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OFAC FAQ (Current) # 972 - Russian Harmful Foreign Activities Sanctions

Date issued: Feb. 24 2022

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972. Do non-U.S. financial institutions have to comply with the prohibitions of 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)?

Under the Russia-related CAPTA Directive, U.S. financial institutions are prohibited from the opening or maintaining of a correspondent account or payable-through account for or on behalf of, or from processing of a transaction involving, a foreign financial institution determined to be subject to the prohibitions of the Russia-related CAPTA Directive. The term “U.S. financial institution,” as defined in the directive, includes foreign branches of U.S. financial institutions, but not their foreign subsidiaries. Note, however, that the Russia-related CAPTA Directive prohibits any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions of this directive, as...

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TURBOFAC Commentary (85 words)

Notes:

1) This FAQ appears to have cross-programmatic significance for the typical prohibition, found in virtually all IEEPA-based sanctions provisions, on "evading" or "avoiding" sanctions laws. The FAQ appears to stand for the proposition that structuring transactions to comply with sanctions laws does not "avoid" sanctions laws, even where, e.g., such structuring entails making a payment through a non-sanctioned (or less-sanctioned) Russian bank in lieu of a sanctioned one. See General Note on the Apparent Scope of "Evasion/Avoidance" Provisions.