Q: I understand that OFAC recently published a new list of Russian
and Ukrainian sanction targets in response to the crisis in Crimea. How should credit unions deal with these new
A: The Office
of Foreign Assets Control (OFAC) published a new list on July 16 targeting certain
entities operating in the financial services, energy, arms and related sectors of
the Russian economy in accordance with Executive
Order (E.O.) 13662. The Sectoral Sanctions Identifications (SSI) List is
not part of the Specially Designated Nationals (SDN) List, although some SSI
targets may appear on the SDN List.
The 7/16 sanctions were imposed on: two major Russian
financial institutions (Gazprombank OAO and VEB), two Russian energy firms;
eight Russian arms firms; the “Luhansk People’s Republic” and the “Donetsk
People’s Republic,” which have asserted governmental authority over parts of
Ukraine without the authorization of the Government of Ukraine, and the
self-declared prime minister of the Donetsk People’s Republic; a key shipping
facility in the Crimean peninsula (Feodosiya Enterprises); and several Russian
The Ukraine-related sanctions also added Russian and
Ukrainian individuals and entities to the SDN List. As the crisis continues, OFAC will likely add
more individuals and entities on the SDN List and/or SSI List.
So, how should CUs handle these new OFAC targets? First,
check with your OFAC software vendor to make sure they’re tracking this list in
addition to the SDN List.
As for whether to block property or reject transactions
involving these new targets, OFAC has a list of rather complicated frequently
asked questions on how to handle SSIs (see resource links below). But, here’s the nutshell version from what I
can tell: U.S. persons are prohibited from providing debt financing longer than
90 days or new equity to any person/entity on the SSI List. However, targets’
assets under U.S. jurisdiction are not “blocked” (frozen) at this time.
Obviously, this post just hits the highlights – see the
resource links for more information and call
OFAC if you get a hit on the SSI List.