OFAC publishes a list to identify persons operating in sectors of the Russian economy identified by the Secretary of the Treasury pursuant to Executive Order 13662. Directives found within the list describe prohibitions on dealings with the persons identified. See https://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/ssi_list.aspx. These sectoral sanctions bring special challenges. They prohibit transactions of or dealings with new debt of longer than 90 days’ maturity or with new equity with those listed on the SSI List. Firms should be mindful of OFAC’s definition of debt and of the necessity to evaluate transactions for potential violations of the sectoral sanctions, especially, for financial institutions, in the context of trade financing given the inclusion of letters of credit and the extension of credit. Last, firms may need to reevaluate their existing due diligence efforts with clients or entities that may be affected by the new sectoral sanctions or if clients or entities have been added to the SDN list. Prohibitions may not be limited to named persons or entities but may include entities that are 50% or more (OFAC 50% rule) owned by the SDN-listed persons or entities. Consequently, it may be prudent for companies to observe those individuals or entities being targeted for sanctions and ensure they are not owned or controlled by SDNs.

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