An authorization for transactions that are ordinarily incident and necessary to a transaction licensed pursuant to E.O. 14024 does not implicitly authorize a debit to a blocked account on the books of a U.S. financial institution.  Debits to an account on the books of a U.S. financial institution of a blocked person are only authorized as transactions ordinarily incident and necessary to a licensed transaction if such license explicitly authorizes such debits.

For example, General Licenses (GLs) 9 and 10  explicitly state that debits to accounts on the books of a U.S. financial institution of the blocked entities listed in the GLs are authorized to the extent ordinarily incident and necessary to effect the specified transactions authorized therein.  By contrast, GLs 3 and 11 do not explicitly authorize debits to accounts on the books of a U.S. financial institution of the blocked entities.
 

No, so long as the terms of such debt (including the repayment period, the interest rate, and the amount) were contractually agreed to before the relevant sanctions effective date described in the Russia-related Entities Directive  and are not modified on or after the relevant sanctions effective date (FAQ 984).  As stated in FAQ 956, loans, contracts, or other agreements that use London Interbank Offered Rate (LIBOR) as a reference rate that are modified to replace such benchmark reference rate will not be treated as new debt for OFAC sanctions purposes, so long as no other material terms of the loan, contract, or agreement are modified. 

Some entities determined to be subject to the prohibitions of the Russia-related Entities Directive may also be subject to additional prohibitions under other sanctions authorities, such as additional directives under E.O. 14024 or E.O. 13662.  It is important to note that each directive operates independently of the others.  For example, if a transaction involves a person subject to two separate directives, a U.S. person engaging in that transaction must comply with both directives.  
 

No.  The Russia-related Entities Directive prohibits U.S. persons from engaging in only certain activities related to new debt of longer than 14 days maturity or new equity of the entities listed in Annex 1 to the Russia-related Entities Directive, or of entities otherwise determined to be subject to the prohibitions of the Russia-related Entities Directive, as explained in FAQ 984.  Please see FAQ 985 regarding the applicability of OFAC’s 50 Percent Rule with respect to this directive.

Some entities determined to be subject to the prohibitions of the Russia-related Entities Directive may also be subject to additional prohibitions under other sanctions authorities, such as additional directives under E.O. 14024 or E.O. 13662.  It is important to note that each directive operates independently of the others.  For example, if a transaction involves a person subject to two separate directives, a U.S. person engaging in that transaction must comply with both directives.  
 

If a U.S. person entered into a long-term credit facility or loan agreement prior to the relevant sanctions effective date described in the Russia-related Entities Directive, drawdowns and disbursements with repayment terms of 14 days or less are permitted.  In addition, drawdowns and disbursements whose repayment terms exceed 14 days are not prohibited if the terms of such drawdowns and disbursements (including the length of the repayment period, the interest rate applied to the drawdown, and the maximum drawdown amount) were contractually agreed to prior to the relevant sanctions effective date and are not modified on or after the relevant sanctions effective date.  U.S. persons may not deal in a drawdown or disbursement initiated on or after the relevant sanctions effective date with a repayment term that is longer than 14 days if the terms of the drawdown or disbursement were negotiated on or after the relevant sanctions effective date.  Such a newly negotiated drawdown or disbursement would constitute a prohibited extension of credit.  

The term “debt” includes bonds, loans, extensions of credit, loan guarantees, letters of credit, drafts, bankers acceptances, discount notes or bills, or commercial paper.

The term “equity” includes stocks, share issuances, depositary receipts, or any other evidence of title or ownership.
 

Yes.  The prohibitions of the Russia-related Entities Directive apply to any entity listed in Annex 1 to the Russia-related Entities Directive or otherwise determined to be subject to the prohibitions of the Russia-related Entities Directive, or their property or interests in property, which includes entities 50 percent or more owned, directly or indirectly, individually or in the aggregate, by one or more entities determined to be subject to the prohibitions of the Russia-related Entities Directive.

The Russia-related Entities Directive prohibits certain dealings by U.S. persons or within the United States in new debt of longer than 14 days maturity or new equity of Russian entities determined to be subject to the prohibitions of the directive or their property or interests in property.  The prohibitions of the Russia-related Entities Directive are effective beginning on 12:01 a.m. eastern daylight time, March 26, 2022 for entities listed in Annex 1 to the Russia-related Entities Directive, or their property or interests in property.  For entities subsequently determined to be subject to the prohibitions of the Russia-related Entities Directive, the prohibitions are effective 12:01 a.m. eastern time 30 days following such determination.

