On Feb. 23, 2023, the United States sanctioned Iranian and Russian companies involved in transferring munitions as well as parts, components and materials for suicide drones. Moscow has increased its capacity to manufacture Iranian-designed suicide drones. For the first time, Washington designated the Iranian Ministry of Defense under a Russia-related authority. The Treasury Department had previously sanctioned the ministry in 2019 for supporting the Qods Force, the external operations branch of Iran's Revolutionary Guards.
The Treasury and State Departments announced the new sanctions on the second anniversary of Russia’s invasion of Ukraine. The State Department “remains focused on highlighting and disrupting the ongoing military cooperation between Iran and Russia to further Russia’s war efforts against Ukraine,” Spokesperson Matthew Miller said.
Moscow has increasingly relied on Iranian and North Korean arms supplies as the war in Ukraine has dragged on. By December 2022, Iran had become Russia’s “top military backer,” John Kirby of the National Security Council claimed. The following are excerpted statements on the new sanctions by the State and Treasury Departments.
State Department
The Department remains focused on highlighting and disrupting the ongoing military cooperation between Iran and Russia to further Russia’s war efforts against Ukraine. In December 2022 and October 2023, we designated numerous Russian and Iranian entities for their involvement in the proliferation of arms including transfers of UAVs from Iran for Russia’s use against Ukraine, conventional arms and related materiel from Iran to Russia, and major weapons systems from Russia to Iran, including the Yak-130 combat aircraft.
Today, we continue these efforts by designating the Iranian MINISTRY OF DEFENSE AND ARMED FORCES LOGISTICS (MODAFL) for the first time under a Russia-related sanctions authority, as well as two shipping companies that have previously been involved in arms related transfers between Iran and Russia. At least as of 2022, ROSOBORONEKSPORT OAO had worked through MODAFL to facilitate Iranian munitions transfers to Russia. Additionally, MODAFL worked with other Iranian military entities to facilitate the transfer of armed UAVs to Russia beginning in 2022. This action aligns with the Department of the Treasury’s designations today of a network of entities and individuals that has supported efforts by the Government of the Russian Federation and MODAFL to establish a facility in Russia to supply the Russian military with one-way attack UAVs, such as the Shahed-136 UAVs, and the Russian version, the Geran-2, for use in Russia’s war against Ukraine.
Pursuant to section 1(a)(vi)(B), the following entity is being designated for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of ROSOBORONEKSPORT OAO, a person whose property and interests in property are blocked pursuant to the Order:
MINISTRY OF DEFENSE AND ARMED FORCES LOGISTICS (MODAFL) is the Iranian Ministry of Defense and has been involved in transfers of major weapons systems between Russia and Iran. MODAFL was previously designated pursuant to E.O. 13382, E.O. 13224, and E.O. 13949.
Pursuant to section 1(a)(i), the following entity is being designated for operating or having operated in the marine sector of the Russian Federation economy:
DALIR LTD is a Russian shipping company based in Astrakhan, Russia on the Caspian Sea. Additionally, DALIR LTD previously transported military-related cargo for delivery to the Iranian military on behalf of ROSOBORONEKSPORT OAO, Russia’s sole state-controlled intermediary agency for exporting and importing the entire range of military, defense, and dual-use products, technologies, and services. ROSOBORONEKSPORT OAO is designated pursuant to E.O. 14024, E.O. 13949, E.O. 13582 and E.O. 13662.
Pursuant to the Order, the following vessels are being identified as property in which DALIR LTD has an interest: ALIREZA 1 and BALTIYSKIY-111. ALIREZA 1 and BALTIYSKIY-111 are general cargo ships.
LADOGA SHIPPING COMPANY LIMITED LIABILITY COMPANY (LADOGA LTD) is a Russian shipping company based in Astrakhan, Russia on the Caspian Sea. Additionally, LADOGA LTD vessels previously made port calls in Russian-occupied Crimea and transported military-related cargo for delivery to the Iranian military on behalf of ROSOBORONEKSPORT OAO.
Pursuant to the Order, SKIF-V is being identified as property in which LADOGA LTD has an interest. SKIF-V is a general cargo ship.
