Frequently Asked Questions

545. What do the following key terms in section 10 of the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014 (SSIDES), as amended by section 228 of the Countering America’s Adversaries Through Sanctions Act (CAATSA), mean: “foreign person,” “knowingly,” “materially violate,” “facilitates . . . for or on behalf of,” “significant transaction,” and “deceptive or structured transaction”?

Answer

“foreign person” – As stated in § 589.317 of the Ukraine-/Russia-Related Sanctions Regulations (URSR), the term foreign person for purposes of the SSIDES section 10 provisions in §§ 589.201(a)(6) and 589.413 means any citizen or national of a foreign state (including any such individual who is also a citizen or national of the United States), or any entity not organized solely under the laws of the United States or existing solely in the United States, but does not include a foreign state.  This definition is consistent with section 10(f)(2) of SSIDES.

“knowingly” – section 589.322 states that the term knowingly, with respect to conduct, a circumstance, or a result, means that a person has actual knowledge, or should have known, of the conduct, the circumstance, or the result.  This definition is consistent with section 221(4) of CAATSA.

“materially violate” – For purposes of section 10(a)(1) of SSIDES, OFAC will interpret the term “materially violate” to refer to an “egregious” violation.  A determination about whether a violation is egregious will be based on an analysis of the applicable General Factors as described in OFAC’s Economic Sanctions Enforcement Guidelines, located in subsection (B)(1), section V of Appendix A to 31 C.F.R. part 501.

“facilitate[ion] . . . for or on behalf of” – For purposes of section 10(a)(2) of SSIDES, facilitating a significant transaction for or on behalf of a person will be interpreted to mean providing assistance for a transaction from which the person in question derives a particular benefit of any kind (as opposed to a generalized benefit conferred upon undifferentiated persons in aggregate).  Assistance may include the provision or transmission of currency, financial instruments, securities, or any other value; purchasing, selling, transporting, swapping, brokering, financing, approving, or guaranteeing; the provision of other services of any kind; the provision of personnel; or the provision of software, technology, or goods of any kind.

“significant transaction” – section 589.413 states that for purposes of the SSIDES prohibitions in § 589.201(a)(6)(vii), the Secretary of the Treasury or the Secretary’s designee will consider the totality of the facts and circumstances when determining whether transactions are “significant.”  As a general matter, some or all of the following factors may be considered: (1) the size, number, and frequency of the transaction(s); (2) the nature of the transaction(s); (3) the level of awareness of management and whether the transaction(s) are part of a pattern of conduct; (4) the nexus between the transaction(s) and the person subject to sanctions imposed by the United States with respect to the Russian Federation, as defined in SSIDES, or any child, spouse, parent, or sibling of such an individual; (5) the impact of the transaction(s) on the objectives of the Ukraine Freedom Support Act, SSIDES, CAATSA, Executive Order (E.O.) 13660, E.O. 13661, E.O. 13662, E.O. 13685, or any other Executive order issued pursuant to the national emergency declared in E.O. 13660; (6) whether the transaction(s) involve deceptive practices; and (7) such other factors that the Secretary of the Treasury or the Secretary’s designee deems relevant on a case-by-case basis.  

Furthermore, § 589.413(i) states a transaction is not significant if U.S. persons would not require specific licenses from OFAC to participate in it.  A transaction in which the person subject to sanctions is identified on the Sectoral Sanctions Identifications (SSI) List or the Non-SDN Menu-Based Sanctions (NS-MBS) List will only be potentially considered significant if:  1) the transaction involves deceptive practices (i.e., attempts to obscure or conceal the actual parties or true nature of the transaction(s), or to evade sanctions); and 2) such person is “subject to sanctions imposed by the United States with respect to the Russian Federation” or a child, spouse, parent, or sibling of such an individual, as described in § 589.413(d)(1) (see also FAQ 546).  

A transaction involving an entity solely on the SSI List or NS-MBS List is not automatically significant simply because a U.S. person would require a specific license from OFAC to participate in it and it involves deceptive practices.  In all cases, the totality of the circumstances, including the other factors listed above, will shape the final determination of significance.

“Deceptive or structured transaction” – the term structured, with respect to a transaction, has the meaning given the term “structure” in 31 CFR 1010.100 (xx) (or any corresponding similar regulation or ruling).  See 31 C.F.R. § 589.336.

Structured transactions are a type of deceptive transaction.  A “deceptive transaction” is one that involves deceptive practices.  As described in 31 C.F.R. § 589.413(f), “deceptive practices” are attempts to obscure or conceal the actual parties or true nature of a transaction, or to evade sanctions. 

Date Updated: April 29, 2022

 

Date Released
January 5, 2021