Specifically, the Russia-related Entities Directive prohibits the following activities by U.S. persons or within the United States:  all transactions in, provision of financing for, and other dealings in new debt with a maturity of greater than 14 days or new equity of entities listed in Annex 1 to the Russia-related Entities Directive or otherwise determined to be subject to the prohibitions of the Russia-related Entities Directive, or their property or interests in property, where such debt or equity is issued on or after the relevant sanctions effective date.  Please see FAQ 985 regarding the applicability of OFAC’s 50 Percent Rule with respect to this directive.

These prohibitions apply to all new debt with a maturity of greater than 14 days and new equity irrespective of currency denomination.

In addition, the Russia-related Entities Directive prohibits:  (1) any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions of the Russia-related Entities Directive; and (2) any conspiracy formed to violate any of the prohibitions of the Russia-related Entities Directive. 

Some entities determined to be subject to the prohibitions of the Russia-related Entities Directive may also be subject to prohibitions in other sanctions authorities, such as prohibitions of other directives issued under E.O. 14024, or directives issued under E.O. 13662.  It is important to note that each directive operates independently of the others.  For example, if a transaction involves a person subject to two separate directives, a U.S. person engaging in that transaction must comply with both directives.  

In February 2022, OFAC issued two directives under E.O. 14024 regarding restrictions related to new debt or equity involving certain Russian Federation or Russia-related entities:

• On February 22, 2022, OFAC issued Directive 1A under E.O. 14024, “Prohibitions Related to Certain Sovereign Debt of the Russian Federation” (Russia-related Sovereign Debt Directive), replacing and superseding Directive 1 under E.O. 14024 of April 15, 2021, to extend existing sovereign debt prohibitions to cover participation in the secondary market for ruble and non-ruble denominated bonds issued after March 1, 2022 by the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation (see FAQs 888 and 965).
• On February 24, 2022, OFAC issued Directive 3 under E.O. 14024, “Prohibitions Related to New Debt and Equity of Certain Russia-related Entities” (Russia-related Entities Directive) to prohibit all transactions in, provision of financing for, and other dealings in new debt of longer than 14 days maturity or new equity issued on or after 12:01 a.m. eastern daylight time, March 26, 2022 by the entities listed in Annex 1 to that directive, or their property or interests in property.  These same prohibitions also apply to any entity subsequently determined to be subject to the prohibitions of the Russia-related Entities Directive, or its property or interests in property, beginning on or after 12:01 a.m. eastern time on the date that is 30 days after the date of such determination (see FAQ 984).

Entities determined to be subject to the prohibitions of these directives will be listed on the Non-SDN Menu-Based Sanctions List (NS-MBS List) (in addition to any other applicable sanctions lists maintained by OFAC).  Please see FAQ 985 regarding the applicability of OFAC’s 50 Percent Rule with respect to the Russia-related Entities Directive.  Listings on the NS-MBS List will denote when an entity has been determined to be subject to prohibitions, as well as when the prohibitions come into effect with respect to each entity.
 

Unless otherwise authorized, U.S. persons may not buy or sell debt or equity of the Russian financial institutions blocked pursuant to Executive Order (E.O.) 14024.  Accordingly, a U.S. fund may not buy, sell, or otherwise engage in transactions related to debt or equity of such blocked Russian financial institutions, and must block such holdings, unless exempt or otherwise authorized by the Office of Foreign Assets Control (OFAC).  A U.S. fund that contains such blocked holdings generally is not itself considered a blocked entity unless such blocked holdings represent a 50 percent or more share by value of the fund.  If such blocked holdings do not represent a 50 percent or more share by value of the fund, U.S. persons may continue to invest in it, and the fund is not considered blocked.  The fund may divest itself of blocked holdings to the extent authorized by OFAC.

Date Updated: January 17, 2023

General License (GL) 9A authorizes U.S. persons, until 12:01 a.m. eastern daylight time May 25, 2022, to engage in transactions prohibited by the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587, that are ordinarily incident and necessary to dealings in debt or equity issued prior to February 24, 2022 of one or more of the following entities (“covered debt or equity”), provided that any divestment or transfer of, or facilitation of divestment or transfer of, covered debt or equity must be to a non-U.S. person:

• State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB);
• Public Joint Stock Company Bank Financial Corporation Otkritie; 
• Sovcombank Open Joint Stock Company;
• Public Joint Stock Company Sberbank of Russia;
• VTB Bank Public Joint Stock Company;
• Any entity owned 50 percent or more, directly or indirectly, individually or in the aggregate, by one of the above entities.

This authorization includes the facilitation, clearing, and settling of transactions ordinarily incident and necessary to divest covered debt or equity to a non-U.S. person, including on behalf of U.S. persons.  Also, as part of a divestment transaction to a non-U.S. person, U.S. persons may engage in purchases of or investment in covered debt or equity if ordinarily incident and necessary to buy to cover a short position in such holdings.

