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Treasury Targets Actors Involved in Drone Production for Russia’s War Against Ukraine [1]

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Date: 2024-10 

WASHINGTON — Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is targeting three entities and one individual for their involvement in the development and production of Russia’s Garpiya series long-range attack unmanned aerial vehicle (UAV). The Garpiya has been deployed by Russia in its brutal war against Ukraine, destroying critical infrastructure and causing mass casualties. Designed and developed by People’s Republic of China (PRC)-based experts, the Garpiya is produced at PRC-based factories in collaboration with Russian defense firms before transferring the drones to Russia for use against Ukraine.

These private companies and individuals were involved in the development and production of military equipment for a U.S.-sanctioned Russian defense firm for use by the Russian military in Ukraine. While the United States previously imposed sanctions on PRC entities providing critical inputs to Russia’s military-industrial base, these are the first U.S. sanctions imposed on PRC entities directly developing and producing complete weapons systems in partnership with Russian firms.

“Russia increasingly relies on the expertise of foreign professionals and the import of sophisticated technologies to sustain its weapons program and advance its military campaign against Ukraine,” said Acting Under Secretary of the Treasury for Terrorism and Financial Intelligence Bradley T. Smith. “We will continue to disrupt the networks that enable Russia’s acquisition and use of these advanced weapons.”

Today’s action was taken pursuant to Executive Order (E.O.) 14024, which targets Russia’s harmful foreign activities.

RUSSIAN DRONE PRODUCTION IN THE PRC

U.S.-designated Joint Stock Company Izhevsk Electromechanical Plant Kupol (AO IEMZ Kupol), a subsidiary of U.S.-designated Russian state-owned weapons company JSC Aeropspace Defense Concern Almaz-Antey (Almaz-Antey), coordinates the production of the Garpiya series UAVs at factories in China before transferring the weapons to Russia. Xiamen Limbach Aircraft Engine Co., Ltd. (Limbach), based in the PRC, produces the L550E engine for implementation into the Garpiya. Redlepus Vector Industry Shenzhen Co Ltd (Redlepus), which also operates out of the PRC, has worked in collaboration with U.S.-designated Russian defense firm TSK Vektor OOO (TSK Vektor), which serves as an intermediary between AO IEMZ Kupol and the PRC-based suppliers for Russia’s Garpiya project. In addition, TSK Vektor has imported numerous shipments from Redlepus into Russia since the beginning of 2024, including electronic and mechanical components with UAV applications such as aircraft engines, parts of automatic data processing machines, and electrical components. Redlepus was previously involved in an effort with AO IEMZ Kupol and TSK Vektor to establish a joint drone research and production center.

Russian national Artem Mikhailovich Yamshchikov (Yamshchikov) is the General Director and beneficial owner of TSK Vektor, which assists with procurement on behalf of AO IEMZ Kupol and Almaz-Antey in the development and production effort of one-way attack UAVs. Yamshikov has directed procurement activities on behalf of TSK Vektor, including the procurement of sensitive UAV components for the Garpiya series one-way attack UAV program. Yamshikov also directs and owns Russia-based Limited Liability Company Trading House Vector (TD Vector).

AO IEMZ Kupol, a leading Russian defense firm that produces anti-aircraft defense equipment used by Russia’s Ministry of Defense, was designated pursuant to E.O. 14024 on December 12, 2023, for operating or having operated in the defense and related materiel sector of the Russian Federation economy. TSK Vektor was designated pursuant to E.O. 14024 on December 12, 2023, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of AO IEMZ Kupol. AO IEMZ Kupol’s parent company, Almaz-Antey, was designated pursuant to E.O. 13661 on July 16, 2014 and pursuant to E.O. 14024 on January 26, 2023.

Redlepus, Limbach, and Yamschikov 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. TD Vector is 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, Yamschikov.

SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of the persons above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked. All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person. Non-U.S. persons are also prohibited from causing or conspiring to cause U.S. persons to wittingly or unwittingly violate U.S. sanctions, as well as from engaging in conduct that evades U.S. sanctions. OFAC’s Economic Sanctions Enforcement Guidelines provide more information regarding OFAC’s enforcement of U.S. sanctions, including the factors that OFAC generally considers when determining an appropriate response to an apparent violation.

In addition, foreign financial institutions that conduct or facilitate significant transactions or provide any service involving Russia’s military-industrial base run the risk of being sanctioned by OFAC. For additional guidance, please see the updated OFAC advisory, “Updated Guidance for Foreign Financial Institutions on OFAC Sanctions Authorities Targeting Support to Russia’s Military-Industrial Base,” as well as OFAC Frequently Asked Questions (FAQs) 1146-1157.

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

Any persons included on the SDN List pursuant to E.O. 14024 may be subject to additional export restrictions administered by the Department of Commerce, Bureau of Industry and Security (BIS).

For identifying information on the individuals and entities sanctioned today, click here.

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[1] Url: https://home.treasury.gov/news/press-releases/jy2651

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