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Financial Services Law Insights and Observations

OFAC sanctions Belarusian state-owned enterprises and government officials; amends Belarus Sanctions Regulations

Financial Crimes Of Interest to Non-US Persons OFAC OFAC Sanctions OFAC Designations Belarus Russia Ukraine Ukraine Invasion

Financial Crimes

On March 24, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against Belarusian state-owned enterprises and government officials. In so doing, OFAC designated three entities and nine individuals, and identified one presidential aircraft as blocked property, pursuant to Executive Order 14038. The announcement noted that the designations build on previously issued sanctions taken against individuals and entities in Belarus in response to efforts by the Lukashenka regime to suppress democracy and support the Russian Federation’s war against Ukraine. “The authoritarian Lukashenka regime relies on state-owned enterprises and key officials to generate substantial revenue that enables oppressive acts against the Belarusian people,” Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson said in the announcement. Concurrently, the State Department imposed visa restrictions on 14 additional individuals, “including regime officials involved in policies to threaten and intimidate the Belarusian people, for their involvement in undermining democracy under Presidential Proclamation 8015.”

As a result of the sanctions, all property and interests in property belonging to the sanctioned persons that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons, unless authorized by a general or specific OFAC license, or if otherwise exempt.

Additionally, OFAC published a final rule in the Federal Register amending and reissuing the Belarus Sanctions Regulations in their entirety in order to implement the August 2021 Belarus-related Executive Order 14038 (discussed above), “Blocking Property of Additional Persons Contributing to the Situation in Belarus,” and incorporate a directive regarding sovereign debt (covered by InfoBytes here and here). The final rule (effective March 27) also updates and adds new definitions, general licenses, and interpretive guidance, among other things.