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U.S. DEPARTMENT OF THE TREASURY
Remarks by Assistant Secretary Elizabeth Rosenberg at the ACI
Annual Conference on Economic Sanctions
December 6, 2022

As Prepared for Delivery
Good afternoon, everyone.
It is my great pleasure to be here with all of you today to discuss the importance and
implications of economic sanctions.
As you all know, in February of this year, Russia launched an unprovoked war in Europe. To this
day, Russia has chosen violence and death. Moscow continues to launch missiles into Ukraine—
attacking the civilian power grid, which will cause electricity and heating blackouts in the
middle of winter; damaging residential buildings hundreds of miles away from the border; and
killing innocents. This kind of warfare is of course a direct attack on Ukraine’s people, a brutal
attempt to sever their access to basic needs. It is also a naked attempt to put Ukraine’s economy
in a deep freeze—it is economic warfare.
Secretary Yellen has called ending this invasion a “moral imperative.” She has noted rightly that
it is a primary driver for global economic insecurity. Accordingly, the Treasury Department is
using its financial authorities to achieve three objectives: (1) deprive Russia of the enabling
means necessary to wage war in Ukraine; (2) prevent Russia from projecting military power; and
(3) deter and denounce Russian war crimes and human rights abuses in Ukraine. To achieve
these objectives, we have brought to bear both well-establish tools from our economic arsenal
as well as bold, novel approaches that are pushing the boundaries of economic statecraft.
Yesterday’s news represents the culmination of our efforts to pursue one such novel economic
approach: the United States, alongside Australia, the G7 countries, and the EU put into effect a
price cap on Russian-origin oil to reduce the Kremlin’s oil revenues.
Many of you may have heard about this policy and may be responsible for ensuring your
businesses are in compliance with it. I want to illustrate for you the “why” and the “how” of this
policy—why we are doing it and how it will work.

Let’s start with the why. Russia is a major energy exporter. This means that under any
conditions, a significant share of Russia’s fiscal resources come from oil exports. More critically,
though, Russia’s invasion of Ukraine created the uncertainty that drove the price of oil up from
the pre-invasion average of $70 per barrel to a high of more than $140 per barrel post-invasion.
As a result, Russia has reaped a windfall from elevated oil prices—which has enabled it to fund
brutal military operations and sustain its illegal and unjust war against Ukraine, all while the rest
of the world bears the costs of higher energy prices.
The price cap policy is designed to limit Russia’s ability to profit from its aggression, while
promoting global energy stability by keeping Russian oil on the market. This is accomplished by
ensuring that companies within their respective jurisdictions provide services relating to the
maritime transport of Russian oil purchased at or below the cap. Given that the G7 countries
and the EU provide a significant portion of the maritime-related services—including 90 percent
of insurance and reinsurance, and significant financing—this will have a broad effect. Their
services are reliable, and can be more affordable and available than the alternative, so
remaining purchasers of Russian oil, including from emerging markets, are incentivized to
significantly negotiate down Russian oil prices to be able to access these services.
There are alternatives for the Russians, of course. They could sell to those outside the price cap
coalition using non-G7, EU, or Australian services. In this scenario, we expect that the
purchasers not using coalition services would then use their own increased purchasing power to
nevertheless negotiate discounts under current prices. In this scenario, the price cap would
create a ceiling on Russian oil prices and revenues. And remember, these purchasers—including
countries like China and India—have every incentive to demand lower prices because it benefits
them and their consumers. This policy was deliberately designed to incorporate their selfinterest.
The Russians could potentially refuse to sell oil at or below the price cap, which would force
them to shut in their oil, denying them revenue and potentially taxing and damaging their
medium- to long-term drilling, refining, and storage infrastructure. In any event, we will
continue pursuing our overarching policy goal: to cut into Russia’s energy revenues and to keep
Russian oil flowing in a stable global market.
While we assess that the market incentive for businesses to pay the lowest price possible will be
the biggest motivation to comply with the price cap, we have layered a multifaceted policy
structure on top, in the form of the services ban for oil purchased above the price cap, coupled
with a safe harbor to provide assurances to U.S. service providers that comply in good faith with

