371. What does OFAC interpret to be debt and equity? Are there other prohibited activities under Directives 1, 2, and 3 under Executive Order (E.O.) 13662? Can U.S. financial institutions continue to maintain correspondent accounts and process U.S. dollar-clearing transactions for the entities subject to the prohibitions of these directives?
The term debt includes bonds, loans, extensions of credit, loan guarantees, letters of credit, drafts, bankers acceptances, discount notes or bills, or commercial paper. The term equity includes stocks, share issuances, depositary receipts, or any other evidence of title or ownership.
The prohibitions of Directive 1 apply to all transactions involving new debt of specified tenors (see FAQ 370) or new equity; all financing in support of such new debt or new equity; and any dealing in, including provision of services in support of, such new debt or new equity. For example, for debt that is...
Notes:
1) OFAC does not give a sense of the breadth scope of the term "transact in, to provide financing for, or to otherwise deal in this debt," as it relates to the SSI program in particular. Nor do 13662 directives 1, 2 or 3 explicitly extend the range of prohibited conduct to actions "indirectly" related to covered debt and/or equity.
However, the terms "transact in, to provide financing for, or to otherwise deal in this debt" generally mirrors the language used with that found in typical blocking regulations. In addition, FAQ 419 explicitly states that a U.S. person may not "engage in commercial transactions with SSI entities provided that any such transactions do not...