OFAC FAQ (Current) # 372 - Ukraine-/Russia-related Sanctions

Date issued: Nov. 28 2017

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TURBOFAC Commentary (300 words)

Note:

1) OFAC's practice is to issue general licenses only for activities that it considers to be otherwise prohibited.* A typical derivative contract is fundamentally a side-bet on the value of an asset in which neither contracting party have any legal interest.

That Ukraine GL 1B exists implies that dealing in derivatives linked to prohibited debt and/or equity is prohibited on the face of the directives, i.e. that it would constitute a "dealing in" the prohibited debt to which the derivatives contract makes reference.

This is a rather expansive of interpretation the notion of "dealing in" debt and/or equity covered by the directives, presumably as an "indirect" dealing in the asset referenced by the derivative. Query whether, on the basis of the logic of FAQ 391, the directives prohibit a new derivatives contract...