OFAC issues guidance clarifying its sanctions against Russia and amends several general licenses – International Law
United States: OFAC issues guidance clarifying its sanctions against Russia and amends several blanket licenses
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On March 2, 2022, the Treasury Department’s Office of Foreign Assets Control (OFAC) provided clarification on the implementation of several of its sanctions involving Russia. In doing so, OFAC noted that since the implementation of the sanctions, “Russia has taken steps to use exporters to act as their agents and help them raise resources to support their currency and fund their priorities. [This additional] The guidelines make it clear that such actions on behalf of Russia’s Central Bank are prohibited, blocking attempts to gain access to the US financial system. “The clarifications and guidelines focus on the interpretation of transactions authorized by Directive 4 under Executive Decree (EO). Related to transactions involving the Central Bank of the Russian Federation, the National Wealth Fund of the Federation of Russia and the Ministry of Finance of the Russian Federation, involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation” (collectively, the “ entities covered by Directive 4”).
In one Press releaseOFAC said “The Treasury remains committed to authorizing energy-related payments – ranging from production to consumption for a wide range of energy sources – involving specific sanctioned Russian banks. To help protect Americans, partners, and allies higher energy prices that If current circumstances and the dangers of Russia’s war in Ukraine may lead entities and individuals to make their own risk assessments and business decisions, the Treasury clarifies that the sanctions will not block energy payments.
OFAC has issued a number of general licenses (GLs) as part of the sanctions against Russia. GL 9A authorizes all transactions prohibited by the Russia-Related Sovereign Transactions Directive that are ordinarily incidental and necessary to the receipt of interest, dividends or payments when due in connection with the debt or equity of entities of guideline 4. GL 10A authorizes all transactions prohibited by the Russia-Related Sovereign Transactions Directive that are ordinarily incidental and necessary to the liquidation of derivative contracts, repurchase agreements or reverse repurchase agreements entered into before 12:01 a.m. Eastern Standard Time ‘Est, on March 1, 2022, which include a Directive 4 entity as a counterparty. OFAC pointed out that neither GL 9A nor GL 10A authorizes a debit to an account on the books of a U.S. financial institution of a Directive 4 entity. shares, and certain derivative contracts involving (i) the State Bank for Development and Foreign Economic Affairs Vnesheconombank; (ii) Public Joint Stock Company Bank Financial Corporation Otkritie; (iii) Sovcombank Open Joint Stock Company; (iv) State Joint Stock Company Sberbank of Russia; and, (v) VTB Bank Public Joint Stock Company.
OFAC issued GL 13, “Authorizing Certain Administrative Transactions Prohibited by Directive 4 under Executive Order 14024”, to clarify that U.S. persons are authorized to pay taxes, fees, or import duties and to purchase or receive permits, licenses, registrations or certifications, to the extent such transactions are prohibited by the Russian Sovereign Transactions Directive, provided that such transactions are habitually incidental and necessary to the day-to-day operations of such persons in the Russian Federation. This GL expires June 24, 2022.
OFAC has also issued GL 14, “Authorization of Certain Clearing and Settlement Transactions Prohibited by Directive 4 Under Executive Order 14024”, to clarify and authorize certain transactions involving any Directive 4 entity where the sole function of the Directive 4 entity in the transaction is to act as the operator of a clearing and settlement system. GL 14 does not permit any transfer of assets to or from a Directive 4 entity, or any transaction in which a Directive 4 entity is either a counterparty or a beneficiary of the transaction. In addition, GL 14 does not authorize any debit to an account on the books of a U.S. financial institution of a Directive 4 entity.
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