General Note on "Counterfactual Secondary Sanctions and Derivative Designation Safe Harbors" in Certain OFAC Guidance and FAQs

Last substantive commentary amendment:
Sep. 02 2024

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TURBOFAC Commentary (1375 words)

General Note on "Counterfactual Secondary Sanctions and Derivative Designation Safe Harbors" in Certain OFAC Guidance and FAQs

1) Background/Synopsis

As described in further detail at section 4 of General Note on Secondary Sanctions and “Derivative Designation” Criteria, OFAC has traditionally been very reluctant to provide formal guidance specifying that a given type of transaction would or would not qualify as “significant” for secondary sanctions purposes or otherwise constitute “material assistance” in a way that would trigger the standard “material support” derivative designation criterion.

As detailed below, OFAC has, over time, been more and more willing to provide formal assurance that certain types of transactions will not result in secondary sanctions or derivative designation risk for non-U.S. persons, i.e. those which would be authorized/not require a specific license for a U.S. person. Initially, this was limited to “secondary sanctions” provisions while purposefully declining...