June 15, 2022

OFAC issues GL 8C and amended FAQs to authorize energy-related transactions involving certain Russian banks

On June 14, 2022, the Department of the Treasury’s Office of Foreign Assets Control issued General License 8C and amended several frequently asked questions in order to further clarify the provisions in the general license.  GL 8C was issued pursuant to the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587, to authorize, until December 5, 2022, all energy-related transactions that would otherwise be prohibited by Executive Order 14024 that involve the Central Bank of the Russian Federation or one or more of the following Russian financial institutions:

  1. State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank;
  2. PJSC Bank Financial Corporation Otkritie;
  3. Sovcombank Open JSC;
  4. PJSC Sberbank of Russia;
  5. VTB Bank PJSC;
  6. JSC Company Alfa-Bank; or
  7. Any entity in which one of these institutions owns a 50 percent or great interest. 

GL 8C also describes certain transactions that are not authorized by the general license, including transactions prohibited by Directive 1A under EO 14024, Prohibitions Related to Certain Sovereign Debt of the Russian Federation, or the opening or maintaining of correspondent accounts or payable-through accounts for any entity subject to Directive 2 under EO 14024, Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions.

OFAC has also updated several FAQs in an effort to further explain the implications of GL 8C.  In FAQ 967, OFAC reviews the prohibitions in Directive 2 under EO 14024, also known as the Russia-related CAPTA Directive, which are not authorized under GL 8C.  OFAC provides a general overview of GL 8C in FAQ 976, while FAQ 977 defines what is meant by transactions “related to energy” for purposes of GL 8C.  

FAQs 978 and 1010 provide specific examples and scenarios of how to avoid sanctions violations in light of GL 8C and other Russia-related sanctions.  FAQ 978 provides examples of both authorized and prohibited fund transfers under Russia-related GLs 6A, 7A, and 8C, and FAQ 1010 identifies and discusses the applicable EOs and FAQs that a company involved in the transport of Russian oil for sale in the US and third countries should review in order to avoid violating sanctions pursuant to EO 14024.

In FAQ 1011, OFAC recommends how the public should proceed if a US bank refuses to process transactions that are authorized under GL 8C, and, in FAQ 1012, OFAC makes clear that US companies are not required to wind down energy-related transactions by December 5, 2022, GL 8C’s expiration date. OFAC reports that if GL 8C is not renewed, it will issue a general license to wind down activities covered by GL 8C.  Finally, FAQ 1017 reiterates that GL 8C remains valid following the issuance of EO 14066 but does not authorize any transactions prohibited by EO 14066.

Department of Treasury Recent Action | General License 8C | Updated FAQs