OFAC is designating a network of four entities and nine individuals based in the PRC, the Russian Federation, Hong Kong, and Pakistan involved in the facilitation and procurement of Chinese-manufactured weapons and technologies to Russia. Chinese national Hu Xiaoxun (Hu) has utilized his PRC-based private defense company Jarvis HK Co., Ltd. (Jarvis) and a network of associates to coordinate the sale of Chinese-manufactured weapons and technologies to Russia.
Hu’s network has worked to structure deals circumventing United States sanctions and Chinese controls on the export of military-related materials, including for conventional weapons and electronic components with Russian customers ranging from thousands of dollars for ammunition, to hundreds of thousands of dollars for loitering munitions, to millions of dollars for semiconductor microchip manufacturing equipment. Hu and his associates have attempted to mask the identities of his customers by obfuscating the end-user of PRC-manufactured products, including by coordinating shipments through third-party countries and organizing shipments through intermediary company PJSC Vysochaishy (Vysochaishy) and its Chairman Sergey Vladimirovich Dokuchaev (Dokuchaev).
Hu’s network has facilitated the procurement of Chinese-manufactured military materials and technology, including UAVs and related components, for various Russian customers and intermediaries, including Technology 5 Co., Limited (Technology 5) and its General Director Vladimir Vladimirovich Gugnin (Gugnin), Limited Liability Company Yuna Engineering (Yuna) and its General Director Andrei Denisovich Zalevskii (Zalevskii), Roman Aleksandrovich Kotekin (Kotekin) of U.S.-designated FGUP NPP Istok, and Russian intermediary Boris Olegovich Bernikov (Bernikov).
Hu has worked with Pakistani associates and weapons dealers Syed Asadullah (Asadullah) and Nur Khabib Shakh (Shakh), as well as Russian associate Vladimir Krylov (Krylov), to coordinate sale and business proposals, structure plans for Russian domestic production of military goods, and procure various Chinese weapons and technologies on behalf of the Russian military and defense sector.
Hu was designated pursuant to E.O. 14024 for operating or having operated in the defense and related materiel sector of the Russian Federation economy.
Jarvis was designated pursuant to E.O. 14024 for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, Hu.
Technology 5 was designated pursuant to E.O. 14024 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Hu.
Executive Order 14024 of April 15, 2021 Blocking Property With Respect To Specified Harmful Foreign Activities of the Government of the Russian Federation
In response to the Russian Federation’s continued use of its military-industrial base to support its aggression against Ukraine, the President has issued an Executive Order (E.O.) amending E.O. 14024 that provides the Office of Foreign Assets Control (OFAC) with new authorities to target foreign financial institutions for engaging in certain transactions. Foreign financial institutions that conduct or facilitate significant transactions or provide any service involving Russia’s military-industrial base run the risk of being sanctioned by OFAC.
The United States and partners have put in place a sanctions and export controls regime that has severely restricted Russia’s ability to import many of the items that directly support its brutal and unjustified war against Ukraine. As a result, Russia is increasingly using third countries to evade sanctions and continue its procurement of certain critical items. The United States and partners have published multiple advisories, including detailed red flags, to warn the private sector about Russian sanctions evasion in support of its war machine and to support compliance efforts. OFAC’s new targeting authorities, which are aimed at foreign financial institutions that provide services to, or engage in significant transactions relating to, Russia’s military-industrial base, come as a natural evolution of OFAC’s work to counter evasion and hold accountable those perpetuating Russia’s war against Ukraine, including financial facilitators.
OFAC is issuing this advisory to provide guidance to foreign financial institutions on the amendments to E.O. 14024, including practical guidance on how to identify sanctions risks and implement corresponding controls. For additional guidance on this E.O., please see FAQs 1146–1157.