To allow the closing of trades initiated before February 24, 2022, paragraph (b) of GL 9A authorizes all transactions that are ordinarily incident and necessary to facilitating, clearing, and settling trades of covered debt or equity through 12:01 a.m. eastern daylight time May 25, 2022, provided such trades were placed prior to 4:00 p.m. eastern standard time on February 24, 2022, including debits to accounts on the books of U.S. financial institutions of certain blocked entities.  

GL 9A also authorizes U.S. persons to receive interest, dividend, or maturity payments on debt or equity of the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation through 12:01 a.m. eastern daylight time on May 25, 2022.  After May 25, 2022, U.S. persons would require a specific license to continue to receive such payments.  

Certain transactions otherwise prohibited by the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587, are not authorized by GL 9A.  Please see GL 9A for additional details.  Please also see GL 10A with respect to authorizations related to certain derivative contracts. 

For purposes of assessing whether certain transactions are authorized under GL 9A or GL 10A, U.S. persons—including financial institutions, registered broker-dealers in securities, securities exchanges, and other market intermediaries and participants—may rely upon the information available to them in the ordinary course of business, including reasonable reliance on information about the underlying transaction provided by the parties thereto.  However, U.S. persons should also exercise caution in engaging in foreign exchange transactions on the Moscow Exchange given the current heightened risk that the Central Bank of the Russia Federation could be a counterparty to such transactions (see FAQ 1002). 

Date Updated: March 02, 2022

OFAC evaluates a range of factors when developing sanctions targets, consistent with foreign policy and national security goals.  In the context of blocking sanctions, non-U.S. persons may be exposed to sanctions risk in relation to activities with persons subject to blocking sanctions pursuant to E.O. 14024.  Under E.O. 14024, non-U.S. persons may be designated if they have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, certain activities, a person whose property and interests in property are blocked pursuant to E.O. 14024, or (in certain circumstances) a blocked government.  Please see sections 1(a)(vi) and 1(b) of E.O. 14024. 

Non-U.S. persons generally do not risk exposure to U.S. blocking sanctions under E.O. 14024 for engaging in transactions with persons subject to the prohibitions of the directives under E.O. 14024.  Moreover, non-U.S. persons generally do not risk exposure to U.S. blocking sanctions under E.O. 14024 for engaging in transactions with blocked persons, where those transactions would not require a specific license if engaged in by a U.S. person.  Note, however, that E.O. 14024 and the directives under E.O. 14024 prohibit any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions of those directives, as well as any conspiracy formed to violate any of the prohibitions of those directives.  OFAC will not view as “evading or avoiding” efforts by non-U.S. persons to comply with U.S. sanctions by replacing sanctioned suppliers or service providers (including financial institutions) with non-sanctioned persons.
 

Yes, U.S. persons supporting activities undertaken for the official business of certain international organizations or entities, certain humanitarian-related trade, or the response to the COVID-19 pandemic may continue to engage in such activity involving persons sanctioned pursuant to E.O. 14024 through a variety of OFAC authorizations or exemptions, as described below.

Consistent with section 9 of E.O. 14024, transactions for the conduct of the official business of the Federal Government or the United Nations (including its specialized agencies, programs, funds, and related organizations) by employees, grantees, and contractors thereof are exempt from the sanctions prohibitions of E.O. 14024.

Additionally, OFAC has issued General License (GL) 5, authorizing transactions for the conduct of the official business of certain international organizations and entities.  

OFAC also issued GL 6, which authorizes, subject to certain conditions, transactions that are ordinarily incident and necessary to:  (1) the exportation or reexportation of agricultural commodities, medicine, medical devices, replacement parts and components for medical devices, or software updates for medical devices to, from, or transiting the Russian Federation; or (2) the prevention, diagnosis, or treatment of COVID-19 (including research or clinical studies relating to COVID-19).

While certain Russian financial institutions are subject to sanctions under E.O. 14024, the financial services sector of the Russian Federation economy is not comprehensively sanctioned (see FAQ 964).  Accordingly, U.S. persons may also use non-sanctioned Russian financial institutions to process these transactions.

Note that the authorizations and exemptions described above do not extend to prohibitions applied to persons sanctioned pursuant to any other sanctions authorities implemented by OFAC, such as E.O. 13662.

