe Byuro Priborostroeniya Otkrytoe Aktsionernoe Obshchestvo. Elit is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.
• Russia-based Aviek Limited Liability Company (Aviek), Ekvik Limited Liability Company (Ekvik), Ksian Limited Liability Company (Ksian), and Severnyi Veter – TB Limited Liability Company (Severnyi Veter – TB) are wholesalers that have imported electronic integrated circuits, including from Uzay Group. Aviek, Ekvik, Ksian, and Severnyi Veter – TB are being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.
• Russia-based Limited Liability Company Baikal Trading Company (Baikal Trading) is an electronics wholesaler that has imported items on the CHPL, including Tier 3.A items, which are electronic components used in Russian weapon systems. Baikal Trading’s suppliers include Uzay Group. Baikal Trading is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.
• Russia-based Intellekt Telekom Limited Liability Company (Intellekt Telekom) has imported integrated circuits. Intellekt Telekom’s suppliers include LSS Global. Intellekt Telekom is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Cresta Lojistik

Türkiye-based Cresta Lojistik Ithalat Ihracat Ticaret Sirketi (Cresta Lojistik) has been involved in the attempted procurement of South Korea-origin semiconductor manufacturing equipment for U.S.-designated Russian producers of microelectronics for the Russian military. Cresta Lojistik is being designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy.

Sinno Group Procurement Network

PRC nationals Lin Qing (a.k.a. Becky Lin) and Peng Minbo (a.k.a. Betty Peng) are executives of U.S.-designated Sinno Electronics Co., Limited (Sinno Electronics), a Hong Kong-registered company that operates from several addresses in Hong Kong and Mainland China. Sinno Electronics is a longtime supplier of microelectronics to Russian defense procurement companies. 

On September 30, 2022, OFAC designated Sinno Electronics 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 Radioavtomatika LLC (Radioavtomatika), a U.S.-designated Russian defense procurement firm that specializes in procuring foreign items for Russia’s defense industry. Sinno Electronics was previously added to the U.S. Department of Commerce’s Entity List on June 28, 2022. Sinno Electronics now goes by the name Sinno Group Limited, but continues to use the trade name Sinno Electronics in public and likely operates a reserve list of companies it could use. 

Lin Qing has served as managing director of Sinno Electronics since 2006. He is also the director and 100 percent owner of Hong Kong-registered Sinno Group Limited (Sinno Group). The business group now known as Sinno Group claims to have supplied electronic equipment to Russia since 2010 and has had an office there since 2015. As recently as April 2024, Sinno Group sponsored and participated in the largest electronics exhibition in Russia. In addition, Sinno Group itself has made hundreds of shipments of microelectronics identified as Tier 1 items on the CHPL to Russia-based end-users. 

Following Sinno Electronics’ addition to the Entity and Specially Designated Nationals (SDN) Lists, Lin Qing continued to engage with leadership of a U.S.-designated entity in Russia.

Lin Qing and Sinno Group are being designated pursuant to E.O. 14024 for operating or having operated in the electronics sector of the Russian Federation economy.

Peng Minbo has been involved in the Russian electronics market for many years as a Sinno Electronics executive. Since the beginning of the full-scale invasion of Ukraine, Peng Minbo has personally made thousands of foreign-origin microelectronic shipments to Russia, including items critical to the production of advanced Russian-precision guided weapons. Peng Minbo has also collaborated directly with multiple U.S.-designated entities in Russia to deliver electronic components utilized in advanced Russian weapons systems. Peng Minbo and a U.S.-designated Russia entity engaged in a complex scheme involving numerous intermediary companies across multiple countries.

Peng Minbo is being designated pursuant to E.O. 14024 for operating or having operated in the electronics sector of the Russian Federation economy.

Additionally, today OFAC is designating several Hong Kong-registered companies linked to Sinno Electronics. Since Russia’s full-scale invasion of Ukraine, these companies have cumulatively made tens of thousands of shipments of microelectronics critical to the production of advanced Russian precision-guided weapons systems to Russia, including to U.S.-designated companies. Though registered in Hong Kong, these companies also operate from Shenzhen-based addresses in Mainland China associated with Sinno Electronics. 

• Allparts Trading Limited (Allparts) and Align Trading Limited (Align) are Hong Kong-registered companies that have supplied multiple U.S.-designated entities in Russia with microelectronics, including components intended for advanced Russian weapons systems. Both companies have made thousands of foreign-origin microelectronics shipments to Russia, including hundreds of shipments on behalf of Sinno Electronics executive Peng Minbo. Allparts has also made shipments on behalf of Sinno Electronics. Allparts was previously added to the U.S. Department of Commerce’s Entity List on April 12, 2023. Align was registered a week prior to Allparts’ addition to the Entity List. Together, Allparts and Align have made more than $27 million worth of shipments of microelectronics identified as Tier 1 items on the CHPL to Russia-based end-users.
• Chips Resources Limited (Chips Resources) is a Hong Kong-registered company that has made thousands of shipments of microelectronics to Russia, including hundreds of shipments to U.S.-designated Mikrosan OOO. Many of these shipments occurred months after Mikrosan OOO’s designation by OFAC in June 2023. Chips Resources is also involved in supporting the efforts of a U.S.-designated entity in Russia to procure electronic components for advanced Russian weapons systems. Chips Resources has made more than $13 million worth of shipments of microelectronics identified as Tier 1 items on the CHPL to Russia-based end-users.
• Hong Kong-registered Maxtronic Global Limited (Maxtronic) and Avtex Semiconductor Limited (Avtex) have both shipped thousands of microelectronics shipments to Russia from locations in Hong Kong and Shenzhen, including items critical to the production of advanced Russian precision-guided weapons. Sinno Electronics executive Peng Minbo is the partial owner of Maxtronic and the full owner of Avtex. Maxtronic and Avtex were previously added to the U.S. Department of Commerce’s Entity List on April 12, 2023. Together, Maxtronic and Avtex have made more than $4.5 million worth of shipments of microelectronics identified as Tier 1 items on the CHPL to Russia-based end-users.
• Hong Kong-registered Avinex Global Limited (Avinex) operates from a Shenzhen-based address associated with Avtex and was registered one week prior to Avtex’s addition to the U.S. Department of Commerce’s Entity List. Avinex has shipped thousands of microelectronic shipments to Russia, including items critical to the production of advanced Russian precision-guided weapons. Avinex has made nearly $5 million worth of shipments of microelectronics identified as Tier 1 items on the CHPL to Russia-based end-users.
• Megachips Limited (Megachips) is a Hong Kong-registered company, likely operating as a front company for Sinno Electronics. Megachips has made hundreds of shipments to U.S.-designated Limited Liability Company Kvazar and is involved in processing payments for a second U.S.-designated Russian entity’s efforts to procure electronic components for advanced Russian weapons systems.

In addition to the above electronics suppliers, OFAC is also designating Polar Bear Electronics Co., Limited (Polar Bear), a Hong Kong-registered company that operates as a financial intermediary between Chips Resources and a U.S.-designated Russian entity.

Allparts, Align, Maxtronic, Avtex, Chips Resources, and Megachips are being designated pursuant to E.O. 14024 for operating or having operated in the electronics sector of the Russian Federation economy. Avinex is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation Economy. Polar Bear is being designated pursuant to E.O. 14024 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Chips Resources. 

Other Third-Country Intermediaries Sending Dual-Use Items to Russia

Established in March 2023, Hong Kong-based 3K Group Limited (3K Group) has sent more than 300 shipments to Russia-based end-users, including U.S.-designated Inelso OOO. 3K Group’s shipments to Russia have included high-priority dual-use technology such as electronic integrated circuits, tantalum capacitors, and multilayer ceramic capacitors. 3K Group is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy. 

India-based Abhar Technologies and Services Private Limited (Abhar) has shipped high-priority dual-use technology, including electronic integrated circuits, to Russian end-users, including U.S.-designated, Russia-based Limited Liability Company Prius Electronics. Abhar is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Hong Kong and PRC-based Ablefast Logistics Shenzhen Limited (Ablefast Logistics) sent more than 170 shipments to Russia-based end-users between May 2022 and January 2024, including lithium-ion batteries, memory chips, and static electric converters. In early 2024, Ablefast Logistics worked on procuring Singapore-origin semiconductor manufacturing equipment ultimately destined for U.S.-designated Russian producers of microelectronics for the Russian military. Ablefast Logistics is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Hong Kong and PRC-based Ace Electronic (HK) Co., Limited (Ace Electronic) has sent more than 300 shipments of high-priority dual-use technology since January 2024 to Russia-based end-users. Additionally, in 2023, Ace Electronic exported American-made radio frequency transceivers to Russia that have been subsequently recovered from Orlan-10 unmanned aerial vehicles (UAVs) used against Ukrainian forces. Ace Electronic is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Hong Kong-based ACS Systems Limited (ACS Systems) has sent more than 100 shipments since April 2023 to U.S.-designated Uniservice Limited Liability Company. Shipments included high-priority dual-use technology such as electronic integrated circuits. ACS Systems is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.       

Since at least February 2022, Hong Kong-based Afox Corporation (Afox) has made thousands of shipments of high-priority dual-use items to Russian government contractor companies, totaling over $100 million in items that are critical to Russia’s weapons systems. These shipments included automatic data-processing machines, solid state drives, and electronic integrated circuits. Afox is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Established in April 2023, Hong Kong-based Auspicious Sun Limited (Auspicious Sun) has sent more than 380 shipments since August 2023 to Russia-based end-users. Shipments included high-priority dual-use technology such as electronic integrated circuits, tantalum capacitors, and multilayer ceramic capacitors. Auspicious Sun is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy. 

Thailand-based Bentozer Company Limited (Bentozer) sent more than 100 shipments to

Russia-based end-users, including of electronic integrated circuits and electronic storage units. Bentozer is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Hong Kong-based Beyond Center Limited (Beyond Center) has sent more than 4,300 shipments since 2023, totaling over $4 million, to a Russia-based technology component company. Beyond Center’s shipments have included high-priority dual-use goods such as electronic integrated circuits, tantalum capacitors, and multilayer ceramic capacitors. Beyond Center was designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.     

