On July 16, 2020, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) amended and extended two Ukraine-related general licenses related to GAZ Group (“GAZ”). Notably, General License No. 15I (“GL 15I”), issued to replace General License 15H, authorizes a wider range of activities related to the “the manufacture and sale of existing and new models of vehicles, their components, and spare parts” produced by GAZ.
By way of background, GAZ was designated as a Specially Designated National (“SDN”) on April 6, 2018, for being owned or controlled by Oleg Deripaska. Oleg Deripaska was designated as an SDN on April 6, 2018, pursuant to Executive Order 13661 for having acted or purported to act for or on behalf of, directly or indirectly, a senior official of the Government of the Russian Federation, as well as pursuant to Executive Order13662 for operating in the energy sector of the Russian Federation. The previous designation of GAZ resulted in a prohibition on dealings with GAZ and entities owned 50% or more by GAZ (“GAZ Subsidiaries”), unless authorized by OFAC via a general or specific license. Please see our blog post regarding the GAZ designation here, and our most recent blog about the previous extension of these general licenses here. OFAC also issued amended FAQs on July 22, 2020, to reflect these updated general licenses, as described in more detail below.
GL 15I was issued to replace and supersede in its entirety General License No. 15H and expands the scope of authorized activities with GAZ/GAZ Subsidiaries. Prior versions of GL 15I authorized only transactions and activities ordinarily incident and necessary to the maintenance or wind down of operations, contracts, or other agreements in effect prior to April 6, 2018, as well as certain other enumerated activities primarily concerned with safety and industry standards. GL 15I expands the list of authorized activities involving GAZ/GAZ Subsidiaries related to the “the manufacture and sale of existing and new models of vehicles, their components, and spare parts” produced by GAZ/GAZ Subsidiaries. These activities include not only wind-down/maintenance activities, but also:
- research, design, development, production, modification, upgrade, certification, distribution, and marketing;
- provision or receipt of services;
- entry into joint ventures, contract manufacturing agreements, supplier contracts, and other new contracts;
- payment and receipt of dividends and other funds owed by or to GAZ/GAZ Subsidiaries;
- financial transactions associated with activities authorized by GL 15I; and
- activities necessary for compliance with GL 15I’s reporting and certification requirements.
(GL 15I continues to authorize the use of blocked funds for the activities authorized by GL 15I.) Lastly, the amendments impose new reporting and certification requirements for GAZ, including monthly certification that it is not acting for or on behalf of Oleg Deripaska or any other SDN. In addition, the amendments also impose reporting requirements on US persons participating in transactions authorized by GL 15I. GL 15I now is set to expire on January 22, 2021.
OFAC issued amended FAQs 570, 571, 586, 588, 589, 5890, 591, 592, and 625 to reflect the updated GL 15I. FAQ 586 now explains in more detail the widened scope of GL 15I.
General License No. 13O
General License No. 13O (“GL 13O”) was issued to replace and supersede in its entirety General License No. 13N. GL 13O continues to authorize certain transactions by US persons ordinarily incident and necessary to divest or transfer debt, equity, or other holdings in GAZ/GAZ Subsidiaries to non-US persons, but extends the expiration date from July 22, 2020 to January 22, 2021.
OFAC issued amended FAQs 570 and 571 that reflect the extension of GL 13O.
The authors thank Orfeh Vahabzadeh for contributing to this blog post.