On July 22, 2022, the Department of the Treasury’s Office of Foreign Assets Control issued General License 45 and 46 pursuant to the Russian Harmful Foreign Activities Sanctions Regulations (RuHSR), 31 CFR part 587, and issued four Frequently Asked Questions to clarify the provisions in these licenses. General License 45 temporarily authorizes transactions associated with the wind down of financial contracts or other agreements that were entered into on or before June 6, 2022 and are associated with debt or equity issued by entity in the Russian Federation. GL 45 authorizes these transactions until October 20, 2022.
General License 46 introduces a new auction process and authorizes all transactions in support of an auction process announced by the EMEA Credit Derivatives Determination Committee, to settle credit derivative transactions with a reference entity of “the Russian Federation” that would otherwise be prohibited by Executive Order 14071. GL 46 also authorizes US persons to purchase or receive debt obligations of the Russian Federation for a window of time that begins two business days prior to the announced auction date and ends eight business days after the auction has concluded.
OFAC also issued two new FAQs and amended two others in order to discuss permissions surrounding Russian debt or equity securities purchases in light of the issuance of new GLs 45 and 46 and the new investment prohibitions in Russia-related EO 14066, EO 14068, and EO 14071. New FAQs 1071 and 1072 provide a general overview of GL 45 and GL 46, respectively. OFAC also amended FAQ 1053 in order to clarify that transactions related to divestment in pre-existing projects or operations in the Russian Federation are permissible under the new investment prohibitions in EO 14066, EO 14068 or EO 14071, as long as the transactions do not involve a blocked person and are not otherwise prohibited by OFAC. In addition, OFAC amended FAQ 1054 to make clear to US persons that they are prohibited from purchasing debt or equity securities issued by an entity in the Russian Federation by the new investment prohibitions in EO 14066, EO 14068 and EO 14071. However, the new investment prohibitions do not prohibit US persons from selling or divesting such debt or equity securities to non-US persons. OFAC also states in FAQ 1054 that US persons are not required to divest these securities and are permitted to hold such previously acquired securities.