GLs 6A, 7A, and 8C do not authorize a U.S. financial institution to maintain (or open) a correspondent account or payable-through account for or on behalf of entities subject to the prohibitions of Directive 2 under E.O.  14024 , “Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions” (Russia-related CAPTA Directive).  Consequently, in order for a U.S. financial institution to engage in transactions authorized under these GLs (e.g., a funds transfer related to energy), all such funds transfers must be processed indirectly through a non-sanctioned, non-U.S. financial institution.  

Examples of authorized and prohibited funds transfers under GLs 6A, 7A, and 8C include:

Payment from third-country originator

Authorized payment from third-country originator to beneficiary with an account at a sanctioned institution:

Prohibited payment from third-country originator to beneficiary with an account at a sanctioned institution: 

 

Payment from U.S. originator

Authorized payment from U.S. originator to beneficiary with an account at a sanctioned institution:

Prohibited payment from U.S. originator to beneficiary with an account at a sanctioned institution: 

In each of the above examples, the underlying funds transfer must be authorized under the applicable GL.
 

Updated: June 14, 2022

For the purposes of GL 8C,  the term “related to energy” means the extraction, production, refinement, liquefaction, gasification, regasification, conversion, enrichment, fabrication, transport, or purchase of petroleum, including crude oil, lease condensates, unfinished oils, natural gas liquids, petroleum products, natural gas, or other products capable of producing energy, such as coal, wood, or agricultural products used to manufacture biofuels, or uranium in any form, as well as the development, production, generation, transmission, or exchange of power, through any means, including nuclear, thermal, and renewable energy sources. This definition remains unchanged from GL 8.

Updated: June 14, 2022

General License (GL) 8C authorizes certain transactions “related to energy” (as defined in the GL; see also FAQ 977) involving the following entities (collectively, “Covered Entities”):

• State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB);
• Public Joint Stock Company Bank Financial Corporation Otkritie;
• Sovcombank Open Joint Stock Company;
• Public Joint Stock Company Sberbank of Russia;
• VTB Bank Public Joint Stock Company; 
• Any entity owned 50 percent or more, directly or indirectly, individually or in the aggregate, by one of the above entities; and
• The Central Bank of the Russian Federation.

GL 8C does not authorize any transaction prohibited by Directive 1A under E.O. 14024, “Prohibitions Related to Certain Sovereign Debt of the Russian Federation” (Russia-related Sovereign Debt Directive).  In addition, GL 8C does not authorize any debit to an account on the books of a U.S. financial institution of the Central Bank of the Russian Federation.  Further, GL 8C does not authorize a U.S. financial institution to maintain (or open) a correspondent account or payable-through account for or on behalf of foreign financial institutions subject to the prohibitions of Directive 2 under E.O. 14024, “Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions” (the “Russia-related CAPTA Directive”).  Consequently, in order for a U.S. financial institution to engage in transactions authorized by GL 8C, all funds transfers related to energy involving one or more Covered Entities must be processed indirectly through a non-sanctioned, non-U.S. financial institution.  Please see FAQ 978 for examples of authorized and prohibited transactions flows under certain GLs, including GL 8C.

For purposes of assessing whether certain transactions are authorized under GL 8C, U.S. persons may rely upon the information available to them in the ordinary course of business, including reasonable reliance on information about the underlying transaction provided by the parties thereto.  

GL 8C is valid until 12:01 eastern standard time, December 5, 2022 unless renewed.  Persons unable to wind down prohibited transactions with the Covered Entities by December 5, 2022 are encouraged to approach the Office of Foreign Assets Control, which may consider renewing GL 8C.  Please see FAQs 977, 978, 1010, 1111, and 1012 for additional guidance related to GL 8C.

GL 8C provides authorization solely under E.O. 14024.  Therefore, U.S. financial institutions that rely on the authorization provided in GL 8C to process transactions related to energy must also comply with the prohibitions of E.O. 14066, E.O. 14068, and E.O. 14071 (see FAQs 1013, FAQ 1014 and FAQ 1015).

Updated: June 14, 2022

For certain Russian financial institutions blocked in February 2022 pursuant to E.O. 14024, a short-term wind-down period is authorized.  General License (GL) 3 authorizes a wind-down period of 30 days for transactions involving State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB), and GL 11 authorizes a wind-down period of 30 days for transactions involving VTB Bank Public Joint Stock Company, Public Joint Stock Company Bank Financial Corporation Otkritie, or Sovcombank Open Joint Stock Company.  These authorizations also apply to any entity in which these financial institutions own, directly or indirectly, individually or in the aggregate, a 50 percent or greater interest. 

