OFAC sanctions: India asks US to release ₹215 crore, frozen from Indian diamond cos due to alleged Russia connection
Indian officials have requested the US to unfreeze $26 million ( ₹215 crore) belonging to Indian diamond companies. The funds were frozen due to alleged trade connections with Russian diamond giant Alrosa.
Indian officials have formally requested the United States to unfreeze a substantial sum of $26 million ( ₹215 crore) belonging to two prominent Indian diamond companies, Reuters has reported citing government sources.
These funds were frozen in relation to alleged trade connections with the Russian diamond giant Alrosa, which has been subjected to sanctions by the US Treasury's Office of Foreign Assets Control in April 2022.
It was the first instance of punitive actions being taken against any Indian business in the aftermath of Russia's military intervention in Ukraine, coupled with subsequent sanctions imposed on Russian entities by Western nations.
Sources have revealed to Reuters that the frozen funds were in the process of being transferred by UAE-based subsidiaries of the aforementioned Indian enterprises for the purpose of acquiring rough diamonds.
Also Read: Funds worth ₹215 crore frozen: US targets Indian diamond sellers over alleged Russia connection
However, banks intervened and suspended the dollar transaction, in what seems to be a precautionary measure undertaken to ascertain the legitimacy of the transaction and ensure adherence to existing sanctions, Reuters sources revealed.
Reuters could not determine if the money was being transferred to Alrosa or another party.
"The government is aware of the OFAC action and has initiated dialogue over it," Reuters quoted one of the Indian government sources as saying, without identifying the U.S. counterparty. "The problem was suspicion of trade links with Alrosa."
The Indian firms impacted by the action have told the government the payments were meant either for non-sanctioned Russian entities or for orders completed before the sanctions on Alrosa came into effect, the source said.
"OFAC itself does not freeze or block transactions," a US Treasury spokesperson said. "US persons are required to block or reject transactions in accordance with the relevant sanctions program."
Foreign banks or other entities running afoul of OFAC sanctions risk being cut off from the dollar-based financial system, but the Treasury does allow entities to apply for general or specific licenses to complete some transactions.
State-controlled Alrosa, the world's largest producer of rough diamonds, did not respond to an email seeking comment. India's trade and foreign ministries did not respond to requests for comment.
(With Reuters inputs)
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Business NewsNewsIndiaOFAC sanctions: India asks US to release ₹215 crore, frozen from Indian diamond cos due to alleged Russia connection
First Published:31 Aug 2023, 11:45 AM IST
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