The Department of the Treasury’s Office of Foreign Assets Control (OFAC) yesterday imposed sanctions on three entities tied to a sanctions evasion network attempting to support arms deals between Russia and the Democratic People’s Republic of Korea (DPRK). The entities are Limited Liability Company Verus (Verus), Defense Engineering Limited Liability Partnership (Defense Engineering), and Versor S.R.O. (Versor).
This action is part of the continuing U.S. strategy to identify, expose, and disrupt third-country actors seeking to support Russia’s brutal war against Ukraine. As Russia has continued to expend munitions and lose heavy equipment on the battlefield, it has been increasingly forced to turn to its few allies, including the DPRK, to sustain its unprovoked war in Ukraine. To date, Treasury has sanctioned hundreds of individuals and entities involved in circumventing the international sanctions regime on Russia.
“The United States continues to root out illicit financial networks that seek to channel support from North Korea to Russia’s war machine,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “Alongside our allies and partners, we remain committed to exposing and disrupting the arms trade underpinning Putin’s brutal war in Ukraine.”
The Illicit Arms Trade
OFAC designated Slovakian national Ashot Mkrtychev (Mkrtychev) on March 30, 2023, for attempting to facilitate arms deals between Russia and the DPRK. Through his negotiations with DPRK and Russian officials, he organized potential plans to transfer over two dozen kinds of weapons and munitions to Russia in exchange for a range of goods, including raw materials and commodities, to the DPRK. Mkrtychev is the President of Versor, the founder and owner of Verus, and the sole director of Defense Engineering. Mkrtychev has coordinated with DPRK procurement officials and used Versor to conduct negotiations with companies abroad.
OFAC is designating Versor, Verus, and Defense Engineering pursuant to Executive Order (E.O.) 13551 for being owned or controlled by, or having acted or purported to act on behalf of, directly or indirectly, Mkrtychev, an individual blocked pursuant to E.O. 13551.
As a result of the August 16, 2023 action, all property and interests in property of the designated persons described 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 person are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all dealings 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.
In addition, persons that engage in certain transactions with the individual designated today may themselves be exposed to designation. Furthermore, any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for the individual designated today could be subject to U.S. correspondent or payable-through account sanctions.