WASHINGTON – Today, the U.S. Department of the Treasury (Treasury), as Chair of the Committee on Foreign Investment in the United States (CFIUS), in close coordination and cooperation with the U.S. Department of Defense (Department of Defense), issued a final rule that significantly expands its ability to review certain real estate transactions by foreign persons near more than 60 military bases and installations across 30 states. Pursuant to legislation that Congress passed in 2018, CFIUS has the authority to review certain real estate transactions near specified military installations and to take action in appropriate circumstances. Nearly 60 military installations will be added to an existing list of military installations around which CFIUS has jurisdiction over real estate transactions and CFIUS jurisdiction around nearly 10 existing installations will be extended. This latest update expands the reach of CFIUS’s real estate jurisdiction while maintaining its sharp focus on national security.
“The Biden-Harris Administration will continue to use our strong investment screening tools to advance America’s national security and protect our military installations from external threats,” said Secretary of the Treasury Janet L. Yellen. “This final rule will significantly increase the ability of CFIUS to thoroughly review real estate transactions near bases and will allow us to deter and stop foreign adversaries from threatening our Armed Forces, including through intelligence gathering.”
“Today’s final rule is a significant milestone in safeguarding critical U.S. military and defense installations,” said Assistant Secretary for Investment Security Paul Rosen. “The expansion of CFIUS jurisdiction around more than 60 military installations across 30 states highlights the work of CFIUS to be nimble and responsive to the evolving nature of the threats we face in the context of foreign investment that raises national security concerns.”
CFIUS jurisdiction over real estate transactions, provided by Congress in the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), allows CFIUS to review the purchase or lease by, or concession to, a foreign person of real estate in the United States that is in close proximity to a military installation or another facility or property of the United States Government that is sensitive for reasons relating to national security; could reasonably provide the foreign person the ability to collect intelligence on activities being conducted at such an installation, facility, or property; or could otherwise expose national security activities at such an installation, facility, or property to the risk of foreign surveillance. The CFIUS regulations governing real estate transactions identify a subset of military installations around which certain real estate transactions are covered under CFIUS’s jurisdiction.
The Department of Defense, a member of CFIUS, regularly assesses its military installations and the geographic scope established under the CFIUS regulations to ensure appropriate application in light of evolving national security considerations. This final rule is the result of a recent comprehensive assessment conducted by the Department of Defense regarding its military installations. The final rule enhances CFIUS’s authorities through the following key changes:
Expands CFIUS’s jurisdiction over certain real estate transactions to include those within a one-mile radius around 40 additional military installations;
Expands CFIUS’s jurisdiction over certain real estate transactions to include those within a 100-mile radius around 19 additional military installations;
Expands CFIUS’s jurisdiction over certain real estate transactions between 1 mile and 100 miles around eight military installations already listed in the regulations;
Updates the names of 14 military installations already listed in the regulations to better assist the public in identifying the relevant sites; and
Updates the locations of seven military installations already listed in the current regulations to better assist the public in identifying the relevant sites.
The final rule will become effective 30 days after publication in the Federal Register and is available at https://www.cfius.gov/.
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WASHINGTON—Today, the U.S. Department of the Treasury’s Community Development Financial Institutions Fund (CDFI Fund) and the Federal Housing Finance Agency (FHFA) announced the establishment of a Working Group to increase capital for affordable housing lending from the Federal Home Loan Banks. The group will advance the Biden-Harris Administration’s priority of expanding the supply of affordable housing and reducing housing costs for American families and is part of a broad effort by Treasury and the FHFA to ensure that the Federal Home Loan Banks (FHLBs) live up to their housing mission.
The CDFI Fund-FHFA Working Group will help more Community Development Financial Institutions (CDFIs) access affordable capital from FHLBs to address affordable housing needs in distressed communities not served by traditional banks and lenders.
