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Updated Guidance for Foreign Financial Institutions on OFAC Sanctions
Authorities Targeting Support to Russia’s Military-Industrial Base
June 12, 2024
SANCTIONS ADVISORY
In response to the Russian Federation’s continued use of its military-industrial base to support its
aggression against Ukraine, on December 22, 2023, the President issued Executive Order (E.O.) 14114,
which amends E.O. 14024 and provides the Oice of Foreign Assets Control (OFAC) with authorities to
target foreign nancial institutions for engaging in certain transactions. Foreign nancial institutions
that conduct or facilitate signicant transactions or provide any service involving Russia’s
military-industrial base run the risk of being sanctioned by OFAC. OFAC is revising the denition
of “Russia’s military-industrial base” to include all persons blocked under E.O. 14024, as amended.
The United States and partners have put in place a sanctions and export controls regime that has severely
restricted Russia’s ability to import many of the items that directly support its brutal and unjustied war
against Ukraine. As a result, Russia is increasingly using third countries to evade sanctions and continue its
procurement of certain critical items. The United States and partners have published multiple advisories,
including detailed red ags, to warn the private sector about Russian sanctions evasion in support of its
war machine and to support compliance eorts. OFAC’s targeting authorities, which are aimed at foreign
nancial institutions that provide services to, or engage in signicant transactions relating to, Russia’s
military-industrial base, come as a natural evolution of OFAC’s work to counter evasion and hold accountable
those perpetuating Russia’s war against Ukraine, including nancial facilitators.
OFAC is issuing this revised advisory to provide updated guidance to foreign nancial institutions in light
of Russia’s continued eorts to reorient its entire economy and government resources to support its war
eort. This updated advisory includes practical guidance on how to identify sanctions risks and implement
corresponding controls. For additional guidance, please see OFAC’s frequently asked questions (FAQs)
1146, 1147, 1148, 1149, 1150, 1151, 1152, 1181, and 1182.
Sanctions Authorities Targeting Foreign Financial Institutions
E.O. 14024, as amended (E.O. 14024), allows OFAC to sanction foreign nancial institutions that, among
other things, have conducted or facilitated any signicant transaction or transactions, or provided any
service, involving Russia’s military-industrial base. On June 12, 2024, OFAC updated the denition of
“Russia’s military-industrial base” to include all persons blocked under E.O. 14024 (FAQ 1181 and
1151). The updated denition reects the Kremlin’s increasing use of Russia’s entire economy to support
OFAC SANCTIONS ADVISORY - June 12, 2024
1 https://ofac.treasury.gov/media/932446/download?inline.
Examples of Activity that Could Expose Foreign Financial Institutions to Sanctions Risk
The following are examples of activities that could expose foreign nancial institutions to sanctions risk
under E.O. 14024:
► Maintaining accounts, transferring funds, or providing other nancial services (e.g., payment
processing, trade nance, insurance) for any person blocked pursuant to E.O. 14024, including
Russian nancial institutions blocked pursuant to E.O. 14024, outside of the activities
described below under “Permissible Activities.”
► Maintaining accounts, transferring funds, or providing other nancial services (e.g., payment
processing, trade nance, insurance) for any persons, either inside or outside Russia, that
otherwise support Russia’s military-industrial base, including those that operate in the
specied sectors.
► Facilitating the sale, supply, or transfer, directly or indirectly, of the specied items to Russian
importers or companies shipping the items to Russia.
► Helping companies or individuals evade U.S. sanctions on Russia’s military-industrial base.
This includes:
» oering to set up alternative or non-transparent payment mechanisms,
» changing or removing customer names or other relevant information from payment elds,
» obfuscating the true purpose of or parties involved in payments, or
» otherwise taking steps to hide the ultimate purpose of transactions to evade sanctions.
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its war in Ukraine.
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Specically, Russia’s military-industrial base includes: (i) all persons blocked pursuant
to E.O. 14024; and (ii) any person operating in the technology, defense and related materiel, construction,
aerospace, and manufacturing sectors of the Russian Federation economy (“the specied sectors”). Russia’s
military-industrial base may also include persons that support the sale, supply, or transfer, directly or
indirectly, to the Russian Federation of certain critical items (“the specied items”). Accordingly, foreign
nancial institutions that conduct or facilitate any signicant transaction or provide any service
involving any person blocked pursuant to E.O. 14024 now risk being sanctioned by OFAC, unless they
are solely facilitating permissible transactions such as those related to food, agriculture, medicine,
energy, and telecommunications.
Under these authorities, OFAC can impose full blocking sanctions on, or prohibit or restrict the maintenance
of correspondent accounts in the United States for, foreign nancial institutions. Please see E.O. 14024 for
the full criteria upon which a foreign nancial institution may be sanctioned and the type of sanctions that
may be imposed.