Established in November 2023, Hong Kong-based Bhoomi HK Limited (Bhoomi) since December 2023 has sent more than 100 shipments to a Russia-based end-user. Bhoomi’s shipments have included high-priority dual-use technology such as electronic integrated circuits. Bhoomi is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Since 2023, Hong Kong-based Cargo Linkedin International Limited (Cargo Linkedin) has sent more than 2,800 shipments to EK Import, a Russia-based manufacturer of electronic components, loaded electronic boards, and computers. Cargo Linkedin’s shipments to EK Import have included high-priority dual-use technology such as electronic integrated circuits, tantalum capacitors, and multilayer ceramic capacitors. Cargo Linkedin is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy. EK Import is being designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy.

Benin-based Centre Chinois De Developpement Economique Et Commercial Au Benin SARL (Centre Chinois) worked with Hong Kong-based Goldvast Enterprises Company Limited (Goldvast) as part of a procurement scheme to obfuscate shipments of advanced manufacturing equipment and metalworking machines to U.S.-designated, Russia-based Limited Liability Company Engineering Firm AB Universal (AB Universal). AB Universal manufactures non-standard industrial equipment, including CNC milling machines and additive manufacturing equipment. AB Universal supplies technical equipment to Russian industrial enterprises and research centers. Centre Chinois is being designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy. Goldvast is being designated pursuant to E.O. 14024 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods and services to or in support of, AB Universal. 

Established in November 2022, Hong Kong-based Chipgoo Electronics Limited (Chipgoo) sent more than 6,000 shipments totaling over $3.6 million between March 2023 and December 2023 to U.S.-designated dual-use technology importer LLC Altrabeta. Shipments included high-priority dual-use goods such as electronic integrated circuits, tantalum capacitors, and multilayer ceramic capacitors. Chipgoo is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.   

India-based Denvas Services Private Limited (Denvas) is managed and directed by several

Russian nationals involved in defense procurement schemes and has been used by Russia to

procure U.S.-origin microelectronics for use in its advanced conventional weapons as recently as

2023. In April 2023, Denvas shipped low voltage switches and fuses, and at least one shipment

of dual-use integrated circuits, to a Russia-based end-user. Denvas is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

PRC-based Ele Technology Co Ltd (Ele Technology) since January 2023 has sent more than 250 shipments, including machining centers for working metal and horizontal lathes, to U.S.-designated, Russia-based manufacturing company Alfa Machinery Group, which supplies metalworking equipment to Russian manufacturers working with Russian military suppliers. Ele Technology is being designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy.   

India-based Emsystech has sent over 800 shipments, including of electronic integrated circuits and tantalum capacitors, to Russia-based end-users such as U.S.-designated Basis Trade Prosoft LLC, a supplier of industrial computers, components for automated process control systems, and radio-electronic components. Emsystech is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Established in February 2023, Hong Kong-based FK HK Limited (FK HK) sent over 150 shipments since November 2023 to Russia-based end-users. Shipments included high-priority dual-use technology such as electronic integrated circuits, tantalum capacitors, and multilayer ceramic capacitors. FK HK was designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

India-based Galaxy Bearings LTD (Galaxy) and Orbit Fintrade LLP (Orbit) have exported dozens of high-priority dual-use equipment to Russia, including roller bearings and roller assemblies. Galaxy and Orbit sent high-priority shipments to a blocked Russia-based subsidiary of U.S.-designated Russian manufacturing company Limited Liability Company Tek Kom Manufacturing. Galaxy and Orbit are being designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy.

Established in June 2023, Hong Kong-based Group Yeoh Limited (Group Yeoh) has sent more than 250 shipments since September 2023 to Russia-based end-users, including U.S.-designated Russian military industrial base companies Limited Liability Company Promelektro Engineering and Limited Liability Company Elecom. Group Yeoh’s shipments have included high-priority dual-use technology such as electronic integrated circuits, multilayer ceramic capacitors, and tantalum capacitors. Group Yeoh is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy. 

Established in July 2022, Hong-Kong based HK Link Asia Electronics Limited (HK Link) has sent over 700 shipments to Russia-based end-users, including U.S.-designated Torgovyi Dom Simmetron Elektronnye Komponenty. HK Link’s shipments have included high-priority dual-use technology such as electronic integrated circuits and, tantalum capacitors, and multilayer ceramic capacitors. HK Link is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy. 

Established in August 2022, Hong Kong-based Honestwin Technology Co Limited (Honestwin Technology) has sent more than 1,000 shipments since April 2023 to Russia-based end-users. Honestwin Technology’s shipments have included high-priority dual-use technology such as electronic integrated circuits, tantalum capacitors, and multilayer ceramic capacitors. Honestwin Technology is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Hong Kong-based Hong Kong Qisu Electronic Technology Co Limited (Qisu Electronic) has sent more than 2,000 shipments since January 2023 to Russia-based end-users, including U.S.-designated Russian military industrial base companies Microem and Torgovyi Dom Simmetron Elektronnye Komponenty. Qisu Electronic’s shipments have included high-priority dual-use technology such as electronic integrated circuits, tantalum capacitors, and multilayer ceramic capacitors. Qisu Electronic is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy. 

Since May 2022, India-based Innovio Ventures has sent over 200 shipments, including of electronic integrated circuits and multilayer ceramic capacitors, to Russia-based end-users, including U.S.-designated electronic components supplier and military procurement entity LLC Testkomplekt. Innovio Ventures’ shipments have included electronic integrated circuits and multilayer ceramic capacitors. Innovio Ventures has supplied at least $4.9 million of electronic equipment, including drones, to Russia. Innovio Ventures is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

PRC-based Jiaxing Yongchi Mechanical And Electrical Co Ltd (Yongchi Mechanical) has sent more than 50 shipments since June 2023 to Russia-based end-users, including U.S.-designated Baltiyskaya Promishlennaya Kompaniya. Yongchi Mechanical’s shipments have included machining centers for working metal and horizontal lathes. Yongchi Mechanical is being designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy. 

India-based KDG Engineering Private Limited (KDG) has sent over 1,500 shipments to Russia of high-priority dual-use technology, including machines for the reception, conversion, and transmission of data, electrical apparatus for switching, and coaxial connectors. KDG is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Since 2023, India-based Khushbu Honing Private Limited (Khushbu)has sent at least five shipments of advanced machine tools and accessories to U.S.-designated, Russia-based Limited Liability Company Unimatik, a Russia-based CNC machine producer and wholesaler that supplies Russian defense companies with CNC machines and related parts. As of January 2024, U.S.-designated, Russia-based Limited Liability Company AK Microtech sought to evade sanctions by purchasing microelectronics equipment via Khushbu. Khushbu was designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy. 

Montenegro-based Russian national Sergey Kokorev (Kokorev) has used his Montenegro-based company Drustvo Sa Ogranicenom Odgovornoscu International Business Corporation Bar (IBC) to transship European-origin machining centers and ball bearings to Russia-based end-users, including U.S.-designated, Russia-based manufacturing company Limited Liability Company AMS Tekhnika, which is involved in the wholesale distribution of industrial machinery and equipment. Kokorev used IBC to export military equipment from Montenegro to Russia. Kokorev and IBC are being designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy.

India-based advanced machine tool manufacturer and supplier Lokesh Machines Limited (Lokesh) openly advertises its exports to Russia and attended major Russian metalworking exhibitions to showcase its products in 2024. Since 2023, Lokesh has sent dozens of shipments of machine tools to various Russian manufacturing companies. Lokesh employees have been coordinating with U.S.-designated Russian defense procurement agent Dmitrii Vladimirovich Alikhanov (Alikhanov) and his U.S.-designated, Russia-based company Newton-ITM to import Italy-origin CNC machines from U.S.-designated Fagima SPA. That coordination has continued even after the designation of Alikhanov and affiliated individuals and entities. Lokesh is being designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy.

Hong Kong-based Midas Lighting Limited (Midas Lighting) has sent more than 100 shipments of high-priority dual-use items since October 2023 to Russia-based end-users, including to U.S. designated LLC T-Komponent SP. These shipments included items such as electrical transformers, tantalum capacitators, and electronic integrated circuits. Midas Lighting is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Since October 2023, Hong Kong-based Minhoo Logistics Limited (Minhoo Logistics) has sent more than 240 shipments to U.S.-designated Baltelektron Limited Liability Company. Minhoo Logistics’ shipments have included high-priority dual-use technology such as electronic integrated circuits, tantalum capacitors, and multilayer ceramic capacitors. Minhoo Logistics is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy. 

PRC-based Nanchang Kudos Import and Export Company Limited (Nanchang Kudos) handles export business for U.S.-designated Jiangxi Liansheng Technology Co Ltd (Jiangxi Liansheng). Nanchang Kudos has worked on procuring Singapore- and Taiwan-origin semiconductor manufacturing machines for U.S.-designated Fotoniks Klaud that were destined for other U.S.-designated Russian producers of microelectronics for the Russian military. Nanchang Kudos is being designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly,Jiangxi Liansheng. 

Established in March 2022, India-based Pointer Electronics has sent over 100 shipments to Russia-based end-users since 2023, with shipments including high-priority dual-use technology such as electronic integrated circuits and multilayer ceramic capacitors. Pointer Electronics is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Since 2023, Hong Kong-based Richtek Hongkong Electronic Co Limited (Richtek) has sent over 30 shipments to Russia-based end-users, including U.S.-designated Logaid and LLC Testkomplekt. Richtek’s shipments have included high priority dual-use technology such as electronic integrated circuits. Richtek is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Since January 2024, PRC-based Rofo Trading Co Ltd (Rofo Trading) has sent over 40 shipments, including of metalworking machine tools and machine centers, to U.S.-designated Russian military-industrial base companies Limited Liability Company KMT, LLC Mashimport, and Limited Liability Company Inkor. Rofo Trading is being designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy.

