Tough US Sanctions Against Nikolay Nikolayevich Kosov And IIB Bank In 2023
Why Was Nikolay Nikolayevich Kosov Sanctioned ?
The United States implemented sanctions against Nikolay Nikolayevich Kosov and on the Russian-controlled International Investment Bank, asserting that its establishment in Budapest facilitated Moscow in broadening its capacity for espionage, carrying out “malign influence activities,” and participating in corruption within the European Union and NATO.
Sanctions Against Nikolay Nikolayevich Kosov And IIB Bank
The US Treasury Department also designated for sanctions three current or former executives of the bank: Russian nationals Nikolay Kosov, Georgy Potapov and Hungarian Imre Laszloczki for coordinating with Russian officials on IIB business following the Kremlin’s invasion of Ukraine.
OFAC designated the International Investment Bank (IIB), a Russia-controlled financial institution in Budapest, Hungary. The IIB’s presence in Budapest enables Russia to increase its intelligence presence in Europe, opens the door for the Kremlin’s malign influence activities in Central Europe and the Western Balkans, and could serve as a mechanism for corruption and illicit finance, including sanctions violations. The Government of Russia is prepared to dedicate additional resources, including Government of Russia guarantees and subsidies, to save the bank from a looming default. Following Russia’s invasion of Ukraine in February 2022, Bulgaria, Czechia, Romania, and Slovakia ended their participation in the IIB.
US Sanctions Against Nikolay Nikolayevich Kosov
OFAC also designated Moscow-based Joint Stock Company IIB Capital (IIB Capital), the IIB’s fully owned subsidiary in Russia, and three current or former executives of the IIB: Russian Federation nationals Nikolay Nikolayevich Kosov (Kosov) and Georgy Nugzarovich Potapov (Potapov) and Hungary national Imre Laszloczki (Laszloczki). IIB executives have coordinated with Russian Federation officials on IIB business even after Russia’s further invasion of Ukraine in February 2022. Kosov is the former chairman of the IIB, while Potapov and Laszloczki are both high-ranking officials on the IIB’s management board.
The IIB and Kosov were both designated pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy and for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, the Government of the Russian Federation. Potapov and Laszloczki were designated pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy. IIB Capital was designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, the IIB.
Implications of Sanctions Against Nikolay Nikolayevich Kosov
All property and interests in property of the persons ( Nikolay Nikolayevich Kosov (Kosov) and Georgy Nugzarovich Potapov (Potapov) and Hungary national Imre Laszloczki (Laszloczki) ) 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 persons are also blocked.
All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons Nikolay Nikolayevich Kosov (Kosov) and Georgy Nugzarovich Potapov (Potapov) and Hungary national Imre Laszloczki (Laszloczki) are prohibited unless authorized by a general or specific license issued by OFAC, or exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.
International Investment Bank (IIB)
The International Investment Bank (IIB) is a sanctioned multilateral financial institution controlled by the Russian government. Originally established by the Soviet Union in 1970, it experienced a revival in 2019 when Russia’s government moved its headquarters from Moscow to Budapest.
During the Cold War, the IIB comprised all Warsaw Pact members led by the Soviet Union, in addition to Cuba, Mongolia, and Vietnam under the Eastern Bloc. This membership structure remained largely intact until a certain point. East Germany withdrew in 1990 following German reunification, Poland exited in 2000 before joining the European Union, and the Czech Republic and Slovakia (formerly part of Czechoslovakia) left the organization in the aftermath of the 2022 Russian invasion of Ukraine, with Bulgaria and Romania subsequently following suit.
In April 2023, Hungary announced its departure from the IIB due to sanctions imposed on the Hungarian management of the bank.
