Frequently Asked Questions

No.  The Secretary of the Treasury, in consultation with the Secretary of State, has issued a determination pursuant to E.O. 14024 that authorizes sanctions against persons that operate or have operated in the financial services sector of the Russian Federation economy.  The technology sector and defense and related materiel sector of the Russian Federation economy were identified in E.O. 14024 when it was issued on April 15, 2021. 

A sector determination pursuant to E.O. 14024 exposes persons who operate or have operated in an identified sector to sanctions risk; however, a sector determination does not automatically impose sanctions on all persons who operate or have operated in the sector.  Only persons determined, pursuant to E.O. 14024, by the Secretary of the Treasury in consultation with the Secretary of State, or by the Secretary of State, in consultation with the Secretary of the Treasury, to operate or have operated in the above-identified sectors are subject to sanctions.

Persons sanctioned pursuant to E.O. 14024 for operating or having operated in an identified sector are added to one or more OFAC sanctions lists based on the type of sanction, including the Specially Designated Nationals and Blocked Persons List (SDN List), the List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions (CAPTA List), and the Non-SDN Menu-Based Sanctions List (NS-MBS List).

Date Updated: February 24, 2022

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In July 2017, the United Kingdom Financial Conduct Authority (FCA) announced the “future cessation and loss of representativeness” of the ICE Benchmark Administration’s 35 global reference rates, the LIBOR rates.  In light of the discontinuation of LIBOR as a benchmark reference rate, OFAC is issuing additional guidance.   

The Belarus, Russia, Ukraine-/Russia-related, and Venezuela-related sanctions programs prohibit U.S. persons from dealing in certain new debt of persons identified as subject to these prohibitions.  In FAQ 944 (Belarus), FAQ 986 (Russia-related)FAQ 371 (Ukraine-/Russia-related), and FAQ 511 (Venezuela-related), OFAC provides examples of new debt, such as “bonds, loans, extensions of credit, loan guarantees, letters of credit, drafts, bankers acceptances, discount notes or bills, or commercial paper” issued on or after various specified dates.  For more information on the effective dates and relevant debt maturities for each of these sanctions programs, please see FAQ 947 (Belarus), FAQ 984 (Russia-related)FAQ 370 (Ukraine-/Russia-related), and FAQ 553 (Venezuela-related).

For the Belarus, Russia, Ukraine-/Russia-related, and Venezuela-related sanctions programs, OFAC has indicated that certain changes to contractual terms of loans, contracts, or other agreements that were entered into prior to the effective date of the relevant sanctions prohibitions could convert pre-existing debt that was not subject to the sanctions prohibitions into new debt that is subject to the sanctions prohibitions.  (See FAQ 947 (Belarus), FAQs 987 and 989 (Russia-related) FAQ 394 (Ukraine-/Russia-related), and FAQ 553 (Venezuela-related).

Loans, contracts, or other agreements that use 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.

Date Updated: February 24, 2022

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E.O . 14024 establishes a new national emergency under which sanctions may be imposed against individuals and entities furthering specified harmful foreign activities of the Russian Federation.  This national emergency is separate from the national emergency relating to the crisis in Ukraine, declared in E.O. 13660 and further addressed in E.O.s 13661, 13662, 13685, and 13849.   E.O. 14024 addresses national security threats posed by specified harmful foreign activities of the Russian Federation, including:  its efforts to undermine the conduct of free and fair democratic elections and democratic institutions in the United States and its allies and partners; engaging in and facilitating malicious cyber-enabled activities against the United States and its allies and partners; fostering and using transnational corruption to influence foreign governments; pursuing extraterritorial activities targeting dissidents or journalists; undermining security in countries and regions important to United States national security; and violating well-established principles of international law, including respect for the territorial integrity of states. 

Like any other blocking Executive order, E.O. 14024 permits the United States to impose blocking and short-of-blocking sanctions.  The Office of Foreign Assets Control (OFAC) issued several directives under E.O. 14024 specifying certain prohibitions relating to persons determined to be subject to the applicable directive.  OFAC recommends reviewing the sanctions lists maintained by OFAC, including the Specially Designated Nationals and Blocked Persons List (SDN List), the List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions (CAPTA List), and the Non-SDN Menu-Based Sanctions List (NS-MBS List), to determine which sanctions are applicable.

Date Updated: February 24, 2022

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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.

