By Jay Solomon 

WASHINGTON--The Obama administration on Wednesday accused Syria's government of purchasing oil from the Islamic State and sanctioned a Syrian businessman for allegedly facilitating these transactions.

The U.S. Treasury Department also sanctioned Russian and Cypriot businessmen and companies for allegedly helping the Syrian central bank evade international sanctions through a web of companies based in Russia, Cyprus and Belize.

Among those blacklisted is Kirsan Ilyumzhinov, a former president of the autonomous Russian Republic of Kalmykia. Mr. Ilyumzhinov is a long-serving president of the World Chess Federation, according to the Treasury Department.

Treasury's actions bar U.S. nationals from doing business with the designated entities and freeze any assets they hold in the U.S. financial system.

U.S. officials have long voiced concerns that the regime of Syrian ruler Bashar al-Assad was strengthening the Islamic State's finances by purchasing oil produced by the group on territory previously controlled by Damascus. However, Wednesday's charges are the most explicit and direct accusations by the U.S., and the first time sanctions have been imposed for the regime's oil trade.

The Treasury Department's sanctions procedures resemble law enforcement investigations, in that officials release findings as they compile evidence. However, the timing of the charges against the Assad regime of buying oil from Islamic State extremists gives U.S. policymakers and allied diplomats new leverage to use against Russia as the West pressures Moscow to distance itself from Damascus. French President François Hollande is due to meet Russian President Vladimir Putin in Moscow Thursday to discuss recent terror attacks targeting both countries.

On Wednesday, Treasury accused a Syrian-born businessman, George Haswani, of using his Damascus- and London-based firm, HESCO Engineering and Construction Co., for facilitating oil trades between the Assad regime and Islamic State.

The European Union sanctioned Mr. Haswani in March. Mr. Haswani has appealed. He couldn't be reached for comment and his lawyer didn't return a request for comment.

The Treasury Department also blacklisted a network of Syrian, Russian and Cypriot businessmen and their companies for allegedly helping the Central Bank of Syria and some of its top executives evade international sanctions.

The U.S. sanctioned Syria's central bank over a decade ago for its alleged involvement in money laundering. Adib Mayaleh, the governor of Syria's central bank, was sanctioned in 2012 for allegedly using his job to move funds out of the country.

The Treasury on Wednesday accused Mr. Ilyumzhinov of working closely with the Assad regime's business associates in Syria and Russia to help the Syrian central bank avoid sanctions. This included the use of Moscow's Russian Financial Alliance Bank, of which he is a major shareholder.

"Kirsan Ilyumzhinov was designated today for materially assisting and acting for or on behalf of the Government of Syria, Central Bank of Syria" and two central bank officials, the Treasury statement said.

Mr. Ilyumzhinov could not be reached through the Russian Financial Alliance Bank on Wednesday. An aide to Mr. Ilyumzhinov at the World Chess Federation, reached in Rome, declined to comment.

The Treasury also sanctioned three Cyprus-based companies and a Belizean firm for allegedly assisting the Syrian government in money laundering activities.

"The United States will continue targeting the finances of those enabling Assad to continue inflicting violence on the Syrian people," the Treasury Department's acting undersecretary for terrorism and financial intelligence, Adam Szubin, said Wednesday.

Benoît Faucon contributed to this article.

Write to Jay Solomon at jay.solomon@wsj.com

 

(END) Dow Jones Newswires

November 25, 2015 15:02 ET (20:02 GMT)

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