OFAC FAQ (Current) # 901 - Chinese Military Companies Sanctions

Date issued: Jun. 03 2021

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TURBOFAC Commentary (139 words)


1) By the standards of ordinary OFAC-administered sanctions programs, this FAQ constitutes a derogation from the norm as it relates to diligence expectations, and in particular the question of whether a U.S. person "knows or has a reason to know" of the facts and circumstances underlying potentially violative conduct. The default is ‘trust but verify,’ whereas here it appears to be ‘trust’.

As it relates to securities exchanges in particular, see comment to FAQ # 871. In the absence of the now-revoked GL authorizing securities exchanges to engage in all otherwise prohibited conduct for the duration of the 365-date “divestment window,” exchanges will still need to figure out a way to prevent the facilitation of trades that do not qualify for the divestment carveout (i.e. certain U.S. person-to-U.S. person trades).