Since 2023, India-based RRG Engineering Technologies Private Limited (RRG) has sent over 100 shipments of microelectronics to U.S.-designated, Russia-based Arteks Limited Company. RRG is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Since November 2023, PRC-based Shanghai Zhanjia Trading Co Ltd (Zhanjia Trading) has sent more than 60 shipments, including of lathes, to U.S.-designated Russian military-industrial base company Public Joint Stock Company Chelyabinsk Forge and Press Plant, which manufactures special purpose vehicles. Zhanjia Trading is being designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy. 

India-based Sharpline Automation Private Limited (Sharpline) has sent shipments to Russia of high-priority dual-use machinery and related goods, including lathes, parts and accessories for machine tools, metalworking machining centers, and drilling machines. Sharpline is being designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy.

India-based Shaurya Aeronautics Private Limited (Shaurya) has sent shipments to Russia of high-priority dual-use technology, including radar apparatus, radio navigational aid apparatus and radio remote control apparatus, and electrical apparatus for switching. Shaurya is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

PRC-based Shenzhen A Technology Co Ltd (Shenzhen A Technology) has sent more than 600 shipments to Russia-based end-users since December 2022, including to U.S. designated Russian military-industrial base companies LLC Testkomplekt and Limited Liability Company Promelektro Engineering. Shenzhen A Technology’s shipments have included high-priority dual-use technology such as electronic integrated circuits, tantalum capacitors, and multilayer ceramic capacitors. Shenzhen A Technology is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

PRC-based Shenzhen One World International Logistics Co Ltd (One World) has sent more than 600 shipments to Russia-based end-users, including U.S.-designated Limited Liability Company Elecom, LLC Testkomplekt, and Global Key Limited Liability Company. One World’s shipments have included high-priority dual-use technology such as electronic integrated circuits, tantalum capacitors, and multilayer ceramic capacitors. One World is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

India-based Shreegee Impex Private Limited (Shreegee) openly advertises its provision of goods to Russian manufacturers and lists U.S.-designated, Russia-based Kamaz Publicly Traded Company as one of its customers. Shreegee has sent hundreds of high-priority dual-use items, including aviation-related parts, as well as transmission belts and rubber products for automobile assembly, to Russia-based manufacturers. Shreegee is being designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy.

Since 2023, India-based Shreya Life Sciences Private Limited (Shreya) has sent hundreds of shipments of U.S.-trademarked technology, including advanced servers designed for artificial intelligence and machine learning, to Russia. These shipments, totaling tens of millions of dollars, have included high-priority technology that Russia seeks to procure for its weapons programs. Shreya has sent technology to U.S.-designated Russian technology companies Silkway Limited Liability Company and OOO Lanprint, as well as Mein Chein, a Russia-based wholesaler and importer of computer equipment founded in 2023 that offers “turnkey import” services. Shreya and Mein Chein are being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Since November 2023, PRC-based Sunshine Logistics Shenzhen Co Ltd (Sunshine Logistics) has sent more than 300 shipments to Russia-based end-users, including Russian military-industrial base company Limited Liability Company Ultran Electronic Components. Sunshine Logistics’ shipments have included high-priority dual-use technology such as electronic integrated circuits and multilayer ceramic capacitors. Sunshine Logistics is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.   

Switzerland-based ZG Optique SA (ZG Optique) develops high precision opto-electron instruments and has customers in Russia. ZG Optique has partnered with U.S.-designated Rostec affiliates and has exported technology to U.S.-designated, Russia-based Katod, a night vision device manufacturer. ZG Optique SA is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Trust and Corporate Services Providers (TCSP) Enabling Sanctions Evasion

Baumgartner and Delco

Swiss nationals Andres Baumgartner (Baumgartner) and Fabio Libero Delco (Delco) are major handlers of Russian assets and are important business and cash flow facilitators for Russians. Baumgartner and Delco have provided trust and corporation formation services to many Russian clients, including sanctioned Russian individuals. Baumgartner and Delco are each the director of many Russian-owned entities. 

Intracorp

Thailand-based Intracorp Company Limited (Intracorp) has for several years facilitated the establishment of companies in Thailand for Russians and for third-country nationals wishing to do business with the Russian market. Intracorp caters predominantly to Russian clientele and created and administered the top Thailand-based companies sending high priority items to Russia, including Tsezar Group Company Limited (Tsezar Group) and RBW Lab Co Ltd (RBW Lab). In 2023 and 2024, Tsezar Group sent more than $57 million of goods to Russia-based end-users, including machines for the reception, conversion, and transmission of data, and optical fiber cables. In 2023 and 2024, RBW Lab sent more than 200 shipments to Russia-based end-users, including machines for the reception, conversion, and transmission of data, and magnetic or optical readers.  

Baumgartner, Delco, and Intracorp are being designated pursuant to E.O. 14024 for operating or having operated in the trust and corporate formation services sector of the Russian Federation economy. Tsezar Group and RBW Lab are being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.

Sister Trust

The Sister Trust is a Bermuda and Switzerland-based trust established and controlled by U.S.-designated Alisher Burhanovich Usmanov (Usmanov). Usmanov is actively involved in the management of the Sister Trust and makes all key decisions related to it.  

The Sister Trust is being designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Usmanov, a person whose property and interests in property are blocked pursuant to E.O. 14024. 

Ushko Machine Tools Procurement Scheme

Russia-based Limited Liability Company Tekhnologiya Razvitiya Otkrytykh Sistem (TROS) manufactures metalworking equipment and wholesales machine tools. Russian national Sergei Petrovich Ushko (Sergei Ushko) is the director of TROS. Sergei Ushko’s son, Russian national Aleksandr Sergeyevich Ushko (Aleksandr Ushko), works at a European machine tool company and helps his father procure machine tools for Russia-based end-users. Sergei Ushko and Aleksandr Ushko coordinate with their affiliates, Russian nationals Igor Vladimirovich Khomenko (Igor Khomenko) and Tatyana Valentinovna Khomenko (Tatyana Khomenko), to leverage several Central Asia-based intermediaries to transship advanced machine tools to Russia. Uzbekistan-based OOO Uzstanex (Uzstanex) and Kazakhstan-based Kazstanex operate as nominal recipients of the shipments of machine tools from Europe, before shipping them to PRC-based Shanghai Winsun Imp and Exp Co Ltd (Shanghai Winsun) to reach Russia. 

TROS, Sergei Ushko, Aleksandr Ushko, Igor Khomenko, Tatyana Khomenko, Uzstanex, Kazstanex, and Shanghai Winsun are being designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy. 

Andrei Duben Mining Equipment Procurement Scheme

U.S.-designated Russian procurement agent Marat Khanbalevich Gabitov (Gabitov) has worked with Chile-based Andrei Vladimirovich Duben (Duben) to obtain specialized mining equipment for Russian mining companies. Duben has been Gabitov’s primary South America-based partner to process requests for equipment to be shipped to Russia. 

Duben is being designated pursuant to E.O. 14024 for operating or having operated in the metals and mining sector of the Russian Federation economy.

Illicit Microelectronics Network

OOO Vektor Grupp (Vektor Grupp) is a Russia-based purchaser of U.S.- and non-U.S.-origin microelectronic components. Vektor Grupp works with two Hong Kong companies, Jove HK Limited (Jove HK) and JST Group Limited (JST Group), to procure microelectronics and other components from U.S.-based distributors. Jove HK has shipped optical elements to Russia and JST Group has shipped high priority dual-use goods, including electronic integrated circuits, to Russia. 

Russian national Denis Postovoy (Postovoy) allegedly utilized Vektor Grupp, Jove HK, and JST Group—each of which he owns or operates—to procure and illicitly export microelectronic components with military applications to Russia. On September 16, 2024, the Department of Justice unsealed an indictment charging Postovoy with conspiring to violate the Export Control Reform Act, to commit smuggling, to commit money laundering, and to defraud the United States, following an investigation by Homeland Security Investigations (HSI) in Colorado Springs. Postovoy was arrested the same day.

Vektor Grupp, Jove HK and JST Group are being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy. 

Russian Ministry of Defense Contractor Illicit Procurement Scheme

On August 26, 2024, Hungarian national Bence Horvath (Horvath) was charged by the U.S. Department of Justice with violations of U.S. export controls targeting Russia, including by conspiring with others to illegally export U.S.-origin radio communications technology to Russian government end-users without a license. Horvath allegedly aided in procurement activities involving Russia-based ZAO Budaphone Ltd (Budaphone), a contractor for the Russian Ministry of Defense and certified integration center for the assembly and installation of digital radio communications equipment. Budaphone shares an address with Russia-based Promsvyazradio, which manufactures printed circuits and radio transmitting equipment. Promsvyazradio has also imported high-priority dual-use technology into Russia. Serbia-based Ventrade DOO has exported military-grade radios to Promsvyazradio.

Budaphone and Promsvyazradio are being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy. Ventrade DOO is being designated pursuant to E.O. 14024 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Promsvyazradio. 

OFAC’s action related to this scheme was the result of close and ongoing collaboration with HSI New Orleans Field Division; the Department of Defense’s Defensive Criminal Investigative Service (DCIS); the Department of Commerce’s Bureau of Industry and Security (BIS) Office of Export Enforcement; and the Department of Justice.

Russian Marine Sector Procurement

UPT Network

Russia-based CJSC Perspective Technologies Agency (UPT) performs cable laying and associated support functions for the Russian government, including the Russian Ministry of Defense. UPT is directed by Alexey Alekseyevich Strelchenko (Strelchenko). Strelchenko performs a variety of tasks as the General Director of UPT, including approving cable laying and associated support operations by vessels controlled by UPT. Strelchenko also exercises control over large investments and procurements for UPT. 

Russia-based JSC Transport Freight Agency (Transport Freight) operates several Russian-flagged vessels that are regularly used by UPT for maritime missions. Transport Freight is 100-percent owned by Strelchenko.

Russia-based Joint Stock Company Perspective Technologies Center (TSPT) is a UPT subsidiary that has certified technical specification reports for the Russian Ministry of Defense. TSPT provides engineering support to UPT. TSPT is 100-percent owned by Strelchenko.

