USA sanctions Malta-registered entity for links to Russian sanction evasion

The USA’s office of foreign assets control (OFAC) has sanctioned Malta-based Stratton Investment Group due to its links with Walter Moretti, a Swiss – Italian businessman alleged to have of procured Western products for the Russian military and nuclear weapons laboratories.

The sanctions were handed down on 24th February 2023, one year after Russia launched its full-scale invasion of Ukraine, to clamp down on widespread sanction evasion.

Stratton Investment Group was registered in Malta on 26th May 2014. Little is known about the company’s activities, except that its two directors, Walter Moretti and Frederic Pierre Villa have both been sanctioned, as has its parent company, Taerio Limited.

While neither Mr Moretti nor Mr Villa are Maltese citizens, they both have a residence in Malta, in Balzan and Naxxar respectively, according to the Malta Business Registry.

Mr Moretti appears to have been the central figure in participating in the evasion of sanctions imposed on Russia.

According to the US Department of the Treasury, he and his network of associates and companies have been targeted by sanctions for having covertly procured sensitive Western technologies and equipment for Russian intelligence services and the Russian military, including hydraulic presses, armament packages, and armour plating.

Mr Moretti and his associates have also procured equipment for Russia’s nuclear weapons laboratories.

When an entity/individual is sanctioned by OFAC it is subject to several measures, such as being prohibited from conducting financial transactions with US entities/citizens and having its assets frozen. This severely impacts those sanctioned to participate in international trade and drastically restricts their access to finance.

At the time of writing, a total of four individuals and seven entities linked to Malta can be found on the OFAC sanction list in connection to Russia’s invasion of Ukraine.

What happens next in Malta?

This newsroom reached out to compliance expert Charles Cassar, founder of Shoulder Compliance, to understand what steps, if any, do state institutions need to take when OFAC sanctions a company.

“US sanctions on entities in Malta are not binding,” explained Mr Cassar. He referred to the court case of Darren Debono who had his funds in BOV frozen following a sanction by OFAC.

Mr Debono’s lawyers had argued that OFAC’s sanctions were issued by the USA and were not enforceable in Malta, another sovereign country, and that there were no freezing orders issued by Malta. As a result, the judge ordered the bank to release the funds.

“However if the entity in question is a financial institution, then the MFSA is entitled to look into it. If the entity was sanctioned by OFAC, then it is possible that the entity is involved involved in financial crimes, and in breach of local or EU law.”