May 22, 2018: OFAC updates Ukraine/Russia licenses, FAQs

On Tuesday, OFAC replaced Russia/Ukraine General License 12B with 12C, which now permits release of funds to accounts of blocked US persons, and release of funds for “authorized maintenance and wind-down” transactions. Additionally, General License 15 was published, allowing maintenance and wind-down transactions with GAZ Group and its subsidiaries until October 23rd of this year.

New Frequently Asked Questions were added, related to General License 15: 

586. Why is OFAC issuing General License 15, and what new activity does it authorize?

The purpose of General License 15  is to allow GAZ Group or any other entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest, to continue maintenance or wind down activities until October 23, 2018. Although all funds blocked prior to 12:01 a.m. eastern daylight time, May 22, 2018, remain blocked, the general license authorizes the use of these blocked funds for the maintenance and wind down activities described in General License 15. In addition, U.S. persons are not required to block transactions authorized by General License 15 that occur on or after May 22, 2018, except for transactions involving blocked persons other than GAZ Group or any other entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest. For a discussion of the relationship between General License 15 and foreign persons, please see FAQs 589 and 590. [05-22-2018]


587. Under what circumstances can OFAC give further sanctions relief to GAZ Group or any other entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest? 

Consistent with OFAC regulations, parties may be removed by demonstrating a change in the circumstances that led to their designation. In the case of GAZ Group, absent other adverse information and consistent with the facts and circumstances of any petition for delisting, the path for the United States to provide sanctions relief is through divestment and relinquishment of control of GAZ Group by any Specially Designated Nationals, including Oleg Deripaska. [05-22-2018]


588. I am a U.S. person holding accounts for or other property of GAZ Group or another entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest. Does General License 15 allow me to unblock this property?

No. All accounts or other property of GAZ Group or any other entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest blocked as of May 22, 2018, remain blocked, except for the use in maintenance and wind-down activities described in General License 15. U.S. persons, however, may engage in transactions authorized by General License 15 that occur on or after May 22, 2018, without blocking payments associated with such transactions, except for transactions involving blocked persons other than GAZ Group (including any other entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest). [05-22-2018]


589. Will foreign persons be subject to sanctions under CAATSA for engaging in activity with GAZ Group or any other entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest?

As described in FAQs 542545, and 574, a transaction will not be considered “significant” for the purposes of a sanctions determination under section 10 of SSIDES, as amended by section 228 of CAATSA, and section 5 of UFSA, as amended by section 226 of CAATSA, if U.S. persons would not require specific licenses from OFAC to participate in such a transaction. Therefore, activity authorized by General License 15, and occurring within the time period authorized by General License 15, would not be considered “significant” for the purposes of a sanctions determination under section 10 of SSIDES, as amended by CAATSA, or section 5 of UFSA, as amended by CAATSA. [05-22-2018]


590. I am a foreign person that seeks to pay GAZ Group or another entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest for goods or services connected with maintenance or wind-down activities authorized by General License 15. Am I required to deposit payment into a blocked account at a U.S. financial institution in order for my payment to not be considered “significant” for purposes of section 10 of SSIDES, as amended by section 228 of CAATSA, or section 5 of UFSA, as amended by section 226 of CAATSA? 

No. U.S. persons may engage in activities authorized by General License 15 that occur on or after May 22, 2018, except for activities involving blocked persons other than GAZ Group (or any other entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest) without making associated payments into a blocked account. Similarly, foreign persons may engage in activities that would be authorized by General License 15 if engaged in by a U.S. person without making associated payments into a blocked account. [05-22-2018]


591. I am a U.S. person that seeks to supply goods to GAZ Group. Am I permitted to export those goods from the United States to GAZ Group pursuant to General License 15? 

Yes. General License 15 does not restrict exports to GAZ Group (or any other entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest), provided that the activity is for maintenance or wind down and consistent with the requirements of other federal agencies. [05-22-2018]

and existing ones were updated:

576. Under what circumstances can OFAC give further sanctions relief to RUSAL or any other entity in which RUSAL owns, directly or indirectly, a 50 percent or greater interest?

Consistent with OFAC regulations, parties may be removed by demonstrating a change in the circumstances that led to their designation.  In the case of RUSAL, absent other adverse information and consistent with the facts and circumstances of any petition for delisting, the path for the United States to provide sanctions relief is through divestment and relinquishment of control of RUSAL by any Specially Designated Nationals, including Oleg Deripaska. [05-22-2018]


578. How did General License 12A differ from General License 12?

General License 12A was amended to reflect the authorization in General License 14. Specifically, U.S. persons were no longer required to place into a blocked account payments to or for RUSAL, or any other entity in which RUSAL owns, directly or indirectly, a 50 percent or greater interest, for activities authorized by General License 14.  Activities necessary to the maintenance or wind down of operations or existing contracts of RUSAL and any other entity in which RUSAL owns, directly or indirectly, a 50 percent or greater interest, are authorized pursuant to General License 14 through October 23, 2018.  On May 1, 2018, OFAC issued amended General License 12B. See FAQ 583.  OFAC issued amended General License 12C on May 22, 2018 to make conforming edits in light of the issuance of General License 15 .  [05-22-2018]


583. Why is OFAC issuing General License 12B, and what new activity does it authorize? 

OFAC issued General License 12B to address difficulties blocked U.S. persons are having accessing funds needed for authorized wind-down and maintenance activities.  General License 12B explicitly permits originating and intermediary U.S. financial institutions to process funds transfers that they would otherwise block to an account held by a blocked U.S. person at a U.S. financial institution.  In addition, General License 12B clarifies that U.S. financial institutions can release such funds for authorized maintenance and wind-down purposes only.  On May 22, 2018, OFAC issued amended General License 12C to make conforming edits in light of the issuance of General License 15. [05-22-2018]


 

Links:

OFAC Notice

General Licenses: 12C15

FAQs: NewUpdated

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