Cyprus-based Mostrello Commercial Ltd (Mostrello), British Virgins Island-based Nikesto Investments Ltd (Nikesto), and Belize-based Berezia Management Ltd (Berezia) own Russian-flagged vessels that have been used by Russia-based UPT to conduct maritime missions.

UPT, Strelchenko, Transport Freight, Mostrello, Nikesto, and Berezia are being designated pursuant to E.O. 14024 for operating or having operated in the marine sector of the Russian Federation economy. TSPT is being designated pursuant to E.O. 14024 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, UPT.

Technopole Network

U.S.-designated Technopole Company (Technopole), a Russia-based firm involved in the manufacture and delivery of equipment for ocean exploration, oceanology, and related applications, produces a navigation system designed for Russian military vessels, including high-speed missile boats, as well as submarines and remotely operated autonomous unmanned underwater vehicles. Russian national Evgeniy Krayushkin (Krayushkin) is a Technopole employee who has requested pricing and placed orders on behalf of Technopole. Krayushkin has worked with Technopole owner, U.S.-designated Alexander Petrovich Voronkov (Voronkov), to complete purchase orders through U.S.-designated, Russia-based Technomar for Technopole. Russian national Valery Mikhaylovich Slepov (Slepov) is a representative of Technomar who has attempted to procure equipment for Technomar and worked for Technopole. Russia-based Ineko LLC has procured undersea-related technologies on behalf of Technopole. 

Krayushkin and Slepov are being designated pursuant to E.O. 14024 for having acted or purported to act for or on behalf of, directly or indirectly, Technopole. Ineko LLC is being designated pursuant to E.O. 14024 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, Technopole.

 

ANNEX 2:  RUSSIA’S MILITARY-INDUSTRIAL BASE

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

• Athree Company Limited develops electronic components with defense applications, as well as weapons and other military equipment. Athree Company Limited works with the Russian Ministry of Defense.
• Autonomous Non Profit Organization Institute for Testing and Certification of Armament and Military Materiel develops certification technologies and quality control systems for the Russian Ministry of Defense and U.S.-designated Russian defense companies.
• Federal State Budgetary Institution Russian Academy of Rocket and Artillery Sciences (Russian Academy of Rocket and Artillery Sciences) works with the Russian Ministry of Defense and U.S.-designated Russian defense organizations. The Russian Academy of Rocket and Artillery Sciences focuses on using advanced technologies for military purposes, conducting research for weapons systems, and supporting the development and procurement of weapons systems. 
• Joint Stock Company Intellect Mashine develops weapons, including drones used in Russia’s invasion of Ukraine.
• Joint Stock Company Research and Production Association Volna develops electronic equipment for the Russian Ministry of Defense and Russian law enforcement agencies.
• Joint Stock Company Scientific Research Institute of Communication Systems and Automated Control Systems develops automatic control and communication systems and other military equipment for the Russian military.
• Limited Liability Company Astron Aero develops drones and combat anti-drone systems and has presented its products at a Russian defense exhibition. 
• Limited Liability Company Nauchno Proizvodstvennoe Obyedinenie Kaisant develops man-portable anti-drone weapons used by the Russian military.
• Moscow Aviation Institute (MAI) trains personnel in aircraft armaments, weapon control systems, and targeting systems and that also trains engineers in the design and manufacturing of robotic systems for military use. MAI trains aviation personnel for U.S.-designated Russian defense conglomerate State Corporation Rostec (Rostec), and Rostec personnel participate in instruction and research at MAI.   
• OOO Konstruktorskoe Byuro Spektr Inzhiniring develops sea, air, and land drones with reconnaissance, minelaying, and combat applications that are used by the Russian military.
• OOO Nauchno Proizvodstvennoe Obyedinenie TSVBP develops remote-controlled military vehicles for personnel transport and minelaying.
• State Unitary Enterprise Center for Technical Development and Services Named After P A Sudoplatov of the Military and Civil Administration of the Zaporizhzhia Region, based in Russia-occupied Ukraine, is an official supplier of UAVs to the Russian Ministry of Defense.

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

• AO NPO Angstrem develops software for Russia’s military.
• Autonomous Non Profit Organization Institute of Engineering Physics produces a military metrological complex for verification and calibration of gyrocompasses.
• Bastion EK supplies electronic and automated elements to Russia’s military-industrial base.
• Chip&Dip produces semiconductor modules and electrolytic tantalum capacitors, items used by Russia to produce sophisticated weapons. 
• Elmak manufactures diodes, transistors, electronic integrated circuits, and other semiconductor devices. 
• Energon develops and supplies solutions for the storage and generation of energy, mainly focused on industrial batteries.
• Energotest LLC produces ultrasonic liquid flow meters, thermal imagers, and current-measuring transformers, voltmeters, and ammeters. Ultrasonic flow meters have applications in the aerospace and defense industries, including for propellants and to ensure accurate propulsion and trajectory control in missile guidance systems.
• Federal State Budgetary Institution of Science Institute of Problems of Mechanics Named After A Yu Ishlinsky Russian Academy of Sciences (Ishlinsky) performs research general mechanics, navigation systems, robotics and mechatronics, and laser technology. Ishlinsky carries out activities with the U.S.-designated Federal Autonomous Enterprise The Central Aerohydrodynamic Institute Named After Professor NE Zhukovsky, which is involved in military aircraft research.
• Gigant Computer Systems LLC is a computer systems and information technology company that has partnered with U.S.-designated companies ICL Techno Limited Liability Company, and Red Soft, a member of the Military-Industrial Complex of the Russian Federation Coordination Council for Information Technology. 
• Institute for Information Transmission Problems of the Russian Academy of Sciences conducts research in areas such as analysis methods of computer models of continuous systems and cognitive methods for the development of computer design of complex technical objects. 
• Institute for System Programming of the Russian Academy of Sciences (System Programming), an institute focused on information technology, has clients such as U.S.-designated LLC Security Code, whose clients include Russia’s Ministries of Defense and Internal Affairs, and an entity that has cooperated with Russian military and intelligence authorities in support of the Russian Government’s cyber intelligence objectives.
• IPC2U LLC develops and produces equipment such as industrial servers and embedded computers for industrial automation. IPC2U LLC has imported hundreds of shipments of integrated circuits.
• JSC CSPA Leninetz is involved in high-tech production for military purposes, including radioelectronic complexes and microelectronics-related systems.
• JSC Modeling and Digital Doubles (Digital Doubles) implements software products for numerical modeling and engineering analysis. Digital Doubles’ clients include U.S.-designated Joint Stock Company Concern Kalashnikov, Russia’s leading manufacturer of combat firearms.
• Joint Stock Company Pribory Service Torgovlya (Torgovlya) supplies devices for electrical measurements. Torgovlya has contracts with U.S.-designated Joint Stock Company Production Association Strela, which develops and produces missiles for Russia’s Ministry of Defense.
• Joint Stock Company Research Institute of Semiconductor Devices produces microwave semiconductor devices and manufactures products for the military-industrial base.
• Joint Stock Company Science and Production Enterprise Air and Marine Electronics (Marine Electronics) carries out work related to radio-technical equipment; hydroacoustic equipment; optoelectronic systems; autonomous ship navigation systems; and robotic unmanned systems. Marine Electronics has marketed its products and services to customers in Russia’s military-industrial base.
• Krip Tekhno specializes in the development, testing, and production of semiconductor devices and integrated circuits. More than 90 percent of Krip Tekhno’s products are manufactured for Russia’s military-industrial base.
• Lavrentyev Institute of Hydrodynamics of Siberian Branch of Russian Academy of Sciences (Lavrentyev) conducts fundamental research and participates in the development of scientific foundations of modern engineering and technology in areas including mathematical problems of continuum mechanics, physics and mechanics of high-energy processes, and mechanics of liquids and gases. Lavrentyev has government contracts for the development, manufacturing, installation, installation supervision, and adjustment supervision of technological equipment.
• Limited Liability Company AFM Servers (AFM) develops and implements a range of software products for automation and data migration. AFM manufactures the Kartograf, a Russian unmanned aerial system used by the Russian military.
• Limited Liability Company Axalit Lab (Axalit Lab) sells laboratory analytical equipment. Axalit Lab’s technology includes analysis systems, optical microscopes, and electron microscopes.
• Limited Liability Company Axalit Soft has developed a high-speed hyperspectral camera with military applications.
• Limited Liability Company EMT (EMT) supplies Russian enterprises with equipment used in ground and air tests of products in the electronics, aerospace, shipbuilding, and automotive industries. EMT mainly supplies onboard systems for measuring, storing, and transmitting data via telemetry channels for flight tests of aircraft, helicopters, and missiles. 
• Limited Liability Company NTC Arsenal (NTC) produces printed circuit boards, supplies electronic components, and is involved in the assembly of electronic modules with military applications. 
• Limited Liability Company Organic and Printed Electronics Technologies is a joint venture of U.S.-designated Joint Stock Company Central Research Institute Cyclone that produces microdisplays for the Russian army.
• Limited Liability Company Research Institution ISON Orbital Dynamics (ISON OD) is involved in the repair of electronic and optical equipment and the wholesale of computers, computer peripheral equipment, and software. Igor Yevgenyevich Molotov, owner of Small Innovation Enterprise ISON Ballistics Service, both designated on February 23, 2024, has used ISON OD, owned by Stanislav Igorevich Molotov, to circumvent sanctions.  
• Limited Liability Company Tekhspetskomplekt specializes in the procurement of electronic components and the supply of imported electronic components, including digital components, power electronics components, electromechanical components, and industrial automation systems.
• LLC Grant Instrument imports electronic integrated circuits. 
• LLC Interresurs (Interresurs) imports semiconductor production machines. Interresurs’ top suppliers include U.S.-designated Bosphorus Gate Dis Ticaret Limited Sirketi and Globus Turkey Lojistik Dis Ticaret Limited Sirketi. 
• LLC Sinto is an information technology system integrator specializing in projects including the construction and modernization of data processing centers. LLC Sinto’s partners include an entity that cooperates with Russian military and intelligence authorities in support of the Russian government’s cyber intelligence objectives.
• MIG Elektro (MIG) supplies electronic components and industrial automation equipment. 
• Nauchno Proizvodstvennoe Obyedinenie Programmnye Kompleksy Realnogo Vremeni (Vremeni) designs and develops exoskeletons and mountings for printed circuit boards. Vremeni is owned by U.S.-designated, Russia-based Joint Stock Company Tulatochmash, which works within Russia’s weapons and ammunition manufacturing industry.
• OOO Fabrikon (Fabrikon) manufactures computers and has Russian government procurement contracts to supply a Rostec-affiliated provider of technology solutions intended to serve government agencies.
• Opytno Konstruktorskoe Byuro Pribor (Pribor) creates microprocessors and software security systems.
• O-Si-Es-Tsentr, OOO is an authorized Russian government contractor that supplies IT products, such as memory storage equipment and software. 
• Sotis is a computer equipment supplier that has supplied critical products to U.S.-designated Limited Liability Company Yadro Fab Dubna, which is implementing a project to create Russia’s largest modern production plant for the production of circuit boards.
• Stock Company Morion Inc designs and manufactures quartz frequency control products and supplies the Russian defense industry with quartz generators.
• Superwave Group LLC is an authorized Russian government contractor that imports and manufactures biometric products, interchangeable tool bits, computer equipment, and other critical technology items. In addition, Superwave Group LLC manufactures military-grade drones. 
• Tekhnomaks Krasnoyarsk offers solutions in ensuring information security and replacement of foreign equipment and software with domestic Russian analogues.
• Telecom Integration Limited Liability Company (Telecom Integration) is a systems integrator in the information security and information technology fields. Telecom Integration’s partners include U.S.-designated Secret Technologies, which provides advanced information technology and information security services and solutions and serves large state-owned enterprises.
• Tornetcom LLC is an authorized Russian government contractor that supplies data-processing machines, storage units for automatic data-processing machines, and other technology items. 
• Tradestory LLC is an authorized Russian government contractor that imports and manufactures computers, electrical static converters, power supply units, video cards, and other critical technology items. 
• V A Trapeznikov Institute of Control Sciences of Russian Academy of Sciences (Trapeznikov) is involved in the development of jet technology, the control of aircraft gas turbine engines, multiprocessor computers, and control computing complexes.  Trapeznikov’s partners include the Russian Ministries of Defense and Internal Affairs.
• Vektor OOO supplies integrated circuits, data-processing machines, software, and other critical technology items. 
• Voltag LLC (Voltag) develops and manufactures industrial uninterrupted power supply systems. Voltag’s product line includes charging and rectifying devices, static inverters, uninterrupted power supply units, distribution boards, and batteries. Voltag’s systems are used at Russian Ministry of Defense facilities.
• Zakrytoe Aktsionernoe Obshchestvo MPO Elektromontazh (MPO Elektromontazh) produces coaxial cables, electronic motors, electric boards, relays, circuit breakers, automatic switches, electric drills, and grinders. MPO Elektromontazh has been a supplier in dozens of Russian government contracts.