SANCTIONS IMPLICATIONS
As a result of today’s sanctions-related actions, and in accordance with E.O. 14024, as amended, all property and interests in property of the sanctioned persons described above that are in the United States or in possession or control of U.S. persons are blocked and must be reported to the Department of Treasury’s Office of Foreign Assets Control (OFAC). Additionally, all individuals or entities that have ownership, either 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 otherwise 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.
The power and integrity of U.S. government sanctions derive not only from the U.S. government’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.
Treasury Department
Today, marking Russia’s two years of unprovoked and unlawful full-scale war against Ukraine and in response to the death of opposition politician and anticorruption activist Aleksey Navalny, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is sanctioning almost 300 individuals and entities. Together with actions from the U.S. Department of State (State), this is the largest number of sanctions imposed since Russia’s full-scale invasion of Ukraine. State is designating three Government of Russia officials in connection with Navalny’s death; together, Treasury and State are sanctioning over 500 targets to impose additional costs for Russia’s repression, human rights abuses, and aggression against Ukraine. The Department of Commerce is also adding more than 90 companies to the Entity List.
To deny Russia the resources necessary to support its brutal war against Ukraine, Treasury is designating targets including a major cog in Russia’s financial infrastructure; more than two dozen third-country sanctions evaders in Europe, East Asia, Central Asia, and the Middle East; and hundreds of entities in Russia’s military-industrial base and other key sectors.
ALABUGA UAV PROCUREMENT NETWORK
Today’s action also targets the network through which Russia has acquired and produced deadly unmanned aerial vehicles (UAVs). Russia and Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL) have cooperated to finance and produce Iranian-designed one-way attack UAVs, also known as kamikaze drones, at a newly established a facility in Russia. State is also designating MODAFL pursuant to E.O. 14024 today. This network has facilitated shipments, conducted financial transactions, and engaged in industrial production in support of this cooperation between Russian and Iran to produce one-way attack UAVs for use by the Russian military in Ukraine, including against critical infrastructure and other civilian targets. For more information on these targets, please see Annex 1.
ALABUGA SPECIAL ECONOMIC ZONE
Russia-based Joint Stock Company Special Economic Zone of Industrial Production Alabuga (SEZ Alabuga) maintains a contract with the Russian military to assemble Geran-2 UAVs that were shipped from Iran, while increasing domestic production capability to produce many of the components for the Iranian-designed UAVs in Russia. SEZ Alabuga is expected to ramp up production under their contract to produce thousands of UAVs through 2025. SEZ Alabuga is owned and controlled by the Government of the Republic of Tatarstan. SEZ Alabuga has exploited underage students from an affiliated polytechnic university as laborers to assemble these attack UAVs in exploitative conditions.
Albatros OOO (Albatros) is a Russia-based UAV manufacturer that produces the “Albatross M5” UAV that has been operated by the Russian military for reconnaissance against Ukrainian forces. Albatros has partnered with SEZ Alabuga to expand their manufacturing capability through a new facility at SEZ Alabuga.
Limited Liability Company Drake (Drake) is a Russia-based company contracted to receive UAV parts, components, and raw materials from Iran for use in Iranian-designed, Russian-manufactured UAVs. Drake is also involved in a scheme with SEZ Alabuga and Russia-based Alabuga Development OOO to procure commercial UAVs that would be modernized and weaponized for use by the Russian military.
SEZ Alabuga, Albatros, and Drake were designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy.
SEZ Alabuga Officials
Russia national Timur Nailevich Shagivaleev (Shagivaleev) is the General Director and member of the Board of Directors for SEZ Alabuga who is involved in the efforts by SEZ Alabuga to increase the manufacturing of UAVs, including efforts to conduct reverse engineering and import substitution to localize production. Shagivaleev has been named in connection with the exploitation of underage students to assemble these UAVs.
Russia national Sergey Sergeyevich Alekseyev (Alekseyev) is the Deputy Chief Executive Officer of SEZ Alabuga and has been involved in the transshipment of materials from Iran to Russia, related to the production of UAVs at SEZ Alabuga.
Russia national Ildar Rashitovich Tazutdinov (Tazutdinov) is the Deputy Director General of Corporate Affairs for SEZ Alabuga and was involved in the transshipment and importation of materials and disassembled UAVs from Iran to Russia related to SEZ Alabuga’s UAV production activity.
