We anticipate that regulations to be promulgated will generally reflect the following:
“foreign person” – As indicated in section 10(f)(2) of SSIDES, which was added pursuant to CAATSA, the phrase “foreign person” is defined in 31 C.F.R. § 595.304 as in effect on August 2, 2017.
“knowingly” – For purposes of section 10(a) of SSIDES, OFAC will interpret this term consistent with its usage in section 221 of CAATSA, which provides the following: “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.”
“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.
“facilitation . . . 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” – For purposes of section 10(a)(2) of SSIDES, OFAC will consider the totality of the facts and circumstances when determining whether transactions are “significant.” OFAC will consider the following list of seven broad factors that can assist in the determination of whether a transaction is “significant”: (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 a person subject to sanctions imposed by the United States with respect to the Russian Federation; (5) the impact of the transaction(s) on statutory objectives; (6) whether the transaction(s) involve deceptive practices; and (7) such other factors that the Secretary of the Treasury deems relevant on a case-by-case basis.
Furthermore, for purposes of section 10(a)(2) of SSIDES, 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(s) subject to sanctions is only identified on the Sectoral Sanctions Identifications (SSI) List or the Non-SDN Menu-Based Sanctions (NS-MBS) List must also involve deceptive practices (i.e., attempts to obscure or conceal the actual parties or true nature of the transaction(s), or to evade sanctions) to potentially be considered significant. A transaction involving an SSI entity or NS-MBS person is not, however, 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” – As indicated in section 10(f)(3) of SSIDES as added by CAATSA, the term “structured,” with respect to a transaction, has the meaning given the term ‘structure’ in 31 C.F.R. § 1010.100(xx). Structured transactions are a type of deceptive transaction. A “deceptive transaction” is one that involves deceptive practices. As described in 31 C.F.R. § 561.404(f), “deceptive practices” are attempts to obscure or conceal the actual parties or true nature of a transaction, or to evade sanctions.