“The Biden-Harris Administration is focused on using every tool at its disposal to increase the supply of housing and lower costs for American families,” said U.S. Deputy Secretary of the Treasury Wally Adeyemo. “Critical to our efforts is working to ensure that the Federal Home Loan Banks fulfill their statutory mission of supporting affordable housing. Helping lenders expand their sources of financing and access capital from the Federal Home Loan Banks will help these community banks support a range of projects that can lower housing costs in communities across the country for years to come.”
“This collaboration between FHFA and the CDFI Fund will help accelerate the ‘System at 100’ reforms to ensure the Federal Home Loan Banks meet their housing and community development mission and remain a stable source of liquidity for their members,” said FHFA Director Sandra L. Thompson. “CDFIs play a key role with FHFA and our regulated entities in efforts to address the nation’s affordable housing challenges, working on the ground in their communities to deliver positive outcomes for underserved households.”
The Working Group defined initial topics and priorities for consideration and exploration in 2024-2025. Topics areas defined by the Working Group to examine are:
As detailed in FHFA’s FHLBank System at 100 report, it is a main priority for the FHLBanks to increase support to mission-oriented organizations. As such, CDFI Fund and FHFA have entered into a Memorandum of Understanding to share data to assist FHLBs to better serve CDFIs, allowing them to access capital necessary to meet urgent housing affordability needs. This effort aligns with U.S. Secretary of the Treasury Janet L. Yellen and U.S. Deputy Secretary of the Treasury Wally Adeyemo’s agenda to use all appropriate tools at Treasury’s disposal to expand housing supply, including through engaging with the FHLBs to increase their support of affordable housing.
Since its inception in 1994, the CDFI Fund has provided more than $8 billion through a variety of monetary award programs, $81 billion in tax credits through the New Markets Tax Credit Program and has guaranteed nearly $3 billion in bonds through the CDFI Bond Guarantee Program, all to increase the impact of CDFIs and other community development organizations in economically distressed and underserved communities. During this time, the CDFI Fund has helped build the capacity of more than 1,400 Certified CDFIs, which are in all 50 states as well as in the District of Columbia, Guam, and Puerto Rico.
FHFA regulates Fannie Mae, Freddie Mac and the 11 FHLBs. These government-sponsored enterprises provide more than $8.4 trillion in funding for the U.S. mortgage markets and financial institutions.
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Washington – The findings from the annual survey of U.S. portfolio holdings of foreign securities at year-end 2023 were released today and posted on the Treasury web site at https://home.treasury.gov/data/treasury-international-capital-tic-system/tic-forms-instructions/us-claims-on-foreigners-from-holdings-of-foreign-securities
The survey was undertaken jointly by the U.S. Department of the Treasury, the Federal Reserve Bank of New York, and the Board of Governors of the Federal Reserve System.
A complementary survey measuring foreign portfolio holdings of U.S. securities also occurs annually. Data from the most recent such survey, which reports on securities held at end-June 2024, are being processed. Preliminary results are expected to be reported on February 28, 2025.
This survey measured the value of U.S. portfolio holdings of foreign securities at year-end 2023 as approximately $15.3 trillion, with $11.5 trillion held in foreign equity, $3.4 trillion held in foreign long-term debt securities (original term-to-maturity in excess of one year), and $0.4 trillion held in foreign short-term debt securities. The previous such survey, conducted as of year-end 2022, measured U.S. holdings of approximately $14.0 trillion, with $10.3 trillion held in foreign equity, $3.3 trillion held in foreign long-term debt securities, and $0.4 trillion held in foreign short-term debt securities. The increase in U.S. holdings in 2023 was mainly in equity (see Table 1).
U.S. portfolio holdings of foreign securities by country at the end of 2023 were the largest for the Cayman Islands ($2.7 trillion), followed by the United Kingdom ($1.5 trillion), Canada ($1.4 trillion), and Japan ($1.2 trillion) (see Table 2). These four countries attracted 44 percent of total U.S. portfolio investment, the same as the previous year.
This survey is part of the International Monetary Fund’s Coordinated Portfolio Investment Survey, an effort to improve the measurement of portfolio asset holdings.