Russia national Artem Alexandrovich Snitko (Snitko) is an SEZ Alabuga official involved in the production of Iranian-designed UAVs, such as the Shahed-136, and its Russian version, the Geran-2. Snitko was also involved in the transshipment of materials from Iran to Russia related to SEZ Alabuga’s UAV production activity.
Shagivaleev, Alekseyev, Tazutdinov, and Snitko were designated pursuant to E.O. 14024 for being or having been leaders, officials, senior executive officers, or members of the board of directors of SEZ Alabuga.
Albatros Officials
Russia national Aleksei Vadimovich Florov (Florov) is the General Director of Albatros who is involved with both Albatros’ production expansion to SEZ Alabuga, as well as the effort to localize the production of the Iranian-designed Geran-2.
Russia national Ilya Vladimirovich Voronkov (Voronkov) is a director and shareholder of Albatros.
Florov and Voronkov were designated pursuant to E.O. 14024 for being or having been leaders, officials, senior executive officers, or members of the board of directors of Albatros.
SEZ Alabuga Subsidiaries and Financial Facilitators
Russia-based Limited Liability Company Alabuga Machinery (Alabuga Machinery) is a subsidiary of SEZ Alabuga, via its controlling shareholders Alabuga Development and Russia-based GEA OOO, which is itself a subsidiary of Alabuga Development and SEZ Alabuga. Alabuga Machinery has been used to facilitate financial transactions and trade on behalf of its ultimate beneficial owner SEZ Alabuga to the Iranian government for UAV parts, components, and raw materials.
Alabuga Development OOO (Alabuga Development) is a subsidiary of SEZ Alabuga. Alabuga Development is also involved in a scheme with SEZ Alabuga and Drake to procure commercial UAVs that would be modernized and weaponized for use by the Russian military.
Alabuga Machinery, Alabuga Development, and GEA OOO were designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, SEZ Alabuga.
Russia-based LLC Alabuga Exim (Alabuga Exim), Limited Liability Company NR-DEL (NR-DEL), and Limited Liability Company Specialized Developer Alabuga South Park (Alabuga South Park) are subsidiaries of Alabuga Development.
Russia-based Limited Liability Company Zimens Yokogawa (Zimens Yokogawa) is a subsidiary of Alabuga Development. Zimens Yokogawa has been used to facilitate financial transactions with Iranian front companies.
Alabuga Exim, NR-DEL, Alabuga South Park, and Zimens Yokogawa were designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Alabuga Development.
Iranian Financial Facilitation
Iran’s MODAFL has used a United Arab Emirates-based (UAE-based) front company, Generation Trading FZE, to facilitate the sale of sample UAV models, UAV parts, and related ground stations to SEZ Alabuga to support UAV production in Russia. Generation Trading FZE has received millions of dollars’ worth of payments from SEZ Alabuga and its subsidiaries in support of MODAFL’s contract, which is worth hundreds of millions of dollars.
Generation Trading FZE was designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, MODAFL.
Other SEZ Alabuga Entities
OFAC also targeted five other entities located at SEZ Alabuga, all of which were designated pursuant to E.O. 14024 for operating or having operated in the manufacturing sector of the Russian Federation economy:
- Aktsionernoe Obshchestvo Akonit Alabuga produces metal structures such as roller supports.
- Aktsionernoe Obshchestvo Akonit Ural produces conveyor rollers.
- Limited Liability Company Vertikal Alabuga manufactures ready-mixed concrete for construction purposes.
- ST Alabuga produces special machinery and freight transportation.
- TN Alabuga manufactures plastics and synthetic resins in primary form.
Freight forwarder involved in weapons shipments
Russia-based PJSC Transcontainer (Transcontainer) is an intermodal container operator that offers military transportation services to the Russian armed forces and has played a role in the illicit transshipment of North Korean munitions and weapons systems for use on the battlefield in Ukraine. Transcontainer is also the operator of a new rail terminal at SEZ Alabuga, and its leadership was part of a Russian delegation that visited Iran in 2023.
Transcontainer was designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy.