Former Russian Bank Officials Sue Gov’t, Secure Removal From SDN List

The U.S. removed sanctions from two former board members of a Russian state-owned bank after both argued they didn’t meet the criteria for placement on the Treasury Department’s Specially Designated Nationals List. The sanctions removals, made by the Office of Foreign Assets Control late last month, came after Russian nationals Elena Titova and Andrey Golikov, in separate complaints, sued the U.S. government over their designations, accusing it of sanctioning them on “no factual basis” and “unnecessarily” delaying delisting decisions.

Titova and Golikov both filed notices of voluntary dismissals with the U.S. District Court for the District of Columbia after their names were removed from the SDN List. Farhad Alavi, an Akrivis Law Group lawyer who worked on the case, said he is “happy that the government has made the right decision here.”

Titova, a dual Russian and U.K. citizen, and Golikov, a Russian citizen and resident of Spain, sued the Treasury and State departments in June, saying they should never have been sanctioned. Both served as board members of PJSC Bank Otkritie Financial Corporation, which was sanctioned by OFAC immediately after Russia’s invasion of Ukraine in February 2022. Titova resigned from the bank in March, and Golikov resigned in April, according to their complaints.

Titova argued that her designation had “absolutely no effect on the national security crisis” created by Russia’s invasion of Ukraine, adding that she had no ties to the Russian government (see 2306300063). Golikov made similar arguments, saying he underwent multiple rounds of questioning from the government, including the State Department, which was using its “administrative reconsideration process to inappropriately delay adjudication” of Golikov’s delisting petition to “engage in a fishing expedition to find some reason to keep Plaintiff on the SDN List.”

Part of the delay stemmed from OFAC’s decision to “illegally” delegate its authority to adjudicate delisting petitions to the State Department, Golikov said. Although OFAC normally handles sanctions removal requests, the complaint said it was “well-known” by May 2022 that the agency had transferred some of that workload to the State Department, even though rules governing sanctions removals “identify OFAC as the sole administrative body that adjudicates such petitions.” Golikov also said there is “no mechanism for OFAC to delegate its entire function in this regard to any other federal agency, including the State Department.”

A Treasury spokesperson declined to comment. A State Department spokesperson said the agency "serves as the point of contact during the reconsideration process" for all designations imposed by the State Department. OFAC has been dealing with a surge in delisting requests since it announced a range of new sanctions against Russia last year, and former officials and lawyers warned the uptick in petitions could strain Treasury’s already limited resources (see 2305010023).

Golikov also argued there was nothing further he could have done to demonstrate his “improved behavior” and convince OFAC to remove him from the SDN List, since he had only been designated for being an Otkritie board member. He “has done everything that Defendants have requested, including promptly answering follow-up questionnaires that frequently demand information that is irrelevant and inconsequential to the underlying basis for designation,” Golikov’s complaint said. Each questionnaire was “seemingly issued in an attempt to delay the process or find some other basis for designation.”

Among other arguments, both Golikov and Titova said the U.S. government’s delay in issuing a delisting decision violated the Administrative Procedure Act. Both dismissed their complaints after the SDN removals took effect in July.