Treasury Designates Sanctions Evaders Facilitating Illicit Arms Transfers between the DPRK and Russia

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Treasury Designates Sanctions Evaders Facilitating Illicit Arms Transfers between the DPRK and Russia

WASHINGTON — Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is imposing sanctions on two Russian individuals and three Russia-based entities for facilitating weapons transfers between Russia and the Democratic People’s Republic of Korea (DPRK). This action promotes U.S. government objectives to disrupt and expose arms transfers between the DPRK and Russia and builds upon sanctions imposed by the Department of the Treasury and the Department of State related to DPRK-Russia arms transfers, including the transfer and testing of DPRK-origin ballistic missiles for Russia’s use against Ukraine. This action demonstrates our resolve to impose costs on and hold the DPRK and Russia to account for their unlawful activities.   

“Today’s action reflects our commitment to disrupt the DPRK’s deepening military cooperation with Russia,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “The United States will continue to take action to hold accountable those who seek to facilitate the shipment of weapons and other materiel to enable Russia’s war.”

DPRK-Russia Illicit Trade ANd Munitions transfers

Russia and the DPRK have strengthened their military cooperation over the past year, with the DPRK providing ballistic missiles and munitions to Russia. In return for its support to Moscow, Pyongyang is seeking military assistance from Russia. These designations target individuals and companies facilitating Russia-DPRK military cooperation. Operating through networks located in Russia, these actors attempt to evade sanctions by using front companies to move military equipment to support Russia’s illegal aggression against Ukraine.   

In March 2023, OFAC designated Ashot Mkrtychev (Mkrtychev) for attempting to facilitate arms deals between Russia and the DPRK. In August 2023, OFAC designated three additional companies, including Verus LLC, a Russia-based company tied to Mkrtychev’s sanctions evasion network. Since these designations, Mkrtychev and his associates have continued to facilitate the shipment of DPRK military equipment to Russia. 

Throughout 2023, Rafael Anatolyevich Gazaryan (Gazaryan) worked with Mkrtychev on arms transactions involving the DPRK and Russia. Since at least April 2023 Gazaryan has acted as a point of contact for Mkrtychev’s negotiations to obtain multiple kinds of weapons and munitions for Russia from the DPRK. In May 2023, Gazaryan likely acted as an intermediary between a Russian government official and Mkrtychev. As recently as June 2023, Gazaryan worked on purchasing certain components on Mkrtychev’s behalf. At the time of Verus LLC’s 2023 designation Gazaryan was also the company’s director. During October 2023, Gazaryan coordinated with Mkrtychev on commercial proposals involving mortars and mortar shells. Gazaryan also used Russian-based Trans Kapital Limited Liability Company to facilitate the shipment and delivery of aviation components to a North Korean weapons dealer. Gazaryan is the owner of Russia-based Rafort Limited Liability Company

As recently as March 2023, Aleksey Budnev (Budnev) has facilitated shipments to Russia of military communications equipment that likely originated from the DPRK intended to support the Russian military. Budnev is the sole owner of Russia-based Tekhnologiya, OOO.

Rafael Anatolyevich Gazaryan is being designated, pursuant to Executive Order 13551 (E.O. 13551), for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Ashot Mkrtychev, an individual whose property and interests in property are blocked pursuant to E.O. 13551. 

Trans Kapital Limited Liability Company is being designated, pursuant to E.O. 13551, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of Rafael Anatolyevich Gazaryan, an individual whose property and interests in property are blocked pursuant to E.O. 13551.   

Rafort Limited Liability Company is being designated, pursuant to E.O. 13551, for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, Rafael Anatolyevich Gazaryan, an individual whose property and interests in property are blocked pursuant to E.O. 13551. 

Aleksey Budnev is being designated for having directly or indirectly imported, exported, or reexported to, into, or from North Korea any arms or related materiel.

Tekhnologiya, OOO is being designated, pursuant to E.O. 13551, for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, Aleksey Budnev, an individual whose property and interests in property are blocked pursuant to E.O. 13551. 

SANCTIONS IMPLICATIONS

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

In addition, financial institutions and other persons that engage in certain transactions or activities with the sanctioned entities and individuals may expose themselves to sanctions or be subject to an enforcement action. The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any designated person, or the receipt of any contribution or provision of funds, goods, or services from any such person. 

The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the SDN List, but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897. For detailed information on the process to submit a request for removal from an OFAC sanctions list.

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

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Official news published at https://home.treasury.gov/news/press-releases/jy2345

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