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OFAC updates two Ukraine/Russia-related GLs, and updates FAQs – turning up the heat on GAZ Group

Issuance of Ukraine-/Russia-Related General Licenses; Publication of amended Frequently Asked Questions

04/25/2022

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is issuing Ukraine-/Russia-related General License 13R and General License 15L. In addition, OFAC has updated several Frequently Asked Questions.

Here are the FAQs, which explains the changes in the two General Licenses – it’s significantly more than just pushing out deadlines:

592. Does General License (GL) 15L authorize U.S. persons to receive regularly scheduled payments of principal and interest from GAZ Group (or any entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest)?  Does GL 15L authorize U.S. persons to receive accelerated payments or voluntary prepayment pursuant to the terms of such loan or bond?

Yes, GL 15L authorizes U.S. persons to receive regularly scheduled payments of principal and interest from GAZ Group (or any entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest) only to the extent such transactions are ordinarily incident and necessary to the wind down of transactions involving GAZ Group (or any entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest) through 12:01 a.m. eastern daylight time, May 25, 2022, and provided the other terms and conditions of GL 15L are met.  As a general matter, GL 15L also would authorize U.S. persons to receive accelerated payments or voluntary prepayments from GAZ Group (or any entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest) so long as such accelerated payments or voluntary prepayments were ordinarily incident and necessary to the wind down of transactions as authorized by GL 15L.  However, GL 15K does not authorize U.S. persons to send accelerated payments or voluntary prepayments to GAZ Group (or any entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest).  If you are unsure about whether GL 15L authorizes such accelerated payments or voluntary prepayments, you may contact OFAC.

Date Updated: April 25, 2022

Updated on 04/25/2022

Ukraine-/Russia-related Sanctions

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 (GL) 15L?

GL 15L authorizes transactions and activities that are ordinarily incident and necessary to the wind down of transactions involving GAZ Group (or any entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest), including exports.  Any exports to GAZ Group must be consistent with GL 15L and must also be consistent with the requirements of other U.S. federal agencies.  After the expiration of GL 15L, unless exempt or authorized by OFAC, U.S. persons will be prohibited from engaging in any transactions (including those related to wind down and exports) involving GAZ Group, or any entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest, and must block property or interests in property of such persons that are in, or come within, the United States, or the possession or control of a U.S. person.

Date Updated: April 25, 2022

Updated on 04/25/2022

Ukraine-/Russia-related Sanctions

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 activities authorized by General License (GL) 15L.  Am I required to deposit payment into a blocked account at a U.S. financial institution in order for my payment not to 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 GL 15L that occur on or after May 22, 2018, except for activities involving blocked persons other than GAZ Group (or any 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 GL 15L if engaged in by a U.S. person without making associated payments into a blocked account.

Date Updated: April 25, 2022

Updated on 04/25/2022

Ukraine-/Russia-related Sanctions

589. Will foreign persons be subject to sanctions under the Section 5 of the Ukraine Freedom Support Act (UFSA) or Section 10 of the Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act (SSIDES), as amended, respectively, by Sections 226 or Section 228 of the Countering America’s Adversaries Through Sanctions Act (CAATSA) for engaging in activities with GAZ Group or any entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest?

As described in FAQs 542545574, and 579, 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 a U.S. person would not require a specific license from OFAC to participate in such a transaction.  Therefore, activity authorized by General License (GL) 15L, and occurring within the time period authorized by GL 15L, would not be considered “significant” for the purposes of a sanctions determination under section 10 of SSIDES, as amended by section 228 of CAATSA, or section 5 of UFSA, as amended by section 226 of CAATSA.

Date Updated: April 25, 2022

Updated on 04/25/2022

Ukraine-/Russia-related Sanctions

586. What transactions are authorized under wind-down General License (GL) 15L?

GL 15L superseded GL 15K on April 25, 2022.  While GL 15K authorized certain transactions and activities that were ordinarily incident and necessary to the maintenance or wind down of operations, contracts, or other agreements involving GAZ Group, or any entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest, and that were in effect prior to April 6, 2018, GL 15L only authorizes certain transactions and activities that are ordinarily incident and necessary to the wind down of transactions involving GAZ Group and any entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest through 12:01 a.m. eastern daylight time, May 25, 2022.

