1113. If a decedent’s estate includes securities issued by non-blocked Russian entities, do the new investment prohibitions in Executive Order (E.O.) 14066, E.O. 14068, or E.O. 14071 (collectively, “the respective E.O.s”) prohibit the transfer of such securities, through inheritance, to the relevant beneficiary of the decedent’s estate?
No. U.S. persons, including U.S. financial institutions, may transfer securities issued by non-blocked Russian entities from a decedent’s estate to the account of a relevant beneficiary or beneficiaries, including a successor entity (e.g., a family trust), provided such transfers (i) are part of the ordinary course administration of the decedent’s estate, (ii) do not involve an exchange for value, and (iii) have no other sanctions nexus (including the involvement of blocked persons).
Please note, however, that blocked securities in a decedent’s estate must remain blocked. The administration of a decedent’s estate requiring the transfer of blocked securities...
1) OFAC doesn't explain it's reasoning for the "new investment" conclusion, but it appears to constitute a determination that, where a recipient of shares by operation of law receives such shares in the absence of an "exchange for value," the receipt of the shares does not constitute "investment," as the term was defined in FAQ # 1049. More specifically, FAQ # 1049 says that "views 'investment' as the commitment of capital or other assets for the purpose of generating returns or appreciation." In an ordinary inheritance situation, transfer of the estate occur by operation of law, and with no "exchange for value". Here, "exchange for value" appears to stand in for "commitment of capital or other assets". The "purpose of generating returns or appreciation" would, on the other hand, be present. (See generally section II of the Russia-related New Investment System Note). ...