the policy. We will enforce the price cap policy by focusing enforcement on willful violators—
such as taking action against those who attempt to defraud or mislead coalition businesses into
unwittingly providing services for oil purchased above the cap.
However, the price cap is just one aspect of our modernized economic toolkit targeting Russia’s
war machine. We are also redoubling our efforts on investigations into Russian entities tied to
the military-industrial complex, financial sector, Kremlin-linked oligarchs, and other focal points
for corruption. To illustrate this point, I want to talk about Suleiman Kerimov.
Kerimov, an oligarch who is both a billionaire and a member of the Russian parliament, was first
designated by the U.S. Treasury in 2018. He was part of a broader tranche of Russian persons
that engaged in a range of illicit activity around the globe, benefiting and profiting from his
connections to a corrupt Russian government. At the time of designation, Kerimov was also
alleged to have laundered money through the purchases of real estate and illegally transported
millions of euros into France without reporting it to the appropriate tax authorities.
Since 2018, knowing that sanctioned billionaires do not sit idly by, we have continued to
investigate Kerimov and his network, which led to two major actions this year.
The first was the blocking of Heritage Trust, a Delaware-based trust formed in 2017 in which
Kerimov holds a property interest.
At the time of the blocking action this past June, the trust was valued at more than $1 billion.
Let me emphasize that: 1 billion dollars of Russian oligarch money, sitting in a Delaware trust.
Investigative efforts also found that Kerimov was not the only sanctioned person with an
interest in Heritage Trust. His nephew, Ruslan Gadzhiyev, a member of the Russian Duma who
was designated in March of this year, is a beneficiary of Heritage Trust.
This blocking action was made possible with extensive investigative work by OFAC’s
Enforcement Division that employed a range of investigative tools. They saw that these funds
entered the U.S. financial system through a complex and layered network of opaque legal
entities located in Europe and in various well-known tax shelters. From there, the funds were
invested in several large public and private U.S. companies.
This last leg is what I want to emphasize to this group today. Dirty Russian money can only come
into the United States if there are U.S. persons, whether they are family members, banks,
investment advisors, broker/dealers, or even venture capital firms, who facilitate its entry. We
expect financial institutions and all covered institutions to proactively investigate and screen for
these types of risks and report any suspicious activity to Treasury. As you know, OFAC may

impose civil penalties for sanctions violations based on strict liability—knowledge of prohibited
dealings is not required. And while OFAC of course takes into account whether a subject was
witting, Treasury will not hesitate to act where we see control failures or lapses in vigilance that
enable evasion to occur.
The second action I want to specifically highlight is the investigatory work that led to exposing
Kerimov’s broader network of associates and facilitators.
As of September 2022, a number of our partners had also designated Kerimov, including
Australia, Canada, the EU, Japan, New Zealand, Switzerland, and the United Kingdom. Earlier
this year, the U.S. Department of Justice had also worked with its Fijian counterparts to seize a
$300 million yacht assessed to be owned by Kerimov. The breadth of this group is a testament to
the strength of our coalition and the unity of our opposition to Russia’s brutality.
Last month, Treasury further exposed Kerimov’s network by designating his family members,
associates, and facilitators, including one who has allegedly laundered money on his behalf.
This investigation ensnared entities in Russia, France, Switzerland, the UAE, Germany,
Luxembourg, the British Virgin Islands, Malta, Cyprus, and Spain, and showed how Kerimov’s
complex facilitation network continued to move money years after his initial designation.
Our objective here was to expose the breadth of Kerimov’s financial facilitators and block any
associated funds used to advance Russia’s war. We shared information with our international
counterparts, assessed mitigation factors, publicly released as much identifiable information as
we could, and relied on every relevant part of the Treasury team to execute the action. Just last
week, France announced a renewed investigation of Kerimov and his assets following Treasury’s
designation.
The example set by the Kerimov case constitutes a wake-up call. It shows how extensive these
facilitation networks are, and how they may continue to use U.S. or other non-Russian persons
to maintain access to our formal financial networks even after designations are in place.
Additionally, these actions are a reminder to both the designated Russian entities and their
enablers, both foreign and domestic, that our investigations into their activity will persist.
I want to close by emphasizing your critical role in defending our economic and financial
systems. You all are keenly attuned to what is going on in the world and on the battlefield of
Russia’s brutal war. You are on the financial front lines of this conflict, implementing the policy
decisions made by our governments to take a stand against global atrocities.

You file the suspicious activity reports to give us and other authorities information on networks
that you have uncovered shielding designated persons. You help let us know where the mega
yachts and private jets are. You provide the building blocks of sanctions evasion typologies that
go into our press releases and advisories. You notice and flag the indicators for trade-based
money laundering on which we can take action.
For all these efforts, my colleagues and I are extremely grateful. But we cannot rest on our
laurels. We need to redouble efforts—to make sure that these networks do not pass under your
radar and around our laws, and that when you obtain information about them, you promptly
take action. This is not just a matter of compliance; it is a moral imperative. The choice is
between permitting and preventing sanctions evasion—there is no space for neutral ground
here.
While I spent today focusing on Russia, it is certainly not the only challenge we face. Whether it
is international wire fraud, proliferation financing, or money laundering through virtual asset
services, Treasury and its tools will continue to be called upon to protect our financial system
and expose those who would exploit it for illegal ends.
Further, Russia’s war in Ukraine is a stark reminder that we are not immune to challenges to the
geopolitical stability we strive to maintain. We are constantly documenting and applying the
lessons learned from this ongoing conflict to better prepare for the next challenge to the global
order. This work is, frankly, daunting. However, I feel fortunate to be sharing this solemn
responsibility with many outstanding colleagues in the private sector who are similarly
committed to addressing these challenges. Thank you and I look forward to answering your
questions.

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