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

• Aktsionernoe Obschestvo Kazanskii Zavod Sinteticheskogo Kauchuka (Kauchuka) manufactures synthetic rubber, including for Russia’s shipbuilding industry. Kauchuka has exhibited its developments at trade shows run by the Russian Ministry of Defense.
• Aktsionernoe Obshchestvo Akusticheski Institut Imeni Akademika NN Andreeva (Andreeva Institute) develops and manufactures equipment complexes for marine geological exploration and underwater security systems. Andreeva Institute has exhibited at trade shows run by the Russian Ministry of Defense. 
• Aktsionernoe Obshchestvo Stalepromyshlennaya Kompaniya (Stalepromyshlennaya) manufactures steel bars and metal structures. Stalepromyshlennaya has served as a supplier for Russian government procurement contracts with U.S.-designated entities involved in missile production.
• Aktsionernoe Obshchestvo Tambovskii Zavod Oktyabr produces military electronics and focuses on both producing new products for Russian troops and repairing equipment previously supplied to Russian troops.   
• AO NPP Zvezda develops aerospace products and in-flight refueling systems and sells military equipment. 
• AO Volzhskii Dizel Imeni Maminykh (Volga Diesel) manufactures diesel and gas engines. Volga Diesel has exhibited equipment it at trade shows run by the Russian Ministry of Defense.
• Armalit Joint Stock Company (Armalit) specializes in the design, manufacture, and supply of valves for the shipbuilding industry. Armalit has exhibited at trade shows run by the Russian Ministry of Defense.
• ASF Development Limited Liability Company (ASF) manufactures valves and robotic devices. ASF has exhibited at trade shows run by the Russian Ministry of Defense.
• Auroratools Limited Liability Company (Auroratools) manufactures machine tools. Auroratools has exhibited at trade shows run by the Russian Ministry of Defense.
• Avtodom Ltd manufactures special purpose vehicles and provides vehicles to Russia’s Federal Security Service (FSB) and other Russian government security agencies.
• Century of Technologies HTE Company Limited supplies transportation and materials-handling equipment and serves as an official dealer of Russian manufacturers of lifting and handling equipment. 
• Closed Joint Stock Company Testron Association produces non-destructive testing equipment used by various Russian defense industry enterprises.
• Company Limited Komax manufactures machine tools and assembles and supplies industrial equipment, including equipment for a project to update the machine fleet for the repair shop of U.S.-designated Public Joint Stock Company Severstal. 
• ETS Siberia manufactures machine tools and supplies welding equipment and technology. ETS Siberia’s welding equipment and technology have been used by the Russian Ministry of Defense.
• GIT Sistems manufactures instruments and appliances for measuring, testing, and navigation and high-tech equipment.GIT Sistems has participated in an exhibition organized by the Russian Ministry of Defense.
• Joint Stock Company Berg AB (Berg) wholesales bearings. Berg’s customers include numerous U.S.-designated Russian defense companies, as well as equipment manufacturers involved in machine-building.
• Joint Stock Company Cordiant manufactures rubber products and supplies goods to the Russian military-industrial base. 
• Joint Stock Company Experimental Design and Technological Bureau Valday produces optical devices, including night vision equipment and gun sights, and has supplied the Russian Ministry of Defense.
• Joint Stock Company Yaroslavsky Experimental Machines Plant develops and manufactures procurement and assembly equipment for the tire retreading industry. Its customers include the Russian Ministry of Defense and multiple U.S.-designated entities, including Tactical Missiles Corporation JSC. 
• JSC FAB Rassvet manufactures guided missiles and aerospace parts. 
• JSC Finval Energy (Finval) partners with Russian manufacturers to provide industrial and spare parts. Finval sells machine tools from a plant that has supplied machine tools to Russian weapons manufacturers. 
• Kamskii Kabel manufactures wires and cables for the aircraft and shipbuilding industries. 
• Khromos Engineering manufactures devices, sensors, and equipment, including for the Russian Ministry of Defense.
• Limited Liability Company Advanta M SPB manufactures metal structures and products. 
• Limited Liability Company CNC Volga is involved in the manufacturing of engines and machine tools and has imported horizontal lathes, machining centers, and milling machines.
• Limited Liability Company Delaziya supplies manufacturers with rare parts, raw materials, and other materials for production lines.
• Limited Liability Company Elektroprofi (Elektroprofi) supplies electrical equipment and has direct partnerships with Russian manufacturers. Elektroprofi’s customers include a company in the Russian military-industrial base.
• Limited Liability Company Energo Arsenal manufactures and installs industrial lighting. Its customers include U.S.-designated defense companies Irkutsk Aviation Plant, which produces fighter aircraft, and armored vehicle manufacturer KAMAZ Publicly Traded Company (KAMAZ).
• Limited Liability Company Inzhiniringovyi Tsentr Po Osnashcheniyu Proizvodstv (Engineering Center) manufactures tools and metal structures and repairs machinery and equipment. Engineering Center has supplied equipment to numerous U.S.-designated companies, including military engine producers Public Joint Stock Company ODK Saturn and AO Proton PM.
• Limited Liability Company Liontech S manufactures equipment used for the production of complex electronic products and supplies equipment for the Russian defense industry.
• Limited Liability Company Mapper manufactures electron optic elements, micro-electro-mechanical systems, and other high-tech products.
• Limited Liability Company Masheks Service (Masheks Service) wholesales machine tools and repairs machinery. Masheks Service has conducted work for U.S.-designated, Russia-based Joint Stock Company Karachev Plant Electrodetal, which develops wiring devices and electronic equipment. 
• Limited Liability Company Master RM supplies and repairs office equipment, including laser printers, copiers, and other machinery.
• Limited Liability Company Meehanite (Meehanite) supplies metalworking equipment produced by Russian and non-Russian machine tool factories. Meehanite has contracted for U.S.-designated Tactical Missiles Corporation JSC.
• Limited Liability Company Melytec Testing (Melytec) wholesales special purpose machinery and machine tools, manufactures equipment and tools, and repairs equipment. Melytec has provided its products to U.S.-designated companies, including armored vehicle manufacturer KAMAZ.
• Limited Liability Company Opytno Konstruktorskoe Byuro Sokol (Sokol) manufactures computers. Sokol has developed first-person view (FPV) glasses that are designed to control an FPV drone when performing tasks in combat conditions. 
• Limited Liability Company PK Kompressor CHLB wholesales machine tools and the repair of machinery.
• Limited Liability Company Reolgreid Service wholesales special purpose machinery, supplies equipment from non-Russian manufacturers, and repairs electronic, optical, and electrical equipment.
• Limited Liability Company Research and Production Center Kropus PO (Kropus) develops and supplies non-destructive testing tools. Kropus also specializes in the repair of electronic and optical equipment. Kropus’ clients include U.S.-designated Russian defense companies such as Public Joint Stock Company United Aircraft Corporation and Joint Stock Company Russian Helicopters.
• Limited Liability Company Scientific Research Institute of Organic Technologies Inorganic Chemistry and Biotechnology is a chemical manufacturer that supplies the Russian military-industrial base. Its partners include the U.S.-designated State Scientific Research Institute of Organic Chemistry and Technology, a Russian institute that has worked on the development of Russia’s chemical weapons.
• Limited Liability Company STM supplies laser cutting systems and pressing equipment, including to the U.S.-designated Moscow State Technical University Named After N.E. Bauman. 
• Limited Liability Company Stroitelnye I Kommunalnye Tekhnologii manufactures electric motors and power-driven tools. 
• Limited Liability Company TM Tech manufactures metalworking equipment, supplies metalworking equipment from non-Russian manufacturers, and wholesales machine tools.
• Limited Liability Company TSK Grandavto manufactures spare parts and components for diesel engines and motor vehicles.
• Limited Liability Company Vega OM leases machinery, including to a Russian company that develops and produces engines for military use. 
• LLC Arsenal distributes tools and equipment, partners with Russian manufacturing plants, and supplies the Russian government with components critical for weapons systems. 
• LLC Delion is an electro-transport manufacturing plant that supplies U.S.-designated Russian defense companies. 
• Magnitogorskii Elektrodnyi Zavod (MEZ)manufactures electrodes for manual electric arc welding. One of MEZ’s clients is U.S.-designated strategic bomber designer and producer Tupolev Public Joint Stock Company. 
• Metallotorgovaya Kompaniya Kraso supplies and manufactures metal structures and reinforced concrete products. Its partners include U.S.-designated metals companies Public Joint Stock Company Severstal and Publichnoe Aktsionernoe Obschestvo Magnitogorskiy Metallurgicheskiy Kombinat. 
• Nauchno Proizvodstvennoe Predpriyatie Irvis manufactures in-pipe gas velocity sensors and other testing and measurement equipment. Its partners include the U.S.-designated Federal State Budgetary Institution of Science Federal Research Center Kazan Scientific Center of the Russian Academy of Sciences. 
• Nauchno Proizvodstvennoe Predpriyatie TRIM SSHP Izmeritelnye Sistemy manufactures testing and measurement equipment and has supplied numerous U.S.-designated Russian defense companies.
• New Technologies wholesales machinery, equipment, and machine tools and develops, designs, installs, and maintains equipment. It is involved in activities with U.S.-designated Russian defense companies Public Joint Stock Company United Aircraft Corporation, which produces Russian combat aircraft, and Joint Stock Company Kazan Helicopters. 
• Oboron Holding LLC sells testing and measurement equipment designed for military manufacturing processes, including equipment required for the development of Russian electronic warfare systems.
• OOO BLM Sinerzhi (Sinerzhi) sells industrial machinery, including balancing equipment used by U.S.-designated Russian defense conglomerate Rostec to develop military aircraft engines. Sinerzhi has a license to develop and produce military equipment.
• OOO DST Ural manufactures bulldozers and other heavy vehicles, including a remote-controlled minesweeping vehicle used to support Russian operations in occupied Ukraine.
• OOO Kolovrat sells components for manufacturing equipment, including high-speed drills used by Russian advanced weapons manufacturers.
• OOO KrasMK serves as a dealer and representative of manufacturers and supplies machine tools, machinery, and industrial equipment. Its customers include U.S.-designated Russian defense companies involved in manufacturing UAVs and combat vessels.
• OOO Nauchno Proizvodstvennaya Firma Avek sells industrial equipment, including military-grade videoscopes. 
• Otkrytoe Aktsionernoe Obshchestvo Elektromashinostroitelnyi Zavod Velkont produces microelectronics for enterprises engaged in arms production and manufactures electric motors for UAVs.
• Pnevmoresurs LLC manufactures equipment and machinery and repairs spare parts. Pnevmoresurs LLC has supplied items to multiple U.S.-designated Russian entities, including one of Russia’s leading military-industrial chemical enterprises.
• Pnevmoresurs manufactures bearings and gears and repairs machinery and equipment.
• Restart Limited Liability Company (Restart) offers air-powered transport platforms that are widely used in shipbuilding and the manufacture of shipbuilding components. Restart has exhibited at trade shows run by the Russian Ministry of Defense.
• Russkaya Mekhanika Joint Stock Company manufactures off-road vehicles, including for the Russian Ministry of Defense. 
• Saint Petersburgs Aviation Repair Company ZAO (SPB Aviation Repair) manufactures engines and engine systems. SPB Aviation Repair also offers support services such as the overhaul and maintenance of military helicopters.
• Shpinner manufactures fabricated metal products and has received Russian government procurement contracts, including from an entity associated with Russian missile development.
• Smolenskoe Proizvodstvennoe Obyedinenie Analitpribor is a research and production company engaged in the engineering and development of gas-analysis equipment, as well as the manufacture of weapons and ammunition. 
• Soldream SPB Limited deals machine tools and other manufacturing equipment, including machines used by Russian defense companies.
• Spets Prozhekt Grupp produces armored structures and protective equipment used by military units.
• STD Radiks OOO (Radiks) manufactures devices and instruments for navigation, control, measurement, and monitoring. Radiks has received thousands of contracts to supply a U.S.-designated Russian entity that makes lasers and other devices for Russia’s military. 
• TD ESKO Limited sells testing and measurement equipment designed for military manufacturing processes, including equipment required for the development of Russian electronic warfare systems. 
• Technobearing Limited Company supplies bearings and other components for industrial equipment, including components used by Russian advanced weapons manufacturers.
• TOS Varnsdorf Rus Co Ltd manufactures horizontal boring machines and has received Russian government contracts, including for two U.S.-designated Russian missile defense production companies.
• Vyatka Machine Tool Plant LLC (Vyatka Machine Tool Plant) produces metalworking machines. Vyatka Machine Tool Plant’s customers include a Russian missile manufacturer.
• Zavod Goreltex Co Ltd manufactures explosion-proof electrical equipment and sells its products to the defense industry.