The prohibitions of Directive 1 apply to all transactions involving new debt of specified tenors (see FAQ 370) or new equity; all financing in support of such new debt or new equity; and any dealing in, including provision of services in support of, such new debt or new equity.  For example, for debt that is issued on or after November 28, 2017, on behalf of or for the benefit of a person subject to Directive 1, the maturity of such instrument must be 14 days or less in order for a U.S. person to transact in, to provide financing for, or to otherwise deal in such debt.

For debt that is issued on or after September 12, 2014 but before November 28, 2017, on behalf of or for the benefit of a person subject to Directive 1, the maturity of such instrument must be 30 days or less in order for a U.S. person to transact in, to provide financing for, or to otherwise deal in such debt.  If the terms of the agreement do not subsequently change as described in FAQ 394, then a U.S. person may deal in such debt even after the 14-day debt limit came into effect on November 28, 2017, because such debt would not constitute “new debt” for purposes of the sanctions applicable on or after November 28, 2017.

Likewise, for debt that is issued on or after July 16, 2014 but before September 12, 2014, on behalf of or for the benefit of a person subject to Directive 1, the maturity of such instrument must be 90 days or less in order for a U.S. person to transact in, to provide financing for, or to otherwise deal in such debt.  If the terms of the agreement do not subsequently change as described in FAQ 394, then a U.S. person may deal in such debt even after the revised tenors came into effect on September 12, 2014 or November 28, 2017, because such debt would not constitute “new debt” for purposes of the sanctions applicable on those dates.

The prohibitions of Directive 2 apply to all transactions involving new debt of specified tenors (see FAQ 370); all financing in support of such new debt; and any dealing in, including provision of services in support of, such new debt.

For example, for debt that is issued on or after November 28, 2017, on behalf of or for the benefit of a person subject to Directive 2, the maturity of such instrument must be 60 days or less in order for a U.S. person to transact in, to provide financing for, or to otherwise deal in such debt.

For debt that is issued on or after July 16, 2014 but before November 28, 2017, on behalf of or for the benefit of a person subject to Directive 2, the maturity of such instrument must be 90 days or less in order for a U.S. person to transact in, to provide financing for, or to otherwise deal in such debt.  If the terms of the agreement do not subsequently change as described in FAQ 394, then a U.S. person may deal in such debt even after the 60-day debt limit comes into effect on November 28, 2017 because such debt would not constitute “new debt” for purposes of the sanctions applicable on or after November 28, 2017.

The prohibitions of Directive 3 apply to all transactions involving new debt with a maturity of longer than 30 days; all financing in support of such new debt; and any dealing in, including provision of services in support of, such new debt.

All the prohibitions of these Directives extend to rollover of existing debt, if such rollover results in the creation of new debt with a maturity of longer than the applicable tenor specified in the relevant Directive (see FAQ 394).

Transacting in, providing financing for, or otherwise dealing in any debt issued by, on behalf of, or for the benefit of persons subject to Directives 1, 2, or 3, or equity issued by, on behalf of, or for the benefit of persons subject to Directive 1, is permissible if the debt or equity was issued prior to the date on which the person became subject to the relevant Directive.  In addition, transacting in, providing financing for, or otherwise dealing in debt instruments with tenors shorter than the specified tenors, even if they are issued after the sanctions effective date, is permissible.  Transacting in, providing financing for, or otherwise dealing in new equity instruments of persons subject to Directives 2 and 3 is permissible.  U.S. financial institutions may continue to maintain correspondent accounts and process U.S. dollar-clearing transactions for the persons subject to the Directives, so long as those activities:  (i) do not involve transacting in, providing financing for, or otherwise dealing in transaction types prohibited by these Directives; and (ii) are not prohibited by other sanctions authorities (see, e.g., FAQS 964 and FAQs 967 - 973).

In the case of Directive 1, transacting in, providing financing for, or otherwise dealing in debt with a maturity of 90 days or less (if issued on or after July 16, 2014 but prior to September 12, 2014) or 30 days or less (if issued on or after September 12, 2014 but prior to November 28, 2017) that was issued by, on behalf of, or for the benefit of the persons subject to Directive 1 is not prohibited if the terms of such instruments do not change subsequently (see FAQ 394 for additional detail on what constitutes the changing of terms).  Similarly, in the case of Directive 2, transacting in, providing financing for, or otherwise dealing in debt with a maturity of 90 days or less (if issued on or after July 16, 2014 but prior to November 28, 2017) that was issued by, on behalf of, or for the benefit of the persons subject to Directive 2 is not prohibited if the terms of such instruments do not change subsequently.  Rollovers of such instruments must comply with the new Directive 1 and 2 maturity limits that came into effect on November 28, 2017.

Date Updated: February 24, 2022

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