When the wording isn’t clear, don’t fix it – make up more FAQs!

OFAC’s Ukraine/Russia General Licenses 12C, 14 and 15 are still confusing to people, so today they issued two new Frequently Asked Questions (FAQs):

592. Do General License 12C, General License 14, and General License 15 authorize U.S. persons to receive regularly scheduled payments of principal and interest from a blocked person listed in General License 12C, General License 14, or General License 15 pursuant to the terms of a loan or bond in existence prior to April 6, 2018? Do General License 12C, General License 14, and General License 15 authorize U.S. persons to receive accelerated payments or voluntary prepayment pursuant to the terms of such loan or bond? 

Yes, General License 12CGeneral License 14, and General License 15 authorize U.S. persons to receive regularly scheduled payments of principal and interest from a blocked person listed in the respective general license so long as the loan or bond was in existence prior to April 6, 2018, and the payments are in accordance with the terms of the preexisting loan or bond contract. As a general matter, General License 12C, General License 14, and General License 15 also would authorize U.S. persons to receive accelerated payments or voluntary prepayments from a blocked person listed in the respective general license so long as such accelerated payments or voluntary prepayments are made in accordance with the terms of the preexisting loan or bond contract and are consistent with maintenance or wind down activities. If you are unsure about whether General License 12C, General License 14, or General License 15 authorizes such accelerated payments or voluntary prepayments, you may contact OFAC. [05-25-2018]


593. If a blocked person holds an equity interest in a foreign entity, and the foreign entity is not itself a blocked person pursuant to OFAC’s fifty percent rule, can the foreign entity be sanctioned under section 10 of SSIDES, as amended by section 228 of CAATSA, and section 5 of UFSA, as amended by section 226 of CAATSA, for paying dividends to the blocked person? 

Whether paying dividends to a blocked person who holds an equity interest in the foreign company of less than fifty percent, individually or in the aggregate, would result in OFAC imposing sanctions under these authorities on the payer of the dividends depends on whether OFAC determines that such a transaction is “significant.” For information on how OFAC determines whether a transaction is significant, see FAQs 542545579, and 589. Paying dividends into a blocked account or in a manner that does not provide economic benefit, directly or indirectly, to the blocked person, such as an escrow account, will 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. [05-25-2018]

Maybe the General Licenses should be expanded to be more explanatory….

Links:

OFAC Notice 

New FAQs

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