(Billions of dollars)
| Type of Security |
December 31, 2022 |
December 31, 2023 |
|
|
|
|
| Long-term Securities |
13,563 |
14,921 |
| Equity |
10,280 |
11,492 |
| Long-term debt |
3,283 |
3,429 |
| Short-term debt securities |
447 |
422 |
| Total |
14,009 |
15,343 |
(Billions of dollars)
| Country or category |
Total |
Equity |
Debt |
||
|
Total |
Long-term |
Short-term |
|||
| Cayman Islands |
2,663 |
1,935 |
729 |
719 |
9 |
| United Kingdom |
1,490 |
1,061 |
429 |
382 |
47 |
| Canada |
1,390 |
839 |
550 |
451 |
100 |
| Japan |
1,218 |
991 |
227 |
184 |
43 |
| Ireland |
924 |
823 |
101 |
79 |
23 |
| France |
816 |
597 |
219 |
173 |
46 |
| Netherlands |
668 |
508 |
159 |
151 |
8 |
| Switzerland |
655 |
607 |
47 |
46 |
1 |
| Germany |
514 |
418 |
97 |
79 |
17 |
| Australia |
442 |
269 |
172 |
132 |
41 |
| India |
352 |
342 |
10 |
10 |
0 |
| Taiwan |
316 |
316 |
0 |
0 |
0 |
| Bermuda |
267 |
215 |
52 |
52 |
0 |
| Korea, South |
253 |
227 |
25 |
25 |
0 |
| Luxembourg |
238 |
172 |
65 |
61 |
4 |
| Denmark |
219 |
206 |
13 |
12 |
0 |
| China, mainland [2] |
217 |
202 |
15 |
15 |
0 |
| Sweden |
197 |
156 |
40 |
19 |
21 |
| Jersey |
192 |
145 |
47 |
47 |
0 |
| Brazil |
181 |
157 |
24 |
23 |
1 |
| Rest of the world |
2,133 |
1,304 |
829 |
768 |
61 |
| Total |
15,343 |
11,492 |
3,851 |
3,429 |
422 |
* Greater than zero but less than $500 million. Items may not sum to totals due to rounding.
[1] The stock of foreign securities for December 31, 2023, reported in this survey may not, for a number of reasons, correspond to the stock of foreign securities on December 31, 2022, plus cumulative flows reported in Treasury’s transactions reporting system. An analysis of the relationship between the stock and flow data is available in “U.S. Portfolio Holdings of Foreign Securities as of End-December 2023,” Table 2.
[2] China, Hong Kong, and Macau are all reported separately.
WASHINGTON – The U.S. Department of the Treasury hosted a roundtable on October 30 with participants from the banking, credit union, and insurance industries; government-sponsored entities (Fannie Mae and Freddie Mac); consumer advocates; and state and federal regulators to discuss the financial sector’s responses to Hurricanes Helene and Milton, and to express the Biden-Harris Administration’s continued support and commitment in aiding hurricane response efforts.
At the roundtable, participants discussed the ways in which they have supported affected communities, including permitting flexibility by insurers and financial institutions in mortgage or other payments; opening mobile bank branches; staffing 24/7 claims offices; and suspending certain fees, changes in policies, and payments. Senior Treasury Department officials reiterated the importance of these and other initiatives and led discussions on efforts to reduce burdens and enable the swift and continual flow of aid for affected communities.
Additionally, Treasury Department officials and participants engaged in dialogue on short- and long-term challenges in preparing for, and responding to, future climate-related crises. Treasury officials expressed their commitment to continued partnership and engagement with communities, state and local government entities, and industry to continue supporting recovery efforts.
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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 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.
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.
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:
_________________________________
Deirdre Dunn, Chair
Treasury Borrowing Advisory Committee
October 29, 2024
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.
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.
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?
We would like the Committee’s advice on the following:
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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:
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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:
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:
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:
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:
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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