OFAC Provides New Guidance on Russian Sanctions

OFAC issued additional guidance related to the Russian Harmful Foreign Activities Sanctions Regulations 31 CFR Part 587.

The seven new Frequently Asked Questions define specific terms and clarify certain provisions pursuant to EO 14066 ("Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts To Undermine the Sovereignty and Territorial Integrity of Ukraine"), EO 14068 ("Prohibiting Certain Imports, Exports, and New Investment With Respect to Continued Russian Federation Aggression") and EO 14071 ("Prohibiting New Investment in and Certain Services to the Russian Federation in Response to Continued Russian Federation Aggression"). The new FAQs include:

• FAQ 1049, which defines a "new investment" as "the commitment of capital or other assets for the purpose of generating returns or appreciation";

• FAQ 1050, which specifies transactions considered to be maintenance of investments and are thus not prohibited pursuant to the Executive Orders;

• FAQ 1051, which clarifies that the export or import of goods, services or technology, or related sales or purchases, is not prohibited, provided that such transactions are made pursuant to ordinary commercial sales terms;

• FAQ 1052, which explains that revenues generated from subsidiaries or affiliates located within the Russian Federation can be used for maintenance of investments;

• FAQ 1053, which identifies certain transactions related to divestment of pre-existing investments that are not prohibited pursuant to the Executive Orders;

• FAQ 1054, which clarifies that purchasing debt and equity securities issued by an entity in the Russian Federation is prohibited, but the sale of equities is allowed; and

• FAQ 1055, which specifies the transactions allowed for lending funds to, or purchasing equity in entities located outside the Russian Federation but may have interests or raised capital in the Russian Federation.

OFAC also updated two Frequently Asked Questions: (i) FAQ 1005 on trading in the secondary markets for Russian sovereign debt; and (ii) FAQ 1019 on the definition of "Russian Federation origin."