January 7, 2021

OFAC issues new FAQ to address how LIBOR-related contract modifications will affect Belarus, Ukraine/Russia, and Venezuela-related sanctions compliance

On January 7, 2021, the US Department of the Treasury’s Office of Foreign Assets Control published a new frequently asked question (FAQ 956) to provide the public with guidance on how OFAC will view modifications to pre-existing loans, contract, or other agreements that replace the London Interbank Offered Rate (LIBOR) as the reference rate, and its effect on Belarus, Ukraine and Russia-related, and Venezuela-related sanctions compliance in light of the discontinuation of LIBOR as a benchmark reference rate.  

OFAC reports in FAQ 956 that Belarus, Ukraine/Russia-related, and Venezuela-related sanctions prohibit US persons from dealing in certain forms of “new debt” associated with persons designated under these sanction programs.  In response, according to FAQ 956, OFAC will not consider modifications to loans, contracts or other agreements that used LIBOR as the reference rate to be new debt for sanctions purposes, as long as none of the other material terms of the loan, contract or agreement are modified.  In addition, OFAC provides links to additional FAQs that give examples of new debt under each of these sanctions programs as well as information related to effective dates, relevant debt maturities, and certain changes in contractual terms that could convert pre-existing debt not subject to sanctions prohibitions into new debt that would be subject to the prohibitions in Belarus, Ukraine/Russia, or Venezuela-related sanctions.

Department of Treasury Recent Action | FAQ 956