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1151. How does OFAC intend to interpret the following terms in Executive Order (E.O.) 14024, as amended by E.O. of December 22, 2023: “foreign financial institution,” “Russia’s military-industrial base,” and “significant transaction or transactions”?
OFAC expects to promulgate regulations that define or interpret these terms as follows:
Foreign Financial Institution: As defined in subsection 11(f) of E.O. 14024, foreign financial institution means any foreign entity that is engaged in the business of accepting deposits, making, granting, transferring, holding, or brokering loans or credits, or purchasing or selling foreign exchange, securities, futures or options, or procuring purchasers and sellers thereof, as principal or agent. It includes depository institutions, banks, savings banks, money services businesses, operators of credit card systems, trust companies, insurance companies, securities brokers and dealers, futures and options brokers and dealers, forward contract and foreign exchange merchants, securities and commodities exchanges, clearing corporations, investment companies,...
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1) Refer generally to comments to EO 14114 for more on the new section 11 of EO 14024. The “significant transaction or transactions” portion of this guidance generally tracks the standard guidance and/or interpretive provision defining “significant transaction” for secondary sanctions purposes. See e.g. 510.413, and see Guidance for Foreign Financial Institutions on OFAC Sanctions Authorities Targeting Support to Russia’s Military-Industrial Base for examples of transaction types that OFAC appears to specifically be targeting.
2) With respect to the second paragraph, note that section 11 of amended EO 14024 allows for sanctions against FFIs conducting transactions “involving Russia’s military-industrial base, including the sale, supply, or transfer, directly or indirectly, to the Russian Federation of any item or class of items as may be determined…” Here, OFAC defines “Russia’s military-industrial base” such that...