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  • OFAC sanctions Russian companies and other entities

    Financial Crimes

    On August 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced several new sanctions in response to Russia’s invasion of Ukraine. The new sanctions, issued pursuant to Executive Order 14024, target elites, a major multinational company, a sanctions evasion operation, and a yacht used by a sanctioned individual. The action was taken together with the U.S. Department of State, which imposed additional sanctions on entities and individuals, as well as visa restrictions. 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, and “any entities that are owned, directly or indirectly, 50 percent or more” by the targeted persons are blocked and must be reported to OFAC. Additionally, U.S. persons are prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons, unless exempt or authorized by a general or specific OFAC license.

    The following day, OFAC issued several new Russia-related General Licenses (GLs). OFAC also published three frequently asked questions regarding “Russian Harmful Foreign Sanctions.”

    Financial Crimes Department of Treasury OFAC SDN List Department of State OFAC Designations OFAC Sanctions Russia Ukraine Ukraine Invasion Of Interest to Non-US Persons

  • Creditors release statement on Ukraine

    Federal Issues

    On July 20, the Group of Creditors of Ukraine issued a joint statement regarding coordinated suspension of debt services for Ukraine through 2023, as the Russian invasion continues. According to the statement, the group noted that it would also consider the possibility of deferral for an additional year beyond 2023. The statement granted Ukraine’s request for deferral given the “exceptional circumstances, and acknowledging Ukraine’s exemplary track record of honoring debt service to date,” also “strongly encourage[s] all other official bilateral creditors to swiftly reach agreement with Ukraine on a debt service suspension.”

    Federal Issues Ukraine Ukraine Invasion Debt Collection Department of Treasury

  • Treasury clarifies impact of sanctions on agricultural commodities, agricultural equipment, or medicine relating to Russia

    Financial Crimes

    On July 14, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued a Fact Sheet to clarify that the U.S. has not imposed sanctions on the production, manufacturing, sale, or transport of agricultural commodities, agricultural equipment, or medicine relating to Russia. Additionally, OFAC issued General License (GL) 6B to expand agricultural and medical authorizations to now cover transactions related to agricultural equipment that would normally be prohibited by the Russian Harmful Foreign Activities Sanctions Regulations. OFAC emphasized that U.S. sanctions on Russia issued in response to its war against Ukraine “do not stand in the way of agricultural and medical trade.” OFAC referred to guidance issued in April for more details on authorizations under U.S. sanctions related to agricultural and medical transactions, nongovernmental organization activities, and Covid-19 relief, among others, to support people impacted by Russia’s war (covered by InfoBytes here).

    Financial Crimes Of Interest to Non-US Persons Department of Treasury OFAC OFAC Sanctions OFAC Designations Russia Ukraine Ukraine Invasion

  • OFAC sanctions nearly 100 Russian targets; prohibits Russian gold imports

    Financial Crimes

    On June 28, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Orders (E.O.) 14024 and 14065 against 70 entities—many of which, according to OFAC, “are critical to the Russian Federation’s defense industrial base, including State Corporation Rostec, the cornerstone of Russia’s defense, industrial, technology, and manufacturing sector.” Twenty-nine Russian individuals were also designated. “We once again reaffirm our commitment to working alongside our partners and allies to impose additional severe sanctions in response to Russia’s war against Ukraine,” Treasury Secretary Janet L. Yellen said. OFAC’s designations occurred in tandem with actions taken by the U.S. State Department, which include sanctions against an additional 45 entities and 29 individuals as well as visa restrictions against “officials believed to have threatened or violated Ukraine’s sovereignty, territorial integrity, or political independence.” Additionally, OFAC immediately prohibited the importation of Russian gold into the U.S. (unless licensed or otherwise authorized by OFAC). As a result of the sanctions, all property and interests in property belonging to the designated persons in the U.S. are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” OFAC noted that U.S. persons are prohibited from participating in transactions with the sanctioned persons unless authorized by a general or specific license.