GLs 3 and 11 authorize U.S. persons to engage in transactions ordinarily incident and necessary to exit operations, contracts, or other agreements that were in effect prior to the date of blocking involving the specified blocked Russian financial institutions, provided that such transactions do not involve a debit to a blocked account on the books of a U.S. financial institution (see FAQ 990).  For example, a U.S. financial institution may take steps necessary to collect on outstanding loans made to a blocked person, including exercising rights to any collateral related thereto, as authorized wind-down activity, provided the transaction does not involve a debit to a blocked account on the books of a U.S. financial institution (unless separately authorized).  A U.S. financial institution may also take steps necessary to pay outstanding loans, provided that, if such payment is for the benefit of a blocked person, it must be transferred into a blocked account.  Similarly, a U.S. financial institution may take steps necessary to close a correspondent account maintained for a blocked person; however, funds in the correspondent account may not be returned to the blocked person, and must remain blocked, absent separate authorization from OFAC.

GLs 3 and 11 authorize only new or continued business activities that are ordinarily incident and necessary to wind-down activities.  Wind-down activities do not include the continued processing of funds transfers, securities trades, or other transactions involving a blocked person that were part of ongoing business activities prior to the imposition of sanctions, unless separately authorized (see, e.g., GLs 8, 9, and 10).  Moreover, GLs 3 and 11 do not apply to all Russian financial institutions blocked in February 2022, such as Promsvyazbank Public Joint Stock Company or Joint Stock Commercial Bank Novikombank, or transactions involving other persons blocked pursuant to E.O. 14024, other than the blocked Russian financial institutions specified in GLs 3 and 11.

In addition to GLs 3 and 11, OFAC issued GL 12 to authorize U.S. persons to reject, rather than block, prohibited transactions involving specified blocked Russian financial institutions for 30 days.  This authorizes, for example, a U.S. financial institution to reject, rather than block, an attempted unauthorized funds transfer until the expiration of GL 12.  The authorization provided in GL 3 expires at 12:01 eastern daylight time, March 24, 2022.  The authorizations provided in GLs 11 and 12 expire at 12:01 a.m. eastern daylight time, March 26, 2022.

For more information on the prohibitions that apply to Russian financial institutions blocked pursuant to E.O. 14024 in February 2022, or related authorizations, please see FAQ 974.

For guidance regarding transactions involving securities and derivatives contracts related to the blocked persons listed above, see FAQ 982.
 

On February 22, 2022, the Office of Foreign Assets Control (OFAC) designated specified Russian financial institutions pursuant to E.O. 14024 , including the State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB), Promsvyazbank Public Joint Stock Company, and many of their subsidiaries.  OFAC designated additional Russian financial institutions on February 24, 2022, including VTB Bank Public Joint Stock Company, Public Joint Stock Company Bank Financial Corporation Otkritie (Otkritie), Sovcombank Open Joint Stock Company (Sovcombank), Joint Stock Commercial Bank Novikombank, and many of these financial institutions’ subsidiaries.  As a result, all property and interests in property of these entities in the possession or control of U.S. persons, including U.S. financial institutions, or within U.S. jurisdiction, are blocked and must be reported to OFAC.  In addition, all property and interests in property of any entity that is owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked.  Accordingly, U.S. persons, including U.S. financial institutions, are prohibited from transacting with these entities unless exempt or authorized by OFAC.  

OFAC issued several Russia-related general licenses (GLs) authorizing transactions involving specified blocked Russian financial institutions, including:
•    GL 2 : authorizing certain transactions involving VEB related to servicing obligations of certain Russian sovereign debt; 
•    GL  3: authorizing the wind down of certain transactions involving VEB until 12:01 a.m. eastern daylight time, March 24, 2022;
•    GL  11: authorizing the wind down of certain transactions involving VTB Bank Public Joint Stock Company, Otkritie, and Sovcombank until 12:01 a.m. eastern daylight time, March 26, 2022; and
•    GL  12: authorizing the rejection (rather than blocking) of certain transactions involving VTB Bank Public Joint Stock Company, Otkritie, and Sovcombank until 12:01 a.m. eastern daylight time, March 26, 2022.

Note that these GLs do not authorize certain activities with all blocked Russian financial institutions; nor does each GL authorize certain activities with the same group of blocked Russian financial institutions.  For example, the GLs listed above do not authorize any transactions involving Promsvyazbank Public Joint Stock Company or Joint Stock Commercial Bank Novikombank, and GLs 2 and 3  relate only to VEB.  

