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1005. Does Directive 4 under Executive Order (E.O.) 14024, “Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation,” as amended (Russia-related Sovereign Transactions Directive), prohibit trading in the secondary markets for Russian sovereign debt?
No, the Russia-related Sovereign Transactions Directive does not prohibit trading in the secondary markets for debt or equity of the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation (collectively, “Directive 4 entities”), provided that no Directive 4 entity is a counterparty to such a transaction. Please note, however, that Directive 1A under E.O. 14024, “Prohibitions Related to Certain Sovereign Debt of the Russian Federation” (Russia-related Sovereign Debt Directive), prohibits U.S. financial institutions from participation in the secondary market...
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1) This FAQ suggests substantial limitations on the scope of Directive 4 given the language of Directive 4, general licenses dealing with the Central Bank of the Russian Federation, and other FAQs that appear designed to suggest that the Central Bank of the Russian Federation is subject to blocking-like prohibitions, but without the obligation to block property in which the bank has an "interest". Here, OFAC confirms that this is not the case. "[T]rading in the secondary markets for debt or equity of the Central Bank of the Russian Federation...provided that no Directive 4 entity is a counterparty to such a transaction" would unmistakably be a transaction in which a transaction in which the Central Bank of the Russian Federation has an "interest," i.e. prohibited in principle is the Central Bank of the Russian Federation were a blocked person. This raises questions as to what else...