U.S. Broadens Scope of Sanctions to Target Facilitators of Russian Evasion Schemes

The Departments of State and the Treasury announced extensive new sanctions on June 12 targeting over 300 individuals and entities aiding Russia in evading sanctions and perpetuating its aggression in Ukraine. These measures, which also enable Treasury to more aggressively sanction foreign financial institutions aiding Russia’s military-industrial base, aim to further isolate Russia’s economy and disrupt its war capabilities.

As part of its June 12 action, the Treasury Department broadened the scope of sanctions targeting Russia’s military-industrial base to include all individuals and entities blocked pursuant to Executive Order 14024, which targets those who further Russian efforts to undermine democratic processes, engage in cyberattacks, foster corruption, and violate international law. This expanded definition encompasses major Russian financial institutions such as VTB Bank and Sberbank — as well as certain branches of theirs in China, India, and Hong Kong — substantially increasing the risk of sanctions being imposed on foreign banks that engage with them. By targeting these institutions, Treasury aims to sever critical financial flows that sustain Russia’s defense sector.

The new sanctions also target more than a dozen transnational networks involved in operations, such as gold laundering and sourcing components for unmanned aerial vehicles, which are critical to Russia’s military operations. Spanning Asia, the Middle East, and Europe, these networks are vital to maintaining Russia’s supply chains and, by extension, its war-making capabilities.

Further aligning with broader G7 initiatives, the sanctions rollout prohibits the export of IT consultancy, design, and support services as well as cloud-based enterprise and manufacturing software to Russia. This action seeks to block Russia’s military-industrial complex from acquiring crucial technology necessary for advanced military operations.

Lastly, the sanctions prohibit dealings with critical financial and energy infrastructure such as the Moscow Exchange and entities linked to liquefied natural gas projects that are expected to provide significant revenues to Russia’s war machine.

Robust oversight and extensive international cooperation will be necessary to ensure these sanctions achieve their intended impact. Accordingly, the U.S. government should increase funding for sanctions enforcement, facilitating the hiring of additional personnel and investing in advanced technologies such as artificial intelligence-enabled ship-to-ship transfer detection capabilities.

The United States should also further resource the Treasury Department’s Office of Foreign Assets Control and other federal agencies by adding enforcement officers and sanctions-focused prosecutors. This would enhance their capacity to monitor, investigate, and prosecute violations. Enhanced technical and financial assistance should also be provided to allied nations with constrained resources, ensuring a cohesive and robust international sanctions regime.

Max Meizlish is a senior research analyst for the Center on Economic and Financial Power (CEFP) at the Foundation for Defense of Democracies (FDD). For more analysis from Max and CEFP, please subscribe HERE. Follow Max on X @maxmeizlish. Follow FDD on X @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.