Frequently Asked Questions

1054. Do the new investment prohibitions of Executive Order (E.O.) 14066, E.O. 14068, or E.O. 14071 (collectively, “the respective E.O.s”) prohibit U.S. persons from purchasing debt or equity securities issued by an entity in the Russian Federation?

Answer

Yes, the respective E.O.s prohibit U.S. persons from purchasing both new and existing debt and equity securities issued by an entity in the Russian Federation.  However, the new investment prohibitions of the respective E.O.s do not prohibit U.S. persons from selling or divesting debt or equity securities issued by an entity in the Russian Federation to a non-U.S. person (see FAQ 1049), including purchases of such debt or equity securities if ordinarily incident and necessary to the divestment or transfer of the debt or equity securities to a non-U.S. person.  U.S. financial institutions may clear and settle, or otherwise serve as market intermediaries in, divestment transactions on the secondary market—including transactions between non-U.S. persons.  

Please note that U.S. persons are not required to divest such securities and may continue to hold such previously acquired securities.  Moreover, the conversion of depositary receipts to underlying local shares of non-sanctioned Russian issuers would not be considered a prohibited “new investment” in the Russian Federation under the respective E.O.s.  

Additionally, the purchase of shares in a U.S. fund that contains debt or equity securities issued by entities in the Russian Federation generally would not be considered a prohibited “new investment,” under the respective E.O.s, so long as these holdings represent less than a predominant share by value of debt or equity securities issued by entities in the Russian Federation.  As a result, U.S. persons may continue to invest in the fund, and the fund may continue to operate.  Generally, the fund may also divest itself of these prohibited holdings.  

OFAC has also issued General License (GL) 45, authorizing transactions ordinarily incident and necessary to the wind down of financial contracts entered into on or before June 6, 2022 that involve, or are linked to, debt or equity securities issued by an entity in the Russian Federation, until 12:01 a.m. eastern daylight time, October 20, 2022.  The purpose of GL 45 is to authorize the close out of financial contracts entered into on or before June 6, 2022 that might not otherwise be considered a divestment of debt or equity securities issued by entities in the Russian Federation.  For further information, please see FAQ 1071.  

Please note that transactions to divest debt or equity securities issued by an entity in the Russian Federation to a non-U.S. person, or transactions to wind down pre-existing financial contracts pursuant to GL 45, must not involve blocked persons or other prohibited transactions unless exempt or otherwise authorized by OFAC.

Updated: July 22, 2022

Date Released
June 6, 2022