The following persons are being designated pursuant to E.O. 14024 for operating or having operated in the aerospace sector of the Russian Federation economy:

• AGM Systems LLC manufactures mobile and airborne laser scanners for 3D terrain mapping and aerial photography for use on UAVs.
• Area Joint Stock Company develops autonomous unmanned complexes using artificial intelligence, including a target lock algorithm for one-way attack UAVs. 
• Center for Unmanned Systems of the Tula Region manages a training center for UAV pilots, including those affiliated with the Russian Ministry of Defense, and also manufactures combat UAVs.
• Joint Stock Company Aircraft Service Company manufactures engines and other components for aircraft and missiles.
• Joint Stock Company Engineering Center IKAR (IKAR) designs and manufactures UAVs, including UAVs used by the Russian military in Ukraine.
• Joint Stock Company Laserservice manufactures aircraft and has been involved in international transactions for aircraft components and sensors on behalf of U.S.-designated defense company Rosoboronexport JSC.
• Joint Stock Company Moscow Scientific and Production Complex of Avionica O V Uspensky manufactures avionics and flight control systems and has worked on Russian next-generation bomber aircraft.
• Limited Liability Company Aeromaks (Aeromaks) develops aerial surveillance and digital geo-information platforms. Aeromaks works with IKAR to manufacture UAVs.
• Limited Liability Company Horizon Aero develops UAVs, including a vertical takeoff and landing drone used by the Russian military in Ukraine for reconnaissance and fire adjustment.
• Limited Liability Company JSC Unmanned Technologies develops and provides UAVs and anti-drone guns to the Russian military for use in Ukraine.
• Limited Liability Company KB Atamanova develops combat UAVs used by the Russian military in Ukraine.
• Limited Liability Company Konstruktorskoe Byuro Valkiriya purchases UAVs from outside Russia and provides them to the Russian military.
• Limited Liability Company Kriogenavia NN provides spare parts for airfield equipment, including that belonging to designated Russian defense companies.
• Limited Liability Company Molot Aero manufactures combat UAVs.
• Limited Liability Company Nebesnaya Mekhanika wholesales UAVs purchased outside Russia and provides drones and equipment in support of Russia’s invasion of Ukraine.
• Limited Liability Company NPO Utesov, a company based in Russia-occupied Ukraine, assembles and sells UAVs to pro-Russian militias operating in Ukraine.
• Limited Liability Company Ptero (Ptero) develops reconnaissance UAVs, including those used by the Russian military in Ukraine. Ptero has worked with Aeromaks on systems to track drones.
• Limited Liability Company Russkaya Laboratoriya Vozdushnogo Transporta develops UAVs, including attack UAVs. 
• Limited Liability Company Unmanned Technologies of Mordovia develops combat UAVs.
• Limited Liability Company Vozdushnyi Traktat provides drones to pro-Russian militias in Ukraine.

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. Non-U.S. persons are also prohibited from causing or conspiring to cause U.S. persons to wittingly or unwittingly violate U.S. sanctions, as well as from engaging in conduct that evades U.S. sanctions. OFAC’s Economic Sanctions Enforcement Guidelines provide more information regarding OFAC’s enforcement of U.S. sanctions, including the factors that OFAC generally considers when determining an appropriate response to an apparent violation. 

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 Frequently Asked Question 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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As Prepared for Delivery

Thank you for inviting me to speak to you today. It’s an opportunity for me to recognize the importance of your work advocating for and shaping strong Tribal-federal relations and policies and to discuss what we at the Treasury Department have done on Tribal issues over the past three and half years.

From the beginning, we have worked in partnership with Tribal leaders. A few months after becoming Treasury Secretary, I became the first Treasury Secretary to attend a meeting of the Treasury Tribal Advisory Committee. I heard clearly then how much more we needed to do in areas from consultations with tribes to tax guidance. 

A little over a year later, I became the first Treasury Secretary to visit a Tribal nation. At Rosebud in South Dakota, Tribal leaders and I discussed additional challenges, from the economic devastation caused by the COVID-19 pandemic to deeply-rooted barriers to access to capital.

The Treasury Department has been committed to responding to what we’ve heard and making real and lasting progress for Tribal economies. 

