Chinese Military Companies Sanctions

Chinese Military Companies Sanctions

1048

Answer

No.  E.O. 13959, as amended, does not require U.S. financial institutions to block transactions.  However, transactions that would be prohibited under E.O. 13959, as amended (including an attempted sale of covered securities by a U.S. person made to effect the divestment of CMIC securities after the 365-day divestment period), must be rejected and reported to OFAC within 10 business days.  Consistent with FAQ 863, U.S. financial institutions may continue to intermediate purchases or sales by or from non-U.S. persons to or for non-U.S. persons.  

Date Released
June 1, 2022

1047

Answer

U.S. persons who hold securities of CMICs identified pursuant to E.O. 13959, as amended, may continue to receive cash dividends and stock splits related to such covered securities, and U.S. financial institutions may continue to process such transactions.  However, purchases of CMIC securities effected through dividend reinvestments constitute purchases that are prohibited pursuant to E.O. 13959, as amended.  U.S. persons may, however, continue to facilitate the distribution of dividend reinvestments for non-U.S. persons after the relevant divestment period.

Date Released
June 1, 2022

1046

Answer

U.S. persons are not required to divest their holdings of CMIC securities during the relevant 365-day divestment period and may continue to hold such securities after the divestment period.  E.O. 13959, as amended, permits purchases or sales made solely to effect the divestment of CMIC securities, but only during the 365-day divestment period.  Accordingly, any such purchase or sale is prohibited after the 365-day divestment period, absent OFAC authorization.

Date Released
June 1, 2022

905

Answer

No.  The prohibitions of E.O. 13959, as amended, apply only with respect to certain purchases or sales of publicly traded securities of entities listed on the NS-CMIC List.  E.O. 13959, as amended, does not prohibit activity with entities listed on the NS-CMIC List that is unrelated to such securities, such as the purchase or sale of goods or services.  E.O. 13959, as amended, also does not prohibit the purchase or sale of goods or services with respect to subsidiaries of such entities.

Date Released
June 3, 2021

904

Answer

Yes.  U.S. market makers, and non-U.S. market makers who employ U.S. persons, are permitted to engage in activities that are necessary to effect divestiture during the during the 365-day periods in which divestment transactions are permitted or that are not otherwise prohibited under E.O. 13959, as amended, including the conversion of American depositary receipts (ADRs) of a CMIC into underlying securities of the CMIC on the foreign exchange where the underlying securities are listed.  See FAQ 865 with respect to the permissibility of market intermediaries and other participants engaging in ancillary or intermediary activities that are necessary to effect divestiture of covered securities.

Date Released
June 3, 2021

903

Answer

For purposes of E.O. 13959, as amended, U.S. persons employed by non-U.S. entities are not prohibited from being involved in, or otherwise facilitating, purchases or sales related to a covered security on behalf of their non-U.S. employer, provided that such activity is in the ordinary course of their employment and the underlying purchase or sale would not otherwise violate E.O. 13959, as amended, (e.g., neither the purchase nor sale of the covered security is for the ultimate benefit of a U.S. person; neither the purchase or sale is a willful attempt to evade the prohibitions of E.O. 13959, as amended, etc.).  

Date Released
June 3, 2021

902

Answer

U.S. persons are not prohibited from providing investment advisory, investment management, or similar services to a non-U.S. person, including a foreign entity or foreign fund, in connection with the non-U.S. person’s purchase or sale of a covered security, provided that the underlying purchase or sale would not otherwise violate E.O. 13959, as amended.  For example, a U.S. individual acting as the fund manager for a non-U.S. investment fund, or a U.S. entity that is the investment adviser or investment manager for a non-U.S. investment fund, is not prohibited from advising on, authorizing, directing, or approving purchases or sales of covered securities by the non-U.S. investment fund, provided that the underlying purchase or sale would not otherwise violate E.O. 13959, as amended (e.g., neither the purchase nor sale of the covered security is for the ultimate benefit of a U.S. person, the purchase or sale is not a willful attempt to evade the prohibitions of E.O. 13959, as amended, etc.).  See FAQ 901 with respect to the due diligence expectations associated with determining whether a particular purchase or sale is permissible.  

Date Released
June 3, 2021

901

Answer

For purposes of assessing whether certain purchases or sales are permissible under E.O. 13959, as amended, U.S. persons — including financial institutions, registered broker-dealers in securities, securities exchanges, and other market intermediaries and participants — may rely upon the information available to them in the ordinary course of business. 

Date Released
June 3, 2021

900

Answer

Pursuant to E.O. 13959, as amended, OFAC expects to use its discretion to target, in particular, persons whose operations include or support, or have included or supported, (1) surveillance of persons by Chinese technology companies that occurs outside of the PRC; or (2) the development, marketing, sale, or export of Chinese surveillance technology that is, was, or can be used for surveillance of religious or ethnic minorities or to otherwise facilitate repression or serious human rights abuse.

Date Released
June 3, 2021

899

Answer

OFAC has published a list on its website containing the names of entities that are subject to the prohibitions of E.O. 13959, as amended, as the Non-SDN Chinese Military-Industrial Complex Companies List (the “NS-CMIC List”), along with additional identifying information where possible.  Effective June 3, 2021, the NS-CMIC List replaced and superseded in its entirety the Non-SDN Communist Chinese Military Companies List (NS-CCMC List), which has been deleted from OFAC’s website.  Only entities whose names exactly match the names of the entities on the NS-CMIC List are subject to the prohibitions in E.O. 13959, as amended.  OFAC will refer to entities listed on the NS-CMIC List as “Chinese Military-Industrial Complex Companies” or “CMICs.”

For any entity listed in the Annex to E.O. 13959, as amended, the prohibitions go into effect beginning at 12:01 a.m. eastern time on August 2, 2021.  For any entity not listed in the Annex to E.O. 13959, as amended, the prohibitions go into effect beginning at 12:01 a.m. eastern time on the date that is 60 days after the date the entity is listed on the NS-CMIC List.

Purchases or sales of publicly traded securities of CMICs listed in or pursuant to E.O. 13959, as amended, made solely to divest, in whole or in part, such securities by a U.S. person are permitted until 12:01 a.m. eastern time on the date that is 365 days after the date the entity is listed in the Annex to E.O. 13959, as amended, or added to the NS-CMIC List.
 

Date Released
June 3, 2021