All funds blocked prior to 12:01 a.m. eastern daylight time, May 22, 2018, remain blocked.  Unlike its predecessors, this general license no longer authorizes the use of these blocked funds for the activities it authorizes.  In addition, U.S. persons have not been required to block transactions authorized by GL 15L or its predecessors that occurred on or after May 22, 2018; however, transactions involving blocked persons other than GAZ Group or any entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest, must be blocked.  For information regarding the relationship between GL 15L and foreign persons, please see FAQs 589 and 590.

After the expiration of GL 15L, unless exempt or authorized by OFAC, U.S. persons will be prohibited from engaging in transactions involving GAZ Group, or any entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest, and must block property or interests in property of such persons that are in, or come within, the United States, or the possession or control of a U.S. person.

Date Updated: April 25, 2022

Updated on 04/25/2022

Ukraine-/Russia-related Sanctions

571. I am a U.S. person holding accounts for or other property of an entity or individual that was designated under E.O. 13661 or E.O. 13662, or blocked pursuant to OFAC’s 50 Percent Rule on April 6, 2018 as a result of such a designation.  Does General License (GL) 13R allow me to unblock this property?

No.  Until 12:01 a.m. eastern daylight time, May 25, 2022, GL 13R authorizes certain divestment and transfer activities related to debt, equity, or other holdings in GAZ Group, or in entities in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest, that were issued by GAZ Auto Plant (“Other Issuer Holdings”), subject to certain conditions and exceptions.  It does not authorize U.S. persons to sell debt, equity, or other holdings to; to purchase or invest in debt, equity, or other holdings in; or to facilitate such transactions with, directly or indirectly, GAZ Group or any other blocked person, other than transactions and activities involving GAZ Group, or entities in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest that are ordinarily incident and necessary to the divestment or transfer of debt, equity, or other holdings in these entities.

GL 13R superseded GL 13Q on April 25, 2022.  After the expiration of GL 13Q, U.S. persons will be prohibited from engaging in any divestment or transfer activities on behalf of U.S. persons or non-U.S. persons related to debt, equity, or other holdings that previously were authorized by GL 13Q.

Date Updated: April 25, 2022

Updated on 04/25/2022

Ukraine-/Russia-related Sanctions

570. I own shares in or global depositary receipts (GDRs) related to shares in an entity that was designated under E.O. 13661 or E.O. 13662, or blocked pursuant to OFAC’s 50 percent rule on April 6, 2018 as a result of such a designation.  What action am I allowed to take with respect to those shares or GDRs?

Until 12:01 a.m. eastern daylight time, May 25, 2022, General License (GL) 13Rauthorizes certain divestment and transfer activities related to debt, equity, or other holdings in GAZ Group, or in entities in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest, that were issued by GAZ Auto Plant (“Other Issuer Holdings”), subject to certain conditions and exceptions.  Specifically, GL 13R authorizes U.S. persons to divest or transfer to a non-U.S. person, or to facilitate the transfer by a non-U.S. person to another non-U.S. person, debt, equity, or other holdings in GAZ Group or Other Issuer Holdings as described in GL13R.  However, such divestment, transfer, or facilitation must not result in U.S. persons selling debt, equity, or other holdings to; purchasing or investing in debt, equity, or other holdings in; or facilitating such transactions with, directly or indirectly, any blocked person, including GAZ Group, other than transactions and activities involving GAZ Group, or entities in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest that are ordinarily incident and necessary to the divestment or transfer of debt, equity, or other holdings in the entities identified in GL 13R.  Please see GL 13R for further details.

GL 13R superseded GL 13Q on April 25, 2022.  After the expiration of GL 13R, U.S. persons will be prohibited from engaging in any divestment or transfer activities on behalf of U.S. persons or non-U.S. persons related to debt, equity, or other holdings that previously were authorized in GL 13R.

Date Updated: April 25, 2022

Links:

OFAC Notice

General Licenses 13R, 15L

Updated FAQs

Categories: Frequently Asked Questions (FAQ) Guidance Licenses OFAC Updates Russia sanctions Ukraine sanctions Wind Down Activities

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