    A joint alert issued by FinCEN and the U.S. Department of Commerce’s Bureau of Industry and Security also urged financial institutions to remain vigilant against Russian and Belarusian export control evasion and to take a “risk-based approach” for identifying potentially suspicious activity, such as end-use certificates, export documents, or letters of credit-based trade financing. “Financial institutions and the private sector continue to play a key role in disrupting Russia’s efforts to acquire critical goods and technology to support its war-making efforts,” OFAC stated in its announcement.

    On the same day, OFAC issued several new Russia-related general licenses (GL): (i) GL 39 authorizes the wind down of transactions ordinarily incident and necessary involving State Corporation Rostec that are normally prohibited by E.O. 14024; (ii) GL 40 authorizes “all transactions ordinarily incident and necessary to the provision, exportation, or reexportation of goods, technology, or services to ensure the safety of civil aviation involving one or more of” certain blocked entities; (iii) GL 41 authorizes certain transactions related to agricultural equipment that are normally prohibited by the Russian Harmful Foreign Activities Sanctions Regulations; (iv) GL 42 authorizes certain transactions with the Federal Security Services; and (v) GL 43 authorizes the divestment or transfer of debt or equity of, and wind down of derivative contracts involving the Public Joint Stock Company Severstal or Nord Gold PLC.

    OFAC also published a Determination Pursuant to Section 1(a)(i) of Executive Order 14068 concerning prohibitions related to the importation of Russian gold and issued one new and one amended frequently asked question.

    The Russian Elites, Proxies, and Oligarchs (REPO) Task Force also issued a joint statement summarizing actions taken by REPO members against sanctioned Russians. The efforts have led to more than $30 billion worth of sanctioned Russians’ assets being blocked or frozen and has heavily restricted sanctioned Russians’ access to the international financial system.

    Financial Crimes Of Interest to Non-US Persons Department of Treasury OFAC OFAC Designations OFAC Sanctions Russia Ukraine Ukraine Invasion Department of State FinCEN Department of Commerce

  • OFAC sanctions Nicaraguan persons

    Financial Crimes

    On June 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13851 against a state-owned Nicaraguan mining company and a high-ranking official for allegedly engaging in actions or policies that are used to “oppress the people of Nicaragua" and engaging "in activities that pose a threat to the security of the hemisphere.” According to OFAC, the company regulates gold mining through the issuance of land concessions to domestic and foreign companies, which feature several joint ventures with private firms. Furthermore, high-ranking members of the government regime have benefitted greatly from Nicaragua’s increase in gold exports, due in large part to the designated mining company. This oppressive regime has engaged in election rigging, OFAC said, and has deepened its relationship with Russia in its war against Ukraine, while using gold revenue to support its activities. As a result, all property and interests in property of the sanctioned individuals and entities, and any entities that own, directly or indirectly, 50 percent or more of such persons subject to U.S. jurisdiction, are blocked and must be reported to OFAC. U.S. persons are also generally prohibited from entering into transactions with the sanctioned persons.

    Financial Crimes OFAC Nicaragua SDN List Of Interest to Non-US Persons Department of Treasury OFAC Sanctions OFAC Designations Russia Ukraine Ukraine Invasion

  • OFAC sanctions additional networks used by Russian elites, issues new Russia-related General Licenses

    Financial Crimes

    On June 2, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced additional sanctions pursuant to Executive Orders (E.O.) 14024, 13685, and 13661, against key networks used by Russian elites, including President Putin, that target “a Kremlin-aligned yacht brokerage, several prominent Russian government officials, and a close Putin associate and money-manager [] who is a custodian of President Putin’s offshore wealth.” OFAC’s announcement also identified “yachts and aircraft in which sanctioned Russian elites maintain interests.” The designations were taken in tandem with the Department of State (which imposed sanctions on five Russian oligarchs and elites) as well as the Department of Commerce (which added 71 new parties located in Russia and Belarus to its Entity List, thus “further restricting the Russian military’s ability to obtain technologies and other items it needs to sustain aggression and project power”).

