Treasury Stops Austrian Deal with Oligarch, Sanctions Parties

Treasury’s Office of Foreign Assets Control (OFAC) designated one Russian individual and three Russia-based companies involved in an attempted sanctions evasion scheme in which an "opaque and complex supposed divestment" could have unfrozen more than $1.5 billion worth of shares belonging to U.S.-designated Russian oligarch Oleg Deripaska.

The transactions was part of a scheme to repatriate some of Austria's  Raiffeisen Bank capital stranded in Russia.  Unlike many of its peers among western banks, the Austrian lender has continues to maintain its Russian operations.

OFAC designated Deripaska 2018 for operating in the energy sector of the Russian Federation economy, and then in September 2022, the U.S. Department of Justice charged Deripaska with conspiring to violate and evade U.S. sanctions.

 “Anyone still doing business in or with Russia should be skeptical of supposed divestment schemes that involve shell companies or proxies linked to sanctioned oligarchs," said said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson.  "Corporate sales and acquisitions can be abused for money laundering and sanctions evasion.”

In June 2023, Deripaska coordinated with Russian national Dmitrii  Beloglazov, the owner of a Russia-based financial services firm on a planned transaction to sell Deripaska’s frozen shares in Strabag,  an Austrian construction company.  Within weeks of this transaction, a Russia-based financial services firm was established as a subsidiary which in March  2024 acquired Deripaska’s frozen shares. 

Bloomberg reported in March that the transaction was the first part of a complex series of deals to repatriate Austria's  Raiffeisen Bank capital stranded in Russia.   Raiffeisen’s Russian unit was to subsequently buy the Strabag shares from Iliadis and then transfer them to its Austrian parent as a dividend in kind.  

On May 8, Raiffeisenbank announced it would not pursue the acquisition of STRABAG shares. According to the announcement, RBI was unable to obtain the “required comfort” from the relevant authorities in order to proceed with the planned transaction.

STRABAG continues to assume that the 24.1% share of STRABAG SE held by Rasperia remains frozen in accordance with the EU Sanctions Regulation.

"This balderdash isn’t worth the time," Deripaska said by message via a spokesperson in response a Reuters request for comment about the latest U.S. sanctions.

Background

This scheme is consistent with typologies highlighted by the multilateral Russian Elites, Proxies, and Oligarchs (REPO) Task Force in a March 9, 2023 Global Advisory. As noted in the REPO Task Force Global Advisory, sanctioned Russian individuals leverage complex ownership structures to disguise their connections to particular assets or entities and use enablers to aid evasion efforts.

A March 7, 2022 Financial Crimes Enforcement Network (FinCEN) Alert also identified certain red flags, including the use of corporate vehicles to obscure ownership and source of funds and the use of third parties to shield the identify of sanctioned persons, to assist financial institutions in identifying potential Russian sanctions evasion attempts.