OFAC SANCTIONS ADVISORY - June 12, 2024
2 Since Russia’s further invasion of Ukraine, the United States and partners have identied key items that Russia is seeking to procure for its
weapons programs. Such key items include all of the specied items described in this advisory, as well as the Common High Priority Items
List, which describes a subset of items that are restricted from trade to Russia by the United States and its allies. The Common High Priority
List is intended for exporters, reexporters, and customs oicials, and identies broad categories of items by Harmonized System (HS) Codes,
which are the foundation of the import and export classication systems used in the United States and by many trading partners. In contrast,
the list of specied items described in this advisory is intended for use by nancial institutions in implementing controls to mitigate
sanctions risks under OFAC’s authorities.
3 The listed measures are illustrative only and do not account for obligations that a nancial institution may have related to historical
activities, such as ling reports of suspicious transactions in the applicable jurisdiction(s).
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Identifying and Mitigating Sanctions Risks
To mitigate sanctions risk, foreign nancial institutions should take steps to identify and minimize their
exposure to activity involving Russia’s military-industrial base and those that support it. These steps are
in addition to baseline customer due diligence (CDD) procedures and other anti-money laundering (AML)
controls, which can be critical for detecting, stopping, and reporting attempted or suspected sanctions
evasion. OFAC recognizes that there is not a “one-size-ts-all” approach to identifying and mitigating
exposure to activity involving Russia’s military-industrial base, and thus foreign nancial institutions may
take various approaches to identifying and mitigating their relative sanctions risk. Each institution should
implement controls commensurate with its risk prole and current exposure to Russia’s military-industrial
base and its supporters.
For example, small- and medium-size nancial institutions located in jurisdictions that continue to engage
in signicant trade with Russia may present a particularly high risk of providing services involving Russia’s
military-industrial base. OFAC recommends that such nancial institutions carefully review the examples
of controls identied below to assess whether implementing one or more of these controls may assist in
identifying and mitigating this risk.
Examples of controls to mitigate sanctions risk may include:
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► Screening transactions, customers, counterparties, and associated parties against relevant
sanctions lists, such as OFAC’s Specially Designated Nationals and Blocked Persons List
(SDN List), to prevent the provision of any service to persons blocked pursuant to E.O.
The list of specied items can be found here. Treasury has identied the specied items because they
are critical for Russia’s war eort, including for the production of advanced precision-guided weapons
and other critical items, and Russia is actively working to import them from third countries to fuel its
war machine. Foreign nancial institutions should use this list of specied items for the purpose
of mitigating sanctions risk under Treasury’s sanctions authorities described in this advisory.
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If in the course of its due diligence, a foreign nancial institution is unsure whether a particular item
is the same as one identied on the list of specied items (or could otherwise potentially be linked
to Russia’s military-industrial base), the institution should conduct further due diligence regarding
the particular customer and/or transaction and take appropriate mitigation measures, as described
further below.
OFAC SANCTIONS ADVISORY - June 12, 2024
14024, outside of permissible transactions such as food, agriculture, medicine, energy, and
telecommunications.
► Reviewing an institution’s customer base to determine exposure to the following:
» Any customers involved in the specied sectors or who conduct business with persons
blocked pursuant to E.O. 14024.
› EXAMPLE OF HIGHER RISK CUSTOMER: A microelectronics exporter formed in March
2022 located in a high-risk jurisdiction that has received repeated international wire
transfers from possible shell companies in oshore nancial centers.
› EXAMPLE OF LOWER RISK CUSTOMER: A basic household goods company in a G7
country that has been the bank’s customer for 20 years, has never been agged for
suspicious activity, whose activity has remained consistent and has never exported
goods to Russia or received funds from Russia.
» Any customers that may be involved in the sale, supply, or transfer of the specied items
to Russia or to jurisdictions previously identied as posing a high risk of Russian sanctions
evasion.
► Communicating compliance expectations to customers on a risk basis, including informing
them that they may not use their accounts to do business involving Russia’s military-industrial
base. This may also include sharing the list of the specied items with customers, especially
customers engaged in import-export activity, manufacturing, or any other relevant business
lines.
► Sending questionnaires, on a risk basis, to customers known to deal in or export specied
items to better understand their counterparties.
► Using open-source information and past transactional activity to inform due diligence and to
conduct proactive investigations into possible sanctions and export control evasion.
» Proactive investigations into suspected sanctions evasion are oen conducted within a
bank’s anti-nancial crime division, as they involve post-transaction reviews for typologies,
networks, and/or suspicious activity, as opposed to real-time, list-based screening.