Our work started with putting in place the systems we needed to strengthen Tribal-federal relations and make good policy. We created Treasury’s Office of Tribal and Native Affairs and appointed our nation’s first Native American Treasurer, Chief Malerba. We updated Treasury’s consultation practices to incorporate Tribal consultation for the first time. We’ve now held more than 50 consultations with Tribal communities and more than 800 engagements with Tribal leaders. That’s many more than any prior Treasury Department.

We then made sure that Tribal nations were part of our historic economic recovery. We distributed $20 billion in State and Local Fiscal Recovery Funds to Tribal governments, helping maintain vital public services and support households and businesses facing the economic impacts of COVID-19. We allocated additional funds to Tribes to support Tribal enterprises and Tribal citizen small businesses through the State Small Business Credit Initiative and have now awarded more than $500 million to more than 230 Tribes. 

These funds can be transformational. They are helping Tribes like the Akiak Native Community in Alaska, which used a $647,000 award to invest in a new Tribal enterprise, Yupiit Grant Services. It supports Tribes and Native communities in accessing and administering federal grants, such as for building infrastructure in the remote Kuskokwim Delta of Southwest Alaska. 

We have also put Tribal nations at the center of our efforts to build a strong and inclusive economy over the medium- and long-term. We’ve worked to make sure that Tribal nations benefit from the key aspects of our economic agenda, such as the Inflation Reduction Act’s tax credits for clean energy like solar. And we’ve tackled tax policy issues that have persisted for decades and that many thought were intractable. In September of this year, we released proposed rules implementing the General Welfare Exclusion that give deference to Tribal nations on a wide range of matters. Once finalized, these rules will provide Tribes with the long-awaited clarity they need to support Tribal communities. 

Just earlier this month, Treasury and the Internal Revenue Service addressed a different issue that had been pending for thirty years—the tax status of Tribally-chartered entities. We published a notice of proposed rulemaking confirming that wholly-owned Tribal entities share the same federal tax status as the Tribes that own them, and that these entities may file directly for elective pay to access clean energy tax credits. This will help give Tribes the certainty they need to strengthen their economies.

There is no question that we have much more work to do. But I’m very proud of what we’ve accomplished. And I look forward to together continuing to advance our work.

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As Prepared for Delivery

Let me start by thanking President Nichols for the invitation and for his leadership. I am very glad to have the opportunity to speak to all of you today.

Over the past four years, we have forged a strong partnership to get American households and businesses the capital they need, expand economic opportunity, and support the resilience of our financial system. I’d like to speak about this collective work today, and there is no better place to start than to step back to reflect on our economic trajectory since the start of this Administration.

When President Biden and Vice President Harris took office, thousands of Americans were dying each day from COVID-19. The unemployment rate was 50 percent higher than it is now. Today, by contrast, the U.S. economy is strong. We’ve seen robust economic growth, bolstered by solid consumer spending and business investment, even while inflation has come down significantly from its peak. The U.S. labor market remains healthy, with the unemployment rate near historic lows and the prime-age labor-force participation rate near all-time highs. While there is more to do to bring down the cost of living, wages have risen faster than prices, which means that the typical American can afford more goods and services than before the pandemic. And Americans are starting new businesses at a record rate, reflecting optimism about the economy.

We haven’t gotten to where we are by chance. From our first day in office, the Biden-Harris Administration acted quickly and decisively to drive a historic economic recovery and put our economy and financial system on stronger footing for the long-term.

We also didn’t get here alone. The banking sector has been critical. From the start, we recognized the value of a broad and diverse banking system, from small community banks to the largest players, with strong capital and liquidity. And in recent years, banks navigated the pandemic and made it through the regional banking stress, continuing to serve as a backbone for Americans’ financial health and our country’s economic growth. Community banks in particular have played a key role, including by providing a significant portion of small-business loans relative to their assets.

I. Economic Recovery

Let me discuss several key areas of our partnership, starting with our historic economic recovery. The recovery depended on getting money out the door to families and businesses as quickly and responsibly as possible. This meant working with the banking system, such as to deliver the American Rescue Plan’s Economic Impact Payments to millions of families.

This was far from business as usual. Treasury conducted outreach to encourage opening free and low-cost transaction accounts to receive these payments. And banks took action to support their customers at that extremely difficult time, with many community banks, for example, reducing or eliminating penalties for late payments on loans or credit card bills.

We also depended on banks for other recovery programs, such as the State Small Business Credit Initiative, a landmark small business program housed at Treasury. Community banks are behind around 90 percent of the SSBCI loans that are supported by banks. We see their impact in examples like Spencer Manufacturing, a family-owned business in Michigan that expanded its manufacturing thanks to SSBCI support and an over $4 million loan from a Michigan-based community bank. As we marked on the CDFI Fund’s 30th anniversary last month, our Administration has also provided unprecedented support to community development financial institutions to help communities recover and invest for the long-term.

II. Strong and Inclusive Growth

And we’ve continued to work with banks as we’ve looked to drive strong and inclusive growth. Treasury has announced millions in new SSBCI awards. And we’re partnering with CDFIs as we address challenges that have been mounting for decades, such as the drastic shortage of housing units. The CDFI Fund helped finance more than 100,000 affordable housing units last year, and we’ve worked to expand its impact, such as by launching a new program that will provide an additional $100 million over the next three years to support the financing of affordable housing.

As part of our focus on driving strong and inclusive growth, we’re also working closely with financial institutions to accelerate the transition to a lower-carbon economy. Treasury’s Principles for Net-Zero Financing and Investment support financial institutions that make net-zero commitments in taking consistent and credible approaches. And financial institutions are key partners to taxpayers seeking to take advantage of the Inflation Reduction Act, including through the transferability market. I strongly believe that banks must stay the course in realizing the opportunities of the transition and in more broadly considering impacts to business from climate change.

And as we look to the long-term, we also see banks of all sizes as key to our efforts to expand financial inclusion. For example, Treasury has supported the efforts of the Economic Opportunity Coalition, a public-private partnership announced by Vice President Harris with bipartisan backing. The EOC’s members, including several of America’s largest banks, have committed over $1 billion to community lenders to reach underserved communities across the country.

And many of you in this room have been involved in other important efforts. Take the example of Reading Cooperative Bank in Massachusetts, led by former ABA Chair Julie Thurlow. Under Julie’s leadership, its extensive work to advance financial inclusion has included opening a new branch staffed with bilingual bankers in an immigrant community, providing loans to finance housing redevelopment, and pioneering innovative financial products that meet customer needs. In Wisconsin, Bay Bank, a minority depository institution, is serving its community by providing financial education to Tribal citizens and helping them build credit.

To move this work forward, I am proud to announce today the launch of our National Strategy for Financial Inclusion in the United States. It provides a roadmap for the public, private, and non-profit sectors to promote the ability of all communities to fully participate in our robust economy and financial system.

The strategy benefited from a yearlong process to gather input, including sustained engagement with ABA staff and members, other government agencies, consumer advocates, and many others. And it importantly focuses not just on increasing access to the financial system but also on leveraging that access to drive better consumer outcomes like increased financial resilience, wellbeing, and wealth.

It emphasizes the need for action to expand access to transaction accounts and to safe and affordable credit; increase retirement and emergency savings opportunities; improve government financial services; and strengthen consumer protections. Access to safe, affordable financial products and unbiased information can help all Americans pursue financial security. And banks have roles to play across these activities, from facilitating payments to offering credit. We will continue to seek your active partnership in moving this strategy forward.

III. Financial Stability

And as we’ve driven a historic economic recovery and pursued strong and inclusive long-term growth, we’ve also focused on working with banks to maintain and strengthen financial stability.

In March of 2023, we acted decisively in response to runs at Silicon Valley Bank and Signature Bank that were particularly large and fast by historical standards. After regulators closed the banks, we worked quickly to enable all depositors to access their funds. I also approved the Federal Reserve’s establishment of the Bank Term Funding Program. Helped by the base of a banking system strengthened by post-financial crisis reforms, we prevented contagion that could have destabilized the broader financial system and derailed our economic recovery.

As we look ahead, we will continue to work with you to address the vulnerabilities the banking stresses in 2023 revealed, including increased shares of uninsured and concentrated deposits and unrealized losses on loan and securities portfolios. This means ensuring that banks are prepared for liquidity stress, including making sure banks have diverse sources of contingency funding, and the capacity to borrow at the discount window and periodically test this capacity.

We will also continue to work with you to address a wide range of other risks and opportunities. The ABA has been a key partner in our multi-year effort to bolster the safe and effective use of cloud services, producing resources to support financial institutions in contracting with cloud service providers. We also launched Project Fortress, through which we’re working with financial institutions of all different sizes to pursue offensive measures, like sanctions that hold perpetrators of cyber-related activities accountable, and defensive measures like scanning for vulnerabilities. More than 1,000 financial institutions have now joined. And ABA members also provided important perspectives in response to our recent request for information as we’ve worked to monitor adoption and identify opportunities and vulnerabilities related to the use of AI technologies.

And climate-related financial risks also need to be identified and managed. Rising homeowners insurance premiums and gaps in coverage, for example, could increase risks to lenders. So we’ll be considering the risks to banks as well as households as we assess the impacts of climate change on homeowners insurance and monitor other climate-related risks to financial stability.

We also of course recognize the growing and evolving role of nonbanks in the financial sector, and challenges for banks as they both cooperate and compete with those firms. We will continue to monitor and address risks posed by the nonbank sector, including private credit and fintech, and its interconnections with banks.

IV. Illicit Finance and Sanctions

And finally, Treasury’s work to protect the U.S. financial system by cracking down on illicit finance depends on financial institutions. Treasury issued new regulations to help safeguard the residential real estate and investment adviser sectors from illicit finance. We’ve appreciated your engagement and feedback, including on our latest program rule to strengthen our anti-money laundering and countering the financing of terrorism work, which we are working to finalize. We also depend on financial institutions for suspicious activity reports that have enabled U.S. authorities to achieve successful prosecutions and seize billions of dollars involved in illicit finance. That’s why we’ve recently been convening financial institutions and law enforcement officials in key regions to exchange information that will help us crack down on the illicit financing that fuels the opioid epidemic.

