The U.S. Treasury Department Office of Foreign Assets Control ("OFAC") released two new FAQs concerning transactions with certain Ukraine-/Russia-related individuals and entities on the Specially Designated Nationals and Blocked Persons list ("SDN list").

The first FAQ gives additional guidance on General Licenses 12C, 14, and 15, which cover "maintenance and wind down" activities related to dealings with identified SDNs. In the FAQ, OFAC clarifies that U.S. persons are authorized to receive regularly scheduled payments of principal and interest on loans extended to, or bonds issued by, the SDNs listed in these General Licenses, as long as the loan or bond was in existence prior to April 6, 2018. (It is assumed, but the FAQ does not explicitly state, that U.S. persons may receive such principal and interest payments only until the expiration of the applicable General License.) The FAQ further explains that, "[a]s a general matter," the General Licenses would permit U.S. persons to receive accelerated payments or voluntary prepayments from a covered SDN, as long as such payments were "made in accordance with the terms of the preexisting loan or bond contract and are consistent with maintenance or wind down activities."

The second FAQ addresses whether secondary sanctions may be applied to foreign companies that pay dividends to an SDN who holds an equity interest in the foreign company of less than fifty percent, such that the foreign company is not automatically subject to sanctions under OFAC's 50-percent rule. According to the FAQ, OFAC may impose sanctions on the payer of the dividends if the transaction is deemed to be "significant," as that term has been defined and explained by OFAC in FAQs 542, 545, 579 and 589. The FAQ adds that "paying dividends into a blocked account or in a manner that does not provide economic benefit, directly or indirectly, to the blocked person, such as an escrow account, will not be considered 'significant.'"

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