    As a result of the sanctions, all property and interests in property belonging to the sanctioned persons in the U.S. are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” OFAC noted that U.S. persons are prohibited from participating in transactions with the sanctioned persons unless authorized by a general or specific license.

    On the same day, OFAC issued several new Russia-related general licenses (GL): (i) GL 25B authorizes transactions related to telecommunications and certain internet-based communications that are otherwise prohibited by Russian Harmful Foreign Activities Sanctions Regulations; (ii) GL 36 and GL 37 authorize the wind down of transactions normally prohibited by E.O. 14024 involving an identified public joint stock company and a gold mining company respectively; and (iii) GL 38 authorizes transactions related to pension payments to U.S. persons that are normally prohibited by E.O. 14024 “provided that the only involvement of blocked persons is the processing of funds by financial institutions blocked pursuant to E.O. 14024.” Additionally, OFAC issued several new and amended Russia-related frequently asked questions.

    Financial Crimes Department of Treasury OFAC Of Interest to Non-US Persons OFAC Sanctions OFAC Designations Russia Ukraine Ukraine Invasion

  • Treasury says foreign financial institutions risk sanctions if they provide material support to Russia

    Financial Crimes

    On May 13, Deputy Secretary of the Treasury Wally Adeyemo warned representatives from several foreign financial institutions about the risks of aiding Russia in evading sanctions imposed by the U.S. and its allies following the country’s invasion of Ukraine. Adeyemo emphasized that institutions may face “sanctions exposure for providing material support to a sanctioned entity,” and stressed that the U.S. Treasury Department’s Office of Foreign Assets Control “expects all financial institutions to do their own due diligence to ensure they are not transacting with a sanctioned person.”

    Financial Crimes Of Interest to Non-US Persons Department of Treasury Illicit Finance Russia Ukraine Ukraine Invasion OFAC Sanctions

  • DOJ seizes $300 million yacht as part of Task Force KleptoCapture; OFAC issues Russia-related general licenses and updated FAQs

    Financial Crimes

    On May 5, the DOJ executed a seizure warrant freezing a $300 million yacht owned by a sanctioned Russian oligarch, following a determination that the yacht is subject to forfeiture based on probable cause of violations of U.S. law, including the International Emergency Economic Powers Act, money laundering and conspiracy. The Russian oligarch was designated in 2018 by the U.S. Treasury Department’s Office of Foreign Assets Control pursuant to the Countering America’s Adversaries Through Sanctions Act and Executive Order (E.O.) 13582 (covered by InfoBytes here). According to the DOJ’s announcement, the sanctioned oligarch owned the yacht after his designation and “caused U.S. dollar transactions to be routed through U.S. financial institutions for the support and maintenance of the [yacht].” The seizure was coordinated through the DOJ’s Task Force KleptoCapture, which is “an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export controls, and economic countermeasures that the United States, along with its foreign allies and partners, have imposed in response to Russia’s unprovoked military invasion of Ukraine” (covered by InfoBytes here.)

    The same day OFAC also issued several Russia-related general licenses (GL), including GL 7A, which authorizes “transactions ordinarily incident and necessary to the receipt of, and payment of charges for, services rendered in connection with overflights of the Russian Federation or emergency landings in the Russian Federation by aircraft registered in the United States or owned or controlled by, or chartered to, U.S. persons that are prohibited by the Russian Harmful Foreign Activities Sanctions Regulations”; GL 26A, which authorizes all transactions ordinarily incident and necessary to the wind down of transactions involving Joint Stock Company SB Sberbank Kazakhstan or Sberbank Europe AG, or any entity that Sberbank subsidiaries owns, through July 12, provided certain criteria are met; GL 31, which authorizes certain transactions related to patents, trademarks, copyrights, or other forms of intellectual property protections in the U.S. or Russia that would otherwise be prohibited; and GL 32, which authorizes the wind down of transactions involving Amsterdam Trade Bank NV that would ordinarily be prohibited by E.O. 14024 through July 12. Additionally, OFAC issued one new and one amended Russia-related frequently asked questions.

