By Peter Jeydel on September 29, 2017

OFAC today revised its Ukraine/Russia-related sectoral sanctions directives prohibiting US person dealings in new debt or new equity of listed Russian financial institutions and new debt of listed Russian energy companies (in both cases, these prohibitions continue to apply to the “interests in property” of the listed entities, meaning any entity 50% or more owned by them). OFAC took this step pursuant to a statutory mandate in the Countering Russian Influence in Europe and Eurasia Act of 2017 (CRIEEA).  See our advisory on CRIEEA.  The changes made today are as follows (and as expected based on the statutory mandate):

  • Directive 1(financial sector): Prohibits all transactions in, provision of financing for, and other dealings in new debt of the covered persons of longer than 14 days maturity issued on or after November 28, 2017.
  • Directive 2(energy sector): Prohibits all transactions in, provision of financing for, and other dealings in new debt of the covered persons of longer than 60 days maturity issued on or after November 28, 2017.

The following rules under this sectoral sanctions program remain unchanged:

  • Directive 1 (financial sector): Continues to prohibit all transactions in, provision of financing for, and other dealings in new equity of the covered persons issued on or after July 16, 2014.  For new debt of the covered persons, the prohibition continues to apply to that issued:
    • on or after July 16, 2014 and before September 12, 2014 of longer than 90 days maturity; and
    • on or after September 12, 2014 and before November 28, 2017 of longer than 30 days maturity.
  • Directive 2 (energy sector): Continues to prohibit all transactions in, provision of financing for, and other dealings in new debt of longer than 90 days maturity of the covered persons issued on or after July 16, 2014 and before November 28, 2017.
  • Directive 3 (defense and related materiel sector – no changes made, and none were expected or required): Continues to prohibit all transactions in, provision of financing for, and other dealings in new debt of longer than 30 days maturity of the covered persons.

OFAC has not yet amended Directive 4 (certain trade related to the energy sector, excluding financial services), which CRIEEA requires OFAC to do by October 31, with a 90 day delayed effective date after the amendment is issued, similar to the 60 day delayed effective date that we see in today’s amendments to Directives 1 and 2.

Note that all of these prohibitions only apply to “activities by a US person or within the United States,” and they all include related prohibitions on evasion, causing violations, attempts and conspiracy.

This article was published originally on Steptoe International Compliance Blog. Read it here: http://www.steptoeinternationalcomplianceblog.com

Peter Jeydel is Associate at Steptoe & Johnson LLP, and member of SanctionsAlert.com Advisory Board.

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