969. Does OFAC’s 50 Percent Rule apply to foreign financial institutions listed in Annex 1 to Directive 2 under Executive Order (E.O.) 14024, “Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions” (Russia-related CAPTA Directive)?
Yes. The prohibitions of the Russia-related CAPTA Directive apply to any foreign financial institution listed in Annex 1 to the Russia-related CAPTA Directive or otherwise determined to be subject to the prohibitions of the Russia-related CAPTA Directive, “or their property or interests in property,” which includes foreign financial institutions 50 percent or more owned, directly or indirectly, individually or in the aggregate, by one or more foreign financial institutions determined to be subject to the prohibitions of the Russia-related CAPTA Directive. As stated in the Russia-related CAPTA Directive, the prohibitions of this directive apply only with respect to a U.S. financial institution’s opening or maintaining...
1) The FAQ appears to confirm that an entity is subject to the CAPTA Directive, even if it does not actually appear on the NS-MBS List, but provided that it meets the definition of "foreign financial institution". In other words, entities can be subject to the CAPTA directive "by operation of law," as is the case with blocked persons owned 50% or greater by blocked persons.
2) The FAQ connects the dots between the 50% rule and the term "property or interests in property," which, when it appears, generally indicates applicability of the 50% rule.
3) The definition of "correspondent account " tracks the definition found in secondary sanctions programs: 31 CFR § 510.303 - Correspondent account; 31 CFR § 561.306 - Correspondent account. Note that the limitation of...