Domestic and international financial institutions are our front-line defense in other contexts as well, such as in enforcing our sanctions. Nowhere is this truer than with our Russia sanctions, where many banks have been key partners in disrupting transactions that help Russia get financing and goods to sustain its illegal war.

v. Conclusion

As we step back and reflect on the past four years, it’s clear that banks of all sizes have been crucial partners in moving forward many of our top economic priorities. So let me thank all of you for this strong and important collaboration and emphasize that it must continue. Thank you.

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The U.S. Department of the Treasury’s (Treasury) National Strategy for Financial Inclusion is a set of objectives and recommendations designed to expand access to safe and affordable financial products and services for all Americans. The Strategy, requested in 2023 by Congress, was informed by Treasury’s extensive research and engagement with experts, community leaders, industry representatives, and other federal agencies, including public input through a Request for Information.^[1]

The ability to fully and beneficially participate in the U.S. financial system is a foundation for financial resilience, well-being, and the opportunity to build wealth. Improving inclusion in the financial system is a critical part of fostering financial resilience and creating opportunities for all communities to succeed.

The Strategy notes that to be inclusive, financial products and services must be accessible and designed to facilitate all consumers’ ability to improve their financial resilience and well-being. The Strategy is intended to promote an inclusive financial system that works to reduce rather than compound disparities. Below is a brief summary of the objectives and key recommendations outlined in the Strategy. 

Objectives and Key Recommendations

Objective 1: Promote Access to Transaction Accounts that Meet Consumer Needs

A transaction account at an insured depository institution provides a secure, convenient, and affordable way for consumers to store, send, and receive money.  To tackle the persistent issue of unbanked households, government can be a primary mover in reducing the number of unbanked consumers by leveraging government-to-consumer payments to encourage transaction account openings. The private sector also has a role in promoting access to transaction accounts, and financial institutions should expand the availability of affordable and tailored accounts that meet the needs of underserved communities, such as BankOn accounts, which are transaction accounts that aim to eliminate barriers that have traditionally discouraged individuals from opening bank accounts, such as high fees, overdraft charges, and minimum balance requirements; and should evaluate their policies to improve access for underserved communities.  Government should continue to promote instant payments, make investments in mobile and broadband infrastructure, and work with community partners to further expand access to digital and in-person banking. 

Objective 2: Increase Access to Safe and Affordable Credit

To address significant disparities in the availability and cost of credit, financial institutions, consumer reporting agencies, and government agencies should collaborate to integrate consumer-permissioned alternative data, such as bank account cash-flow or utility payment history into credit scoring and credit underwriting models, which can open safer and more affordable credit opportunities for those who currently have no credit history or limited credit history. Additionally, expanding Special Purpose Credit Programs, credit assistance programs authorized in fair lending laws that can target “economically disadvantaged” people, can help reach underserved communities to promote fair distribution of credit.  Lastly, lenders should consider ways to improve financial products’ structures, such as through forbearance, to support consumer financial health, particularly for those who experience financial shocks. By improving access to credit and products’ default structures, consumers can use these financial products to better withstand financial emergencies and make investments, improving their financial resilience and well-being. 

Objective 3: Expand Equitable Access to Savings and Investments

Employers and government should take steps to improve consumers’ ability to save for retirement by providing incentives for saving and expanding access to retirement saving accounts. Employers should offer tools that facilitate emergency savings, which help employees manage short-term financial shocks without jeopardizing their long-term retirement goals. Additionally, employers should design retirement and savings benefits to equitably support employee financial health and provide financial education to promote employees’ saving and investing. Financial literacy has a positive effect on retirement readiness and retirees’ satisfaction with their financial situation during retirement. By offering evidence-based financial wellness programs or financial planning services that educate employees about retirement planning, investment basics, and the importance of starting to save early, employers can empower their workforce to make informed decisions and build sufficient savings for the future.

Objective 4: Improve the Inclusivity of Financial Products and Services Provided or Backed by the Government

Government financial products and services, such as income support programs, Direct File, and the payment channels used to disburse public payments, should be designed and delivered to enhance inclusion. Government should research the extent to which public financial products, services and programs advance financial inclusion and equity, and identify and implement opportunities to innovate in existing or new products and programs. Additionally, government should ensure that financial products and services are delivered in an inclusive, accessible manner with minimal fees and easy opportunities for application and use of benefits. 

Objective 5: Foster Trust in the Financial System by Protecting Consumers from Illegal and Predatory Practices

To protect consumers from predatory practices and build trust in the financial system, regulators must rigorously enforce consumer protection and fair lending laws to ensure that financial products and services are safe, transparent, and fair. 

The National Strategy for Financial Inclusion also underscores the importance of financial education and measurement to enable financial inclusion. The Strategy re-affirms the need for unbiased, clear, and relevant financial information, including plain-language product disclosures, information about consumer rights and recourse options, as well as culturally relevant financial educational resources to equip consumers to make informed financial decisions in line with their life circumstances, experiences, and goals. The Strategy also highlights the need for benchmarks to measure progress and determine whether financial inclusion is increasing over time.

Additionally, the Strategy is designed to be a dynamic and evolving framework, adaptable to changing economic conditions and emerging opportunities. The Strategy will be regularly reviewed and updated. 

The success of this Strategy depends on the active participation and collaboration of various stakeholders:

• Financial service providers: Banks, credit unions, fintech companies and other service providers have a crucial role in developing and offering inclusive financial products, including through leveraging technology for broader access and partnering with community organizations.
• Government agencies: Federal, state, and local governments are called upon to implement policies that promote financial inclusion, streamline access to government financial services, and ensure robust protections for consumers, including underserved consumers who may be more likely to be targeted by predatory actors. 
• Community-based organizations: Community-based organizations and advocacy groups can provide valuable insights into local needs, offer financial education or other services, and help bridge the gap between financial services and underserved populations.
• Employers: Employers are key conduits for savings opportunities, as well as trusted sources of financial information. Employers in all sectors can advance financial inclusion by offering inclusive benefits packages that support employees’ financial health.
• Researchers and Academia: Ongoing research and analysis will be vital in measuring progress, identifying emerging trends, and refining strategies for financial inclusion.

Treasury invites all stakeholders to engage with this Strategy, to innovate, and to collaborate in creating a more inclusive financial landscape. 

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WASHINGTON – Today, the U.S. Department of the Treasury (Treasury) released the National Strategy for Financial Inclusion in the United States, which identifies objectives and recommendations for policymakers, industry, employers, and community organizations to advance consumer access to safe financial products and services and strengthen financial security. The Strategy was requested in 2023 by Congress and has been informed by Treasury’s extensive research and engagement with experts, community leaders, industry representatives, and other federal agencies, including public input through a Request for Information.

“Access to financial products and services is essential to creating opportunity for all Americans,” said Secretary of the Treasury Janet L. Yellen. “For the first time, Treasury’s strategy provides a national roadmap to expand access to foundational financial tools like credit and investments that are key to building wealth. Implementing these recommendations will help more families build financial security and get ahead.” 

“Today’s release marks the nation’s first ever strategy on financial inclusion and reflects the Vice President’s leadership on expanding access to capital, credit, and economic opportunity,” said National Economic Advisor Lael Brainard. “This financial inclusion roadmap marks a major step forward in charting a clear path to improving access to banking, credit, savings, and other financial products in underserved communities—to ensure every American has the financial tools to build wealth.”

The ability to participate in and benefit from the U.S. financial system is a foundation for financial security and wealth building. While the U.S. has a robust financial infrastructure, there are significant disparities in how different populations interact with and benefit from financial products and services. These disparities contribute to persistent economic inequities. Improving inclusion in the financial system is a critical part of fostering financial resilience and creating opportunities for all communities to succeed. This Strategy is intended to promote an inclusive financial system that works to reduce rather than increase disparities.

Objectives and Key Recommendations of the Strategy include:

• Promote access to transaction accounts that meet consumer needs.
• Increase access to safe and affordable credit.
• Expand equitable access to savings and investments.
• Improve the inclusivity of financial products and services provided or backed by the government.
• Foster trust in the financial system by protecting consumers from illegal and predatory practices.

Treasury invites all stakeholders to engage with this Strategy, to innovate, and to collaborate in creating a more inclusive financial landscape. 

A fact sheet on the report and recommendations is available here.

The full report is available here.

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WASHINGTON, DC – The U.S. Department of the Treasury announced today that the United States and Taiwan, under the auspices of the American Institute in Taiwan (AIT) and the Taipei Economic and Cultural Representative Office in the United States (TECRO), will begin negotiations on a comprehensive agreement to address double taxation issues.  The first round of negotiations is expected to take place in the coming weeks. 

This action builds on the initiative shown by Congress, which remains a vital partner to address this issue.  The Biden-Harris Administration recognizes the work done by committees in the House and Senate to address the issue of double taxation, including through the proposal of the United States-Taiwan Expedited Double-Tax Relief Act and United States-Taiwan Tax Agreement Authorization Act draft legislation.  The Administration is committed to engaging with relevant committees throughout the negotiation process and working with Congress on legislation to approve a final agreement and implement the agreement through the Internal Revenue Code. 

A comprehensive tax agreement will provide critical benefits for both the United States and Taiwan.  In particular, this action will support the CHIPS and Science Act’s aims of strengthening the resilience of the semiconductor supply chain, creating jobs, and incentivizing investments in semiconductor manufacturing facilities across the United States.  It will reduce double taxation barriers for further investment by Taiwan into the United States, and vice versa, particularly for the small and medium-sized enterprises that are crucial to a complete semiconductor ecosystem.

The text is expected to be based on the U.S. Model Income Tax Convention and include items such as:

• Reduction of withholding taxes on cross-border payments of dividends, interest, and royalties;
• Provisions governing permanent establishments and tax treatment of temporary cross-border workers;
• Modern anti-abuse provisions intended to prevent instances of non-taxation of income as well as tax forum shopping;
• Dispute resolution mechanisms; and
• Provisions for the exchange of information to help revenue authorities in both jurisdictions carry out their duties as tax administrators.