OFAC issues new guidance on debt provision of Russia/Ukraine sanctions

The US Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’) has updated guidance on US sanctions targeting Russia over its annexation of part of Ukraine. General License 1B and updated (or new) Ukraine/Russia FAQs were published on 28 November. The new licence concerns debt issued on or after this date, and aligns maturity dates with the amended Ukraine/Russia-related Directives 1 and 2 issued on 29 September. These contained certain prohibitions under the Countering America’s Adversaries Through Sanctions Act 2017 (‘CAATSA’).

Directive 1 targets the financial services sector of the Russian economy, prohibiting transactions or the financing of new debt or equity with a maturity of longer than 30 days for persons designated under Directive 1. Directive 2 targets Russia’s energy sector, by prohibiting transactions or the financing of new debt or equity with a maturity of longer than 90 days for persons designated under Directive 2.

Under General License 1B, maturity dates for Directive 1 have decreased from 30 days to 14 days, and for Directive 2 from 90 days to 60 days.

US sectoral sanctions targeting Russian financial services, energy and defence industries have been in place since Russia’s annexation of the Crimea region of Ukraine in 2014. As well as blocking certain Russian individuals and entities under the Specially Designated Nationals and Blocked Persons (‘SDN’) List, the sanctions also limit the availability of debt financing; prohibit the provision of goods, services and technology relating to the exploration of oil or gas in Russia or the Arctic; restrict the supply of certain ‘dual-use’ items to the Russian military or for use in oil or gas exploration; and restrict licensing policies for the export of Russian defence products.

OFAC’s notice can be found here:
https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20171128.aspx

General License 1B can be found here:
https://www.treasury.gov/resource-center/sanctions/Programs/Documents/ukraine_gl1b.pdf

Updated FAQs on the Russia/Ukraine sanctions can be found here:
https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#ukraine

The new FAQ on the Russia/Ukraine sanctions can be found here:
https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#ukraine