Following an attempted revolt against Russian President Vladimir Putin in late June, the Department of the Treasury’s Office of Foreign Asset Control (“OFAC”) issued economic sanctions against several entities associated with the Wagner Group and its leader, Yevgeniy Prigozhin. The U.S. government also issued the Africa Gold Advisory, highlighting the risks of engaging in the African gold sector, which serves as a source of funding for Prigozhin and his paramilitary organization. These measures, detailed below, seek to undermine Russia’s military capabilities and further disrupt its revenue streams.
New Economic Sanctions
On June 27, 2023, OFAC announced sanctions against four companies directly involved in illicit gold trading throughout Africa, particularly within the Sub-Saharan region:
- Midas Ressources SARLU of the Central African Republic (“CAR”)
- Diamville SAU of the CAR
- Industrial Resources General Trading LLC of the United Arab Emirates (“UAE”)
- Limited Liability Company DM of Russia
According to OFAC, Midas maintains ownership of CAR-based mining concessions and licenses for prospecting and extracting minerals, precious and semi-precious metals, and gems, and also retains the preferential mining allowance for a gold mine in the CAR. Midas is also connected to individuals involved in mining operations in Madagascar tied to Prigozhin. Diamville SAU, also affiliated with Prigozhin, has sold gold and diamonds from the CAR to clients in the UAE and Europe; moreover, it has attempted to transfer U.S. dollars into Russia. Industrial Resources and Limited Liability Company DM have both supported such operations.
These entities have been sanctioned pursuant to Executive Order (E.O.) 14024 for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, Prigozhin, or for having sponsored, or provided financial, material, or technological support for, Prigozhin. In addition, OFAC has added Andrey Nikolayevich Ivanov of Russia to its Specially Designated Nationalist List, pursuant to E.O. 14024. Ivanov is believed to be a Wagner Group facilitator who has conducted operations relating to weapons deals, gold mining, and other Wagner Group activities in Mali.
Africa Gold Advisory
Numerous U.S. agencies, including the Departments of State, the Treasury, Commerce, Homeland Security, Labor, and the United States Agency for International Development, issued an advisory for gold mined in Africa, detailing the risks posed by illicit actors involved in the African gold trade. Actors such as Prigozhin and the Wagner Group partake in gold mining and selling operations, and use the funds derived from such business to engage in conflict and terror financing, money laundering activities, and sanctions evasion. Moreover, their actions often constitute human and labor rights abuses, and negatively impact the environment.
As a result, the Advisory recommends that U.S. businesses conduct due diligence when engaging in activities relating to the African gold sector, particularly with respect to local communities, labor rights, human rights, corrupt actors, and conflict. U.S. business are also encouraged to consider the environmental consequences of their dealings, and the red flags of doing business with certain actors—whether corrupt, sanctioned, or risky individuals and entities, such as Prigozhin and the Wagner Group.
The measures detailed above supplement previous actions taken by the U.S. government to disrupt Russian revenue streams and military operations, and further show how far-reaching sanctions relating to Russia have become. Companies should carefully review any current or future dealings in Russia, the African gold sector, or with any of the above-listed individuals or entities, to determine if they are engaged in or plan to be engaged in any transactions covered by these or other applicable sanctions and export control programs. Contact us if you have questions about these developments or their potential impact on your business.