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31 CFR § 589.204 - Prohibited transactions with respect to the defense and related materiel sector of the Russian Federation economy (Directive 3).

Date issued: May. 02 2022

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§ 589.204 Prohibited transactions with respect to the defense and related materiel sector of the Russian Federation economy (Directive 3).

All transactions in, provision of financing for, and other dealings in new debt of longer than 30 days maturity of persons determined to be subject to this section, their property, or their interests in property by a U.S. person or within in the United States are prohibited.

Note 1 to § 589.204. The names of persons subject to this section are published in the Federal Register and incorporated into OFAC’s Sectoral Sanctions Identifications List (SSI List) with the descriptive text “Executive Order 13662 Directive Determination - Subject to Directive 3.” Certain transactions with persons subject to this section may result in the imposition of secondary sanctions, and therefore such persons’ entries on the SSI List will also include the descriptive prefix text “Secondary sanctions risk:”, followed by information about the applicable secondary sanctions authority. The SSI List is accessible via the Ukraine-/Russia-Related Sanctions page on OFAC’s website: www.treas.gov/ofac. See § 589.411 concerning entities that may not be listed on the SSI List but whose property and interests in property are nevertheless subject to the prohibitions of this section.

Note 2 to § 589.204. Section 216 of CAATSA (22 U.S.C. 9511) requires Congressional review prior to the termination of sanctions imposed pursuant to E.O. 13662. Section 222 of CAATSA (22 U.S.C. 9522) describes the Congressional notification required prior to the termination of sanctions imposed pursuant to E.O. 13662.
External link location:
https://www.ecfr.gov/cgi-bin/text-idx?SID=2d5afa2cb880d557cc00ad2dd3cea64a&mc=true&node=pt31.3.589&rgn=div5#se31.3.589_1204

TURBOFAC Commentary (234 words)

Notes:

1) This provision implements SSI Directive 3. See comments to SSI Directive 3 (web version) for further details. There are no substantive differences between this provision and SSI Directive 3, but Note 1 to § 589.204 and Note 2 to § 589.204 are new.

In re: Note 1 to § 589.204, see FAQ 545 and 589.413(i), which effectively remove the practical secondary sanctions risk that would otherwise be associated in dealings with SSI list entities that have no U.S. nexus.

In re: Note 2 to § 589.204, see section 222 of Countering America's Adversaries Through Sanctions Act (pdf version).

2) The 5-2-2022 amendments to the URSR do not meaningfully interpret this Directive in a way that was not otherwise evident from OFAC's previously published FAQs addressing the directive.

3) Note: in the version of the URSR in force from 2014-5/2022, this provision was 31 CFR § 589.204 - Expenses of maintaining blocked property; liquidation of blocked property. That provision was redesignated as part of the URSR amendments in May, 2022.

4) If you are looking for all Research System items dealing with this directive, go to the search interface and type SSI Directive [1, 2 3 or 4] in "Filter Items by Discrete legal Provision of Authority to Which Item Pertains". Using the URSR CFR cite will miss certain documents issued or last amended prior to the implementation of the SSI Directives in the URSR.