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US Treasury Exempts Derivatives from Russia Sanctions
Practical Law Legal Update 8-577-4385 (Approx. 3 pages)
US Treasury Exempts Derivatives from Russia Sanctions
by Practical Law Finance
| Published on 11 Aug 2014 • USA (National/Federal) |
On July 16, 2014, the US Treasury issued FAQs and a General License, providing relief to derivative users from international sanctions against Russia.
On July 16, 2014, the Department of Treasury's Office of Foreign Assets Control (OFAC) published a General License which provides relief for derivatives users from certain sanctions against Russian institutions issued by the OFAC in Directives 1 and 2 pursuant to Executive Order 13662, issued by President Obama on March 20, 2014 (see Legal Update, US Imposes Stronger Sanctions on the Russian Energy Sector). The General License provides authorization for derivatives transactions within the US involving derivatives products with values that are linked to an otherwise prohibited underlying asset that is either:
- Debt with a maturity of longer than 90 days or equity issued on or after July 16, 2014 by a financial institution identified in Directive 1 Pursuant to Executive Order 13662 and the associated Sectoral Sanctions List.
- Debt with a maturity of longer than 90 days issued on or after July 16, 2014 by an energy firm identified in Directive 2 Pursuant to Executive Order 13662 and the associated Sectoral Sanctions List.
This is the first time that the US government has issued a general license from sanctions with respect to derivatives transactions. Industry professionals hope that it will prevent a mass wind-down of swaps trades.
For more information on US sanctions, and specifically US sanctions against Russia, see the OFAC's FAQs.