On Wednesday, the United States announced sanctions on over 300 global entities and individuals providing assistance to Russia, including suppliers and intermediaries from China and Hong Kong that sell semiconductors, IT technology products, and laser products to Russia. The aim of these sanctions is to further weaken Russia’s military equipment support for its unjust war against Ukraine.
The US Treasury Department stated that President Biden and leaders of the Group of Seven (G7) will meet in Italy this week, and the Treasury Department is following the G7 commitment to impose new measures to increase pressure on Russia. This comes as Russia continues its brutal and unjust war against Ukraine.
Russia has transformed into a war economy, with companies across various industries contributing to Russia’s war efforts. US Treasury Secretary Janet Yellen stated in a press release, “Today’s actions strike at their sole pathway to obtaining international materials and equipment, including their reliance on key goods from third countries.”
“We are increasing the risks for foreign financial institutions dealing with Russia’s war economy, eliminating evasion routes, and weakening Russia’s ability to benefit from foreign technology, equipment, software, and IT services,” she said. “Russia is betting its future every day to sustain its unjust war against Ukraine.”
On December 22, 2023, President Biden expanded the Treasury Department’s authority, authorizing sanctions on foreign financial institutions aiding Russia’s military industrial base. Facing secondary sanctions essentially means facing the risk of being barred from the US financial system.
“Today’s actions increase the risk of foreign financial institutions dealing with Russia’s war economy facing secondary sanctions; restrict Russia’s military bases from utilizing certain American software and Information Technology (IT) services; and, in coordination with the US State Department, sanction over 300 individuals and entities both inside and outside Russia in regions including Asia, the Middle East, Europe, Africa, Central Asia, and the Caribbean, whose products and services enable Russia to sustain war and evade sanctions,” the US Treasury Department press release stated.
Russian banks and financial institutions facing American sanctions have branches in Beijing, Shanghai, Hong Kong, and New Delhi, among other locations.
Additionally, the US Department of Commerce is targeting shell companies in Hong Kong which transfer semiconductors to Russia. The US sanctions will impact high-priority projects in Russia worth nearly $100 million.
To coordinate with the US Department of Commerce and support G7 efforts to dismantle Russia’s military industrial base’s reliance on foreign IT systems, the Treasury Department has taken measures to restrict these bases from accessing certain software and IT-related services. The Treasury Department, in consultation with the State Department, issued a new decision under Executive Order 14071, prohibiting the provision of IT consulting and design services, enterprise management software design, manufacturing software support services, and cloud-based services to any person in the Russian Federation. This decision will take effect on September 12, 2024.
Russia relies on complex cross-border supply chains to provide materials for its war machinery and to sustain its war efforts. Similar networks attempt to transfer funds and other valuable goods and assets through complex schemes to evade sanctions.
The US Treasury Department’s actions today target over a dozen such networks involving more than 90 individuals and entities from Russia, Belarus, the British Virgin Islands, Bulgaria, Kazakhstan, Kyrgyzstan, China, Serbia, South Africa, Turkey, and the United Arab Emirates.
Analog Technology Limited, based in Hong Kong, is an electronic components distributor with offices in China and India that ships high-priority items including electronic integrated circuits to Russian companies, including LLC Spetselservis and Limited Liability Company Spetsvoltazh, sanctioned by the US.
Shandong Oree Laser Technology Co., Ltd. and Zhejiang Zhenhuan CNC Machine Tool Co., Ltd., from Shandong and Zhejiang respectively, have shipped metal processing machinery and other related equipment to Russia.
Xianuofugeluode International Trade Co Ltd (CXI Trade), based in Chongqing, has been shipping technology batches, including integrated circuits, to Russia since February 2022. CXI Trade also facilitates technological acquisitions for Russian military bases.
Enka Trading Limited, based in Hong Kong, a wholesaler with expertise in electronic equipment and components, facilitates the procurement of electronic components, including integrated circuits, for final use in Russia.
Shandong Ki Forest New Advanced Co Ltd, based in Shandong, has shipped thousands of high-priority technologies to Russia, including semiconductor devices, electronic integrated circuits, tantalum capacitors, transformers, converters, and inductors. The main clients in Russia are industrial and professional electronic component suppliers Reomaks Limited Liability Company (Reomaks) and electronic component importer Solard.
HK Nicest Electric Technology Co Limited in Hong Kong has sent over a hundred batches of high-priority items to end-users in Russia, including electronic integrated circuits, tantalum capacitors, and multilayer ceramic capacitors. HK Nicest has supplied equipment to end-users in Russia, supporting the defense industry with electronic equipment for aerospace production.
Daytek Chongqing International Trade Co Ltd, based in China, has procured advanced technology equipment for end-users at Russian military bases. Chinese citizen Yi Xuan Wu serves as a director of the company, aiding Russian counterparts in evading sanctions and acquiring technology for Russian military bases.
There are also two Chinese intermediaries supplying laser products to Russian enterprises.