Other GLs that may be applicable to one or more of the Russian financial institutions blocked in February 2022 include:

•    GL  5: authorizing transactions related to the official business of certain international organizations and other entities; 
•    GL  6: authorizing certain transactions related to the exportation or reexportation of agricultural commodities, medicine, medical devices, replacement parts and components, or software updates, or the prevention, diagnosis, or treatment of COVID-19; 
•    GL  7: authorizing overflight payments, emergency landings, and air ambulance services;

•    GL  8A: authorizing transactions related to energy; 
•    GL  9A: authorizing transactions related to dealings in certain debt and equity until 12:01 a.m. eastern daylight time, May 25, 2022; and
•    GL  10A: authorizing certain transactions related to derivative contracts until 12:01 a.m. eastern daylight time, May 25, 2022. 

Please consult each GL for further information regarding its scope.  

On March 1, 2022, OFAC issued the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR), which incorporate GL 5 in section 587.510 of the RuHSR.

Additionally, consistent with section 9 of E.O. 14024, transactions for the conduct of the official business of the Federal Government or the United Nations (including its specialized agencies, programs, funds, and related organizations) by employees, grantees, and contractors thereof are exempt from the sanctions prohibitions of E.O. 14024.

Date Updated: March 02, 2022

With respect to foreign financial institutions subject to the prohibitions of Directive 2 under E.O. 14024, “Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions” (Russia-related CAPTA Directive), including Public Joint Stock Company Sberbank of Russia, obligations under this directive apply to U.S. financial institutions only.  U.S. individuals and companies that are not “U.S. financial institutions,” as defined in the Russia-related CAPTA Directive, are not prohibited from processing transactions involving foreign financial institutions solely subject to the Russia-related CAPTA Directive.  

With respect to the Russian financial institutions blocked on February 22 and 24, 2022 pursuant to E.O. 14024, General Licenses (GLs) 3 and 11 authorized U.S. persons to engage in transactions ordinarily incident and necessary to terminate their relationship with specified blocked Russian financial institutions, including withdrawing funds and securities, cancelling letters of credit, and amending or cancelling performance guarantees.  For additional information, please see FAQ 975.  Upon the respective expiration of GLs 3 and 11, U.S. persons were prohibited from transacting with the blocked Russian financial institutions, unless exempt or authorized by OFAC. 

Date Updated: December 22, 2023

Under the Russia-related CAPTA Directive, U.S. financial institutions are prohibited from the opening or maintaining of a correspondent account or payable-through account for or on behalf of, or from processing of a transaction involving, a foreign financial institution determined to be subject to the prohibitions of the Russia-related CAPTA Directive.  The term “U.S. financial institution,” as defined in the directive, includes foreign branches of U.S. financial institutions, but not their foreign subsidiaries.  Note, however, that the Russia-related CAPTA Directive prohibits any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions of this directive, as well as any conspiracy formed to violate any of the prohibitions of this directive.  OFAC will not view as “evading or avoiding” efforts by non-U.S. persons to comply with U.S. sanctions by replacing sanctioned suppliers or service providers (including financial institutions) with non-sanctioned persons.

No.  The prohibitions of the Russia-related CAPTA Directive apply with respect to any currency.  For example, a foreign branch of a U.S. financial institution may not open or maintain a correspondent account for or on behalf of, or process a transaction involving, a foreign financial institution determined to be subject to the prohibitions of the Russia-related CAPTA Directive, even if that account is denominated in a currency other than U.S. dollars, such as euros.  

Yes.  The prohibitions of the Russia-related CAPTA Directive apply to a U.S. financial institution’s opening or maintaining of a correspondent account or payable-through account for or on behalf of, or processing of a transaction involving, any FFI, wherever located outside of the United States, determined to be subject to the prohibitions of the Russia-related CAPTA Directive, or their property or interests in property—which includes FFIs 50 percent or more owned, directly or indirectly, individually or in the aggregate, by one or more FFIs determined to be subject to the prohibitions of the Russia-related CAPTA Directive.  This includes, for example, banking subsidiaries that are 50 percent or more owned by Public Joint Stock Company Sberbank of Russia and located outside of the United States.  

Yes.  The prohibitions of the Russia-related CAPTA Directive apply to any foreign financial institution listed in Annex 1 to the Russia-related CAPTA Directive or otherwise determined to be subject to the prohibitions of the Russia-related CAPTA Directive, “or their property or interests in property,” which includes foreign financial institutions 50 percent or more owned, directly or indirectly, individually or in the aggregate, by one or more foreign financial institutions determined to be subject to the prohibitions of the Russia-related CAPTA Directive.  As stated in the Russia-related CAPTA Directive, the prohibitions of this directive apply only with respect to a U.S. financial institution’s opening or maintaining of a correspondent account or payable-through account for or on behalf of, or processing of a transaction involving, a “foreign financial institution,” as defined in the Russia-related CAPTA Directive.  Thus, for purposes of the Russia-related CAPTA Directive, the prohibitions of this directive do not apply to non-“foreign financial institutions,” even if those non-“foreign financial institutions” are 50 percent or more owned, directly or indirectly, individually or in the aggregate, by one or more “foreign financial institutions” determined to be subject to this directive.