Sanctions-related information (e.g., interaction with listed entities prior to designation) can
serve as an input for these investigations. The results of these investigations could then be
used to further identify risky customers and other sanctions related risks.
› EXAMPLE: A bank initiates a review of customers who sent or received funds from
persons blocked pursuant to E.O. 14024 prior to their designation. Aer an initial
review, the bank takes no additional action on lower risk customers (e.g., retail banking
customers who sent small funds transfers to family in Russia via now-blocked Russian
banks, retail banking customers who participated in low-value e-commerce involving
now-blocked Russian banks) and focuses on higher risk categories (e.g., customers who
received large wire transfers from Russian companies, which appear to be payments
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OFAC SANCTIONS ADVISORY - June 12, 2024
received for goods shipped to Russia). Aer applying mitigation measures (e.g., account
restrictions, account closure, addition to “do not onboard” and/or “do not process”
watchlists), the bank also reviews the associated parties of exited customers.
» In addition, nancial institutions can use information received through requests for
information from U.S. and global correspondent banks, as well as data from commercial
service providers or public data sources such as trade and customs data, to inform due
diligence and proactive investigations.
► When appropriate, obtaining attestations from high-risk customers that they do not operate
in the specied sectors, engage in any sales or transfers of the specied items to Russia, or
otherwise conduct any transactions involving Russia’s military-industrial base (including
involving any person blocked pursuant to E.O. 14024).
► Taking appropriate mitigation measures for any customers or counterparties engaged in high-
risk activity or who fail to respond to requests for information regarding activity of concern.
These measures include restricting accounts, limiting the type of permissible activity, exiting
relationships, and placing customers or counterparties on internal “do not onboard” or “do not
process” watchlists.
► Incorporating risks related to Russia’s military-industrial base into sanctions risk assessments
and customer risk-rating criteria. This includes updating jurisdictional risk assessments as
appropriate.
► Implementing enhanced trade nance controls related to the specied items, including
monitoring information collected as part of documentary trade.
Examples of High-Risk Foreign Financial Institutions
For nancial institutions that have already invested in eective risk-based compliance programs,
particularly those located in jurisdictions with strong regulatory oversight that have implemented
their own sanctions on Russia, the area of greatest risk may be in the foreign correspondent
relationships they maintain for nancial institutions continuing to engage in signicant transactions
involving Russia.
Examples of high-risk foreign nancial institutions may include:
1 A small bank in a jurisdiction with a strong trading relationship with Russia has a high number
of customers in the import-export and microelectronics sectors that continue to do business with
Russia. This bank maintains relationships with multiple designated Russian banks for the purpose
of facilitating trade with Russia in the local currency. The activity going through this bank’s foreign
correspondent relationships shows repeated linkages with Russia, a large volume of suspected shell
company activity, and other general indicators of suspicious activity, such as wires with no clear
business purpose involving high-risk jurisdictions.
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4 Please see the Department of Commerce’s Resources On Export Controls Implemented In Response To Russia’s Invasion Of Ukraine for
additional information. The Department of Commerce has imposed broad export controls on certain items subject to the Export
Administration Regulations (EAR), including all items listed in the Commerce Control List (CCL) and certain EAR99 items identied by HS
Code, for exports or reexports to Russia or Belarus.
5 Please see the following: Cracking Down on Third-Party Intermediaries Used to Evade Russia-Related Sanctions and Export Controls,
Impact of Sanctions and Export Controls on Russia’s Military-Industrial Complex, Department of Commerce’s Resources On Export Controls
Implemented In Response To Russia’s Invasion Of Ukraine, Supplemental Alert: FinCEN and the U.S. Department of Commerce’s Bureau of
Industry and Security Urge Continued Vigilance for Potential Russian Export Control Evasion Attempts, Trends in Bank Secrecy Act Data:
Suspected Evasion of Russian Export Controls, Russia Business Advisory - United States Department of State, and Tri-Seal Compliance Note:
Obligations of foreign-based persons to comply with U.S. sanctions and export control laws.
Previous Guidance on Russia Sanctions and Export Controls Evasion
Since Russia’s further unlawful invasion of Ukraine, the U.S. Departments of the Treasury, Commerce,
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and State have repeatedly highlighted how Russia seeks to evade sanctions and export controls in
support of its war eort, such as using third-party intermediaries and transshipment points to circumvent
restrictions.
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These alerts have provided examples of red ags that can signal when and how third parties
and intermediaries may be engaged in eorts to evade sanctions or export controls. OFAC encourages
foreign nancial institutions to review and incorporate such guidance into their risk-based controls to
mitigate sanctions risks. OFAC also notes that both this advisory and previous guidance are intended
to warn foreign nancial institutions of sanctions risks and to provide practical suggestions on various
ways they can identify and mitigate such risk. OFAC encourages nancial institutions to allocate their
compliance resources towards the areas of greatest risk, such as products, services, business lines, and
locations most likely to be used to facilitate activity involving Russia’s military-industrial base.