    Financial Crimes OFAC Department of Treasury DOJ Of Interest to Non-US Persons Ukraine Russia Ukraine Invasion OFAC Sanctions OFAC Designations

  • OFAC issues Russian sanctions, general licenses, and expanded E.O.s

    Financial Crimes

    On May 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced “sweeping” sanctions, which include the designations of board members from two of Russia’s most important banks, a Russian state-owned bank and 10 of its subsidiaries, a state-supported weapons manufacturer, and three of Russia’s state-controlled television stations that generate revenue for the state. OFAC also published a Determination Pursuant to Section 1(a)(i) of Executive Order (E.O.) 14024 and a Determination Pursuant To Section 1(a)(ii) Of E.O. 14071. According to OFAC's press release, the sanctions, issued pursuant to E.O. 14071, “cut off access to services that are used by the Russian Federation and Russian elites to evade sanctions.” OFAC identified accounting, trust and corporate formation, and management consulting as categories of services that are subject to a prohibition on the export, reexport, sale, or supply, directly or indirectly, from the U.S., or by a U.S. person, wherever located, to any person located in the Russian Federation. Additionally, OFAC determined that these same services sectors of the Russian Federation economy are subject to sanctions pursuant to E.O. 14024. OFAC also issued four Russia-related general licenses (GLs): (i) GL 25A authorizes transactions related to telecommunications and certain internet-based communications; GL 33 authorizes the wind down of operations or existing contracts involving certain blocked entities; GL 34 authorizes the wind down of accounting, trust and corporate formation, and management consulting services; and GL 35 authorizes transactions involving credit rating and auditing services. OFAC also issued a new frequently asked question clarifying transactions related to telecommunications and certain internet-based communications that involve Joint Stock Company Channel One Russia, Television Station Russia-1, or Joint Stock Company NTV Broadcasting Company authorized by Russia-related GL 25A.

    OFAC also recently published amended Russia-related frequently asked questions 1034, 1035, and 1038 clarifying, among other things, (i) terms related to Executive Order (E.O.) 14071’s prohibition on certain accounting, trust and corporate formation, and management consulting services; (ii) what “credit rating services” and “auditing services” mean under General License 35; and (iii) certain activities related to products and services in or involving the Russian Federation in relation to E.O. 14024.

    Find continuing InfoBytes coverage on the U.S. sanctions response to Russia’s invasion of Ukraine here.

    Financial Crimes OFAC Department of Treasury Of Interest to Non-US Persons Ukraine Russia Ukraine Invasion OFAC Sanctions OFAC Designations

  • SEC advises companies on Ukraine-related disclosure obligations

    Securities

    On May 3, the SEC Division of Corporation Finance released a sample letter advising companies that they should provide “detailed disclosure[s]” if they have direct or indirect operations in Russia, Belarus or Ukraine or if they trade securities in Russia or are affected by financial sanctions imposed on Russia. Companies should also report any other related uncertainties caused by the conflict in Ukraine, and disclose supply chain disruptions, cybersecurity risks, and volatility related to commodity trading prices. Additionally, companies should report whether they rely on goods or services sourced in Russia or Ukraine (or in certain cases, countries supporting Russia) as well as any business relationships or assets based in Russia, Belarus, or Ukraine. “The sample comments do not constitute an exhaustive list of the issues that companies should consider,” the Division said. “As always, companies should evaluate whether they have experienced or been impacted by matters characterized as potential risks and, if so, update disclosures accordingly.”

    Securities Financial Crimes Privacy/Cyber Risk & Data Security Ukraine Ukraine Invasion Russia Of Interest to Non-US Persons

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