As previously covered here, on April 6, 2018, the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) invoked authority provided under the Countering America’s Adversaries Through Sanctions Act (“CAATSA”) in order to place several Russian oligarchs, political officials and businesses under their control on its Specially Designated Nationals and Blocked Persons List (“SDN List”). These designations generally prohibited U.S. persons from engaging in transactions with the sanctioned individuals and entities, however OFAC also issued several General Licenses simultaneously which were intended to provide limited windows for maintaining or winding down preexisting transactions with those sanctioned individuals or entities. OFAC has now partially extended those authorized wind down periods by issuing the following General Licenses last week on September 21, 2018:
Under these new General Licenses, OFAC’s authorization window for transactions with GAZ Group and its subsidiaries remains unchanged from what was provided in the previous General Licenses, however, OFAC has extended the authorization window for transactions with EN+ Group PLC and United Company RUSAL PLC by 20 days. In a press release, OFAC stated that it made these extensions because “EN+ and RUSAL have approached the U.S. Government about substantial corporate governance changes that could potentially result in significant changes in control. To allow sufficient time for review, we are extending these licenses until November 12.”
OFAC also preceded these new General Licenses with new FAQ guidance issued on September 14, 2018. In two new FAQ responses, OFAC stated that authorized “maintenance” activities under General License Nos. 14A and 16A generally include transactions and activities consistent with past practices that existed between the contracting party and the blocked entity prior to April 6, 2018. This FAQ guidance also indicates that General Licenses Nos. 14A and 16A would allow U.S. persons to enter into contingent contracts for transactions and activities to take place after the current expiration of the General Licenses, provided that any performance under such contracts must be made contingent upon future action by OFAC to remove prohibitions applicable to or otherwise authorize such performance. However, the FAQ guidance stated that General Licenses Nos. 14A and 16A do not allow purchases inconsistent with past purchasing practices in order to “stockpile” inventory prior to the General Licenses’ expiration date.