In addition to the specic mitigation measures detailed above and the alerts focused on Russia sanctions
and export control evasion, OFAC encourages foreign nancial institutions to review A Framework for
OFAC Compliance Commitments and the alerts focused on Russia’s sanctions and export control evasion
for further guidance on the essential components of a risk-based sanctions compliance program. Best
practices could include:
► Training sta on sanctions risks and common red ags. This includes not only compliance
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2 A medium-sized bank in a jurisdiction with a strong trading relationship with Russia is reported in
credible open-source media as taking steps to bring in new Russia-related business in order to
capitalize on measures other banks have taken to reduce their Russia-related risk. These steps
include opening a new representative oice in Russia, expanding its Russian language promotional
materials and website, and advertising in Russian-language media about services for Russian
businesses.
3 A small bank frequently sends transactions through its foreign correspondent account for
customers who are later blocked pursuant to E.O. 14024. The bank does not satisfactorily respond
to a request for information from its correspondent about why so many of its customers were
subsequently sanctioned by OFAC.
OFAC SANCTIONS ADVISORY - June 12, 2024
6 GL 6D does not relieve any person from compliance with any other federal laws or requirements of other federal agencies, including the
Export Administration Regulations (EAR), 15 C.F.R. Parts 730–774, which are administered by the U.S. Department of Commerce.
personnel but also front-line sta, senior management, and business lines (e.g., underwriters,
relationship managers). It is especially important to train sta that while it is appropriate
for customers to ask for guidance on how to comply with bank policies and sanctions, any
request for assistance in evading sanctions should be treated as a serious red ag and result in
appropriate mitigation measures.
► Ensuring any identied risks or issues are escalated quickly to the proper level (e.g., senior risk
committee) and promoting a “culture of compliance.”
► Communicating clearly and frequently with U.S. and other correspondent banks on their due
diligence expectations and requests for information.
► Incorporating information and typologies from relevant FinCEN and OFAC alerts and advisories
into automated and manual anti-money laundering controls. Of particular concern for Russian
sanction evasion are:
» Customers conducting business with newly formed Russian companies or newly formed
companies in third countries known to be potential transshipment points for exports to
Russia.
» Companies or counterparties supposedly involved in production or import-export of
sophisticated items with no business history or little-to-no web presence.
» Customers or counterparties using unusual or atypical payment terms and methods, such
as large cash payments, frequent or last-minute changes to end-users or payees, or routing
payments through third countries not otherwise involved in the transaction.
Permissible Transactions
OFAC’s targeting authorities under E.O. 14024 aim to reduce the ability of Russia’s military-industrial base
to circumvent sanctions to support its war aims and do not target otherwise permissible trade. Foreign
persons do not risk the imposition of sanctions for engaging in transactions authorized for U.S. persons
under general licenses issued under the Russian Harmful Foreign Activities Sanctions program or that
are exempt. As previously stated in OFAC guidance, legitimate humanitarian activity and agricultural and
medical trade are not the target of our sanctions.
OFAC maintains a broad authorization for transactions otherwise prohibited by E.O. 14024 related to
the production, manufacturing, sale, transport, or provision of agricultural commodities, agricultural
equipment, medicine, medical devices, replacement parts and components for medical devices, or
soware updates for medical devices. Please see Russia-related General License (GL) 6D and OFAC Food
Security Fact Sheet: Russia Sanctions and Agricultural Trade. This authorization remains valid. Foreign
nancial institutions may engage in or facilitate transactions that would be authorized for U.S. persons
OFAC SANCTIONS ADVISORY - June 12, 2024
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under GL 6D without exposure to sanctions.
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OFAC also has authorizations in place for transactions related to energy (GL 8J), certain transactions
in support of non-governmental organizations (GL 27), oicial business of third-country diplomatic or
consular missions located in the Russian Federation (GL 20), telecommunications and internet-based
communications (GL 25C), and oicial business of certain international organizations and entities
by employees, grantees, or contractors thereof (31 CFR 587.510). Additionally, the importation or
exportation of information or informational materials and transactions ordinarily incident to travel to or
from any country are exempt under the International Emergency Economic Powers Act (IEEPA).
Contacting OFAC
OFAC welcomes continued engagement with the private sector in identifying best practices that are
eective in preventing Russian sanctions evasion. We encourage nancial institutions with questions or
who wish to share information about best practices to contact OFAC.
OFAC SANCTIONS ADVISORY - June 12, 2024
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