Annex 1 to the Russia-related CAPTA Directive identifies Public Joint Stock Company Sberbank of Russia as well as many of its foreign financial institution subsidiaries.  The foreign financial institutions listed in Annex 1 have been determined to be subject to the prohibitions of the Russia-related CAPTA Directive for operating or having operated in the financial services sector of the Russian Federation economy, or for being foreign financial institutions that are 50 percent or more owned, directly or indirectly, individually or in the aggregate, by one or more foreign financial institutions subject to the prohibitions of the Russia-related CAPTA Directive.  Please see FAQ 969 regarding the applicability of OFAC’s 50 Percent Rule to these entities.

The Russia-related CAPTA Directive prohibits U.S. financial institutions from:  (i) the opening or maintaining of a correspondent account or payable-through account for or on behalf of foreign financial institutions determined to be subject to the prohibitions of the Russia-related CAPTA Directive; and (ii) the processing of transactions involving foreign financial institutions determined to be subject to the prohibitions of the Russia-related CAPTA Directive.  Please see the Russia-related CAPTA Directive for the definition of the terms “U.S. financial institution” and “foreign financial institution” for purposes of this directive.  Please see FAQ 969 regarding the applicability of OFAC’s 50 Percent Rule with respect to this directive.

Annex 1 to the Russia-related CAPTA Directive lists the foreign financial institutions determined to be subject to the prohibitions as of March 26, 2022.  Foreign financial institutions determined to be subject to the prohibitions of the Russia-related CAPTA Directive, including the foreign financial institutions listed in Annex 1, can be found on the Office of Foreign Assets Control’s (OFAC) List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions (CAPTA List).  Relevant entries on the CAPTA List will denote when a foreign financial institution became subject to the prohibitions of the Russia-related CAPTA Directive, as well as when the prohibitions of the Russia-related CAPTA Directive come into effect with respect to that foreign financial institution.

The below table identifies the dates the prohibitions of the Russia-related CAPTA Directive take effect for (i) foreign financial institutions listed in Annex 1 to the Russia-related CAPTA Directive, and (ii) foreign financial institutions otherwise determined to be subject to its prohibitions and added to the CAPTA List.  

U.S. financial institutions must close any correspondent or payable-through account maintained for or on behalf of foreign financial institutions determined to be subject to the prohibitions of the Russia-related CAPTA Directive, or their property or interests in property, by the relevant effective date.  Separately, as of the relevant effective date, U.S. financial institutions may not process transactions involving foreign financial institutions determined to be subject to the prohibitions of the Russia-related CAPTA Directive, or their property or interests in property, and must reject such transactions unless exempt or authorized by OFAC.

Accordingly, after the relevant effective date, U.S. financial institutions must reject any transaction involving a foreign financial institution determined to be subject to the prohibitions of the Russia-related CAPTA Directive or involving that foreign financial institution’s property or interests in property.  This includes rejecting transactions related to any securities (including depositary receipts) issued by a foreign financial institution determined to be subject to the prohibitions of the Russia-related CAPTA Directive, including secondary market trading. For certain authorized securities-related transactions, see GL 9C and FAQ 981.  By virtue of the prohibition on the processing of transactions for or on behalf of foreign financial institutions determined to be subject to the prohibitions of the Russia-related CAPTA Directive, U.S. financial institutions are also prohibited from engaging in transactions with a covered foreign financial institution in connection with the foreign financial institution’s role as a local custodian for depositary receipt issuances.

The Russia-related CAPTA Directive does not impose blocking sanctions and, thus, does not require U.S. financial institutions (or other U.S. persons) to block the assets of foreign financial institutions determined to be subject to the prohibitions of this directive.  However, U.S. persons should be aware that foreign financial institutions subject to the prohibitions of the Russia-related CAPTA Directive may also be subject to additional prohibitions under other sanctions authorities, such as additional directives under E.O. 14024  or E.O. 13662.

OFAC issued several Russia-related general licenses (GLs) authorizing certain transactions involving the foreign financial institutions subject to the prohibitions of the Russia-related CAPTA Directive, including: 

• GL 6B: authorizing transactions related to (1) the production, manufacturing, sale, or transport of agricultural commodities, agricultural equipment, medicine, medical devices, replacement parts and components for medical devices, or software updates for medical devices; (2) the prevention, diagnosis, or treatment of COVID-19 (including research or clinical studies relating to COVID-19); or (3) ongoing clinical trials and other medical research activities; 
• GL 7A: authorizing overflight payments, emergency landings, and air ambulance services;
• GL 8C: authorizing transactions related to energy; and
• GL 27: authorizing transactions in support of nongovernmental organizations’ activities
   

On March 1, 2022, OFAC issued the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR), which incorporate GL 5 in section 587.510 of the RuHSR.

