May 27, 2022 | Policy Brief

Top Russian Bank Launches Apparent Attempt to Evade Sanctions

May 27, 2022 | Policy Brief

Top Russian Bank Launches Apparent Attempt to Evade Sanctions

Russian media reported last week that state-owned Sberbank, the country’s largest financial institution, had sold some of its assets to an obscure company established in March. The sale likely reflects an attempt to shield those assets from Western sanctions, which Russia’s Finance Ministry now predicts will cause the country’s economy to shrink by as much as 12 percent this year.

Sberbank reportedly said that “as part of a strategy update,” it had sold streaming platforms Okko, Okko Sport, and Zvuk as well as cloud service provider SberCloud, fintech company Evotor, and biometrics firm STC. Sberbank did not disclose the sale’s terms, saying only that it “was made at a fair market value.”

The new owner of the assets is JSC New Opportunities, a Moscow-based company created on March 24 with 10,000 rubles (around $175) in authorized capital, the legal minimum for a non-public joint stock company in Russia. New Opportunities is owned by a former stock-transfer agency representative named Tatiana Portnykh, an unknown figure who also owns four similar companies created between April and May, all with 10,000 rubles in authorized capital. Interfax reported that Portnykh is New Opportunities’ sole owner, but the company’s file in Russia’s Unified State Register of Legal Entities says that information is restricted pursuant to a Russian law that allows such information to be withheld to combat sanctions.

Citing an unnamed source familiar with Sberbank’s plans for its non-financial “ecosystem,” in which the bank had invested heavily prior to the war, Russian media outlet RBC reported that Sberbank sold the assets due to Western sanctions. The sanctions threaten the business of the sold companies, all of which work with foreign suppliers, the source said.

The U.S. Treasury Department sanctioned Sberbank on February 24, barring U.S. financial institutions from processing transactions for the Russian bank or providing it with correspondent or payable-through accounts. On April 6, in coordination with the United Kingdom, Treasury imposed full blocking sanctions against Sberbank and its majority-owned subsidiaries, while leaving in place a carve-out for energy-related transactions. The European Commission has proposed removing Sberbank from the SWIFT international financial messaging system, though that measure has not yet come to pass.

Russian oligarchs and officials have for years sought to shield their assets from sanctions by hiding them behind shell companies and associates. Now, Russian banks and companies are adopting similar techniques in an effort to circumvent Western sanctions, a senior Treasury Department official told the Financial Times in late March.

Sergei Shishkin, acting CEO of Okko, the video streaming platform, insists New Opportunities is “not affiliated with the Sber group” and therefore is “not subject to the current U.S. or EU sanctions.” However, a Sberbank representative said the bank “will maintain partnerships with” the sold companies and will continue “joint marketing and operational activities with” Okko and Zvuk, the audio streaming platform.

Fyodor Kravchenko, managing partner of Russia’s Collegium of Media Lawyers, believes the sale probably reflects an attempt “to avoid negative consequences for [Sberbank’s] media assets.” Likewise, pointing to the fact that New Opportunities “is an obscure new structure,” Denis Kuskov, CEO of the Telecom Daily research agency, asserted that Sberbank likely sold the assets “solely to circumvent sanctions” and may later regain de jure control over them.

Treasury should examine the nature of the relationship between Sberbank and New Opportunities. If the department determines the latter is owned or controlled by the former or has engaged in dealings designed to circumvent U.S. sanctions, Treasury should designate New Opportunities to maintain the efficacy of U.S. sanctions against Sberbank.

Furthermore, given that Russian sanctions-evasion efforts will likely continue to mount as Moscow faces unprecedented Western economic pressure, Treasury should consider designating Russia as a jurisdiction of primary money laundering concern under Section 311 of the USA PATRIOT Act. Doing so would help counter Russian sanctions evasion and increase the economic pressure on Moscow as it wages its unprovoked war against Ukraine.

John Hardie is research manager and a senior research analyst at the Foundation for Defense of Democracies (FDD), where he contributes to FDD’s Center on Economic and Financial Power (CEFP). For more analysis from John and CEFP, please subscribe HERE. Follow FDD on Twitter @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research center focused on national security and foreign policy.


Russia Sanctions and Illicit Finance