On May 22, 2018, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) issued General License 15 (“GL 15”) and General License 12C (“GL 12C”), replacing and superseding General License 12B (“GL 12B”). Please see our prior blog posts concerning (i) the designation of certain Russian parties here and (ii) the issuance of GL 12B here.
General License 15
- The purpose of GL 15 is to allow US Persons (i.e., US citizens and permanent resident aliens, wherever located or employed; entities organized under US laws, their non-US branches, and employees of the foregoing; and anyone while physically located in the United States (even temporarily) to engage in activities that are ordinarily incident and necessary to the maintenance or wind down of operations, contracts, or other agreements in effect prior to April 6, 2018, involving GAZ Group or entities 50% or more owned by GAZ Group (collectively, “GAZ Group Entities”) until October 23, 2018.
- Although all funds blocked pursuant to the sanctions targeting GAZ Group Entities prior to May 22, 2018, remain blocked, GL 15 authorizes the use of these blocked funds for maintenance or wind-down activities. In addition, US Persons are not required to block transactions authorized by GL 15 that occur on or after May 22, 2018, except for transactions involving blocked persons other than GAZ Group Entities.
- OFAC has also confirmed that activities by non-US persons that would be consistent with GL 15 will not be considered “significant” for purposes of US secondary sanctions under the Countering America’s Adversaries Through Sanctions Act (“CAATSA”) (see FAQ 589).
General License 12C
- GL 12C was amended to reflect the authorizations in GL 15. Specifically, US Persons are no longer required to block payments to or for GAZ Group Entities relating to activities authorized by GL 15.
- Like its predecessor GL 12B, GL 12C still authorizes US Persons to engage in certain activities before June 5, 2018 that are ordinarily incident and necessary to the maintenance or wind-down of operations, contracts, or other agreements in existence prior to April 6, 2018, with 12 specified Russian SDNs (and entities owned 50% or more by those SDNs). No new SDNs have been added to GL 12C.
New and Updated FAQs
On May 22, 2018, OFAC published six new Frequently Asked Questions (FAQs) and made revisions to existing FAQs relating to GLs 15 and 12C. FAQ 587 confirms OFAC’s willingness to consider the potential delisting of GAZ Group as an SDN upon the divestment and relinquishment of control of GAZ Group by any SDNs, including Oleg Deripaska.
On May 25, 2018, OFAC issued two new FAQs. FAQ 592 clarifies that GLs 12C, 14 and 15 authorize US 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 that preexisting loan or bond contract. The above general licenses would also authorize US Persons to receive accelerated payments or voluntary prepayments, provided they are made in accordance with the terms of the preexisting loan or bond contract and are consistent with maintenance or wind- down activities. FAQ 593 also identifies relevant factors to OFAC’s analysis when evaluating whether the payment of dividends to a blocked person with an equity interest in a foreign company of less than 50% is “significant” and could result in the imposition of secondary sanctions.