For additional information, please see FAQs 976, 977, 978, 979, 981, 982 and 990.

Date Updated: July 14, 2022

Treasury took expansive sanctions actions related to Russia’s financial services sector in February 2022 as detailed below.

• Financial services sector determination.  On February 22, 2022, the Secretary of the Treasury, in consultation with the Secretary of State, issued a determination pursuant to E.O. 14024 that authorizes sanctions against persons determined to operate or to have operated in the financial services sector of the Russian Federation economy (see FAQ 964).  
• Correspondent or payable-through account and payment processing prohibitions.  On February 24, 2022, the Office of Foreign Assets Control (OFAC) issued Directive 2 under E.O. 14024, “Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions” (Russia-related CAPTA Directive), which prohibits U.S. financial institutions from:  (i) the opening or maintaining of a correspondent account or payable-through account for or on behalf of foreign financial institutions determined to be subject to the prohibitions of the Russia-related CAPTA Directive; and (ii) the processing of transactions involving foreign financial institutions determined to be subject to the prohibitions of the Russia-related CAPTA Directive.  Annex 1 to the Russia-related CAPTA Directive identifies Public Joint Stock Company Sberbank of Russia and other foreign financial institutions owned 50 percent or more by this bank as subject to these prohibitions, which become effective on March 26, 2022 (see FAQs 964, 967, 968, 969, 970, 971, 972 and 973).
• Blocking certain Russian financial institutions.  OFAC designated specified Russian financial institutions pursuant to E.O. 14024, including the State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB), VTB Bank Public Joint Stock Company, Public Joint Stock Company Bank Financial Corporation Otkritie, Promsvyazbank Public Joint Stock Company, Sovcombank Open Joint Stock Company, Joint Stock Commercial Bank Novikombank, and several of these financial institutions’ subsidiaries.  As a result, all property and interests in property of these entities in the possession or control of U.S. persons, including U.S. financial institutions, or within U.S. jurisdiction, are blocked and must be reported to OFAC.  In addition, all property and interests in property of any entity that is owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked.  Accordingly, U.S. persons, including U.S. financial institutions, are prohibited from transacting with these entities unless exempt or authorized by OFAC (see FAQs 974, 975, 976, 977, 978, 979, 980, 981, and 982).  
• Expanding sovereign debt prohibitions to include the secondary market.  On February 22, 2022, OFAC issued Directive 1A under E.O. 14024, “Prohibitions Related to Certain Sovereign Debt of the Russian Federation” (Russia-related Sovereign Debt Directive), replacing and superseding Directive 1 under E.O. 14024 of April 15, 2021, to extend existing sovereign debt prohibitions to cover participation in the secondary market for ruble or non-ruble denominated bonds issued after March 1, 2022 by the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation (see FAQs 888, 889, 890, 891, 965, and 983).  
• New debt and equity restrictions involving certain Russia-related entities.  On February 24, 2022, OFAC imposed additional debt and equity restrictions involving Russia-related entities by issuing Directive 3 under E.O. 14024, “Prohibitions Related to New Debt and Equity of Certain Russia-related Entities” (Russia-related Entities Directive), to prohibit certain dealings by U.S. persons, or within the United States, in new debt of longer than 14 days maturity or new equity of Russia-related entities determined to be subject to the prohibitions of the Russia-related Entities Directive.  OFAC determined on February 24, 2022 that the entities listed in Annex 1 to the Russia-related Entities Directive, which include certain major Russian state-owned enterprises and large privately owned financial institutions, are subject to the prohibitions of this directive for new debt or equity issued on or after March 26, 2022 (see 983, 984, 985, 986, 987, 988 and 989). 
• General Licenses (GLs).  OFAC issued several Russia-related GLs authorizing certain transactions otherwise prohibited by E.O. 14024 (see FAQs 974, 975, 976, 977, 978, 979, 981, 982, and 990).
• New restrictions on sovereign transactions.  On February 28, 2022, OFAC issued Directive 4 under E.O. 14024, “Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation” (Russia-related Sovereign Transactions Directive) to prohibit U.S. persons from engaging in any transaction involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation, including any transfer of assets to such entities or any foreign exchange transaction for or on behalf of such entities (see FAQs 998 – 1003).

Date Updated: March 02, 2022