OFAC Issues 2 New Russia Licenses

The Office of Foreign Assets Control on July 22 issued two new Russia-related general licenses.

General License 45 allows until 12:01 a.m. EDT Oct. 20 transactions necessary to wind down financial agreements that were entered into before June 6 and involve debt or equity issued by any Russian entity. General License 46 allows transactions related to an auction process (as announced by the Europe, Middle East and Africa Credit Derivatives Determination Committee) to settle credit derivative transactions with a Russian reference entity.

OFAC has also published two new frequently asked questions:

FAQ 1071 explains that "authorized transactions" in GL 45 include the purchase by U.S. persons of debt or equity securities issued by an entity in Russia, if that purchase is necessary to the wind down of a financial agreement. U.S. persons may purchase securities issued by an entity in Russia to cover or close out a short position if such agreement was entered into on or before June 6.

FAQ 1072 clarifies that GL 46 allows certain transactions related to the "establishment, administration, participation in, and execution of an auction process, as announced by the EMEA Credit Derivatives Determination Committee, to settle credit derivative transactions with a reference entity of 'the Russian Federation.'" Those transactions include the "submission and acceptance of bids and offers and physical settlement requests by auction participants and their customers," or the "delivery and acceptance of the Russian Federation debt obligations and corresponding settlement amounts." GL 46 also authorizes financial institutions to facilitate, clear and settle transactions authorized by GL 46, including by U.S. persons, of Russian debt obligations. OFAC said the license doesn't require the clearance and settlement of such transactions to be completed within eight business days after the conclusion of the auction.