Sanctions Watch | Weekly Vol. 74

Sanctions Watch Vol 73

In the latest edition of our Sanctions Watch weekly digest, we present significant updates on sanctions watchlists and regulatory developments.

1. OFSI Issues New License for Retrospective Payment Processing Under Russia Sanctions, Allowing 2022 Transactions in Specific Cases

The Office of Financial Sanctions Implementation (OFSI) issued General License INT/2024/5394840 under the Sanctions and Anti-Money Laundering Act 2018, effective from November 7, 2024, to November 6, 2025. This license permits specific financial institutions, termed “Relevant Institutions,” to process payments made in 2022 involving designated credit or financial institutions, provided both the original sender and intended recipient are not designated persons under the Russia (Sanctions) (EU Exit) Regulations 2019.

A Relevant Institution includes authorized entities under UK financial and payment regulations, such as recognized clearinghouses and payment system operators. The license allows blocked payments to be processed through non-designated institutions, provided they meet set conditions, including that neither the sender nor recipient are designated persons.

Processing institutions must comply with record-keeping and reporting requirements, and the license prohibits any actions that would enable funds or resources to reach designated persons, directly or indirectly. The license’s permissions do not cover any actions in breach of the Russia Regulations, outside those explicitly allowed under granted licenses.

2. OFSI Extends License Allowing Evraz’s North American Subsidiaries to Operate Amid Sanctions Until September 2025

The UK’s Office of Financial Sanctions Implementation (OFSI) has announced an extension to General License INT/2022/1710676, allowing the continuation of business operations for specified North American subsidiaries of Evraz plc until September 30, 2025. Originally issued on April 29, 2022, under Regulation 64 of the Russia (Sanctions) (EU Exit) Regulations 2019, this General License enables Evraz’s subsidiaries in North America, including Evraz North America plc, Evraz Inc. NA, Evraz Inc. NA – Canada, and their subsidiaries, to conduct specific business activities in compliance with UK sanctions.

Under General License INT/2022/1710676, persons may continue operations involving payments to or from these subsidiaries under any obligations or contracts, payments to or from third parties, and the receipt of payments by the subsidiaries for audit services. However, this license does not authorize any act if the person undertaking it knows or has reasonable grounds for suspecting that it will result in funds or economic resources being made available in breach of the Russia Regulations, except as permitted under additional licenses.

This latest update on November 7, 2023, secures the license’s validity until September 30, 2025, ensuring regulatory compliance while allowing business continuity for these entities.

3. UK Extends 2024 Frozen Asset Reporting Deadline Following Russian Decree Impact on Data Reconciliation

The Office of Financial Sanctions Implementation (OFSI) has extended the reporting deadline for the 2024 Frozen Asset Review by two weeks, setting a new submission date of 25 November 2024. This extension follows the recent enactment of Russia’s Decree 840, effective from 2 October 2024, which mandates the transfer of equities held at the Russian National Settlement Depository (NSD) to local registrars.

Under the Frozen Asset Review, institutions were expected to gather and report information on frozen assets as of 30 September 2024. Although Decree 840 took effect after this designated “as of” date, OFSI recognizes the potential challenges for institutions needing to reconcile data and update reporting following these regulatory changes.

The two-week extension aims to support industry stakeholders in meeting compliance requirements, allowing additional time to address the implications of the Russian decree and accurately report affected assets. With the new 25 November deadline, OFSI seeks to ensure that all impacted institutions can fulfill the reporting obligations under the revised regulatory framework without disruption. This decision underscores OFSI’s commitment to facilitating regulatory adherence in response to recent geopolitical developments.

4. OFAC License Supports Drinking Water Access in Western Balkans Amid Broader Sanctions

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued General License No. 5A related to the Western Balkans Stabilization Regulations (WBSR), 31 CFR part 588. This license authorizes specific transactions that are otherwise prohibited under WBSR, focusing on activities linked to the manufacture, distribution, and maintenance of drinking water treatment and distribution pumps. The license explicitly allows transactions involving pumps manufactured or distributed by Kaldera Company EL PGP d.o.o. (Kaldera) and Elpring d.o.o. Laktasi (Elpring), or any entity with 50% or greater ownership by these companies. The transactions covered are restricted to those essential for drinking water infrastructure.

This general license supersedes the earlier General License No. 5, issued on June 18, 2024, effective from November 6, 2024. However, it does not permit any transactions with blocked persons under WBSR, apart from the specific entities mentioned, unless separately authorized. This update underscores OFAC’s intent to support essential services, like drinking water access, while maintaining broader sanctions under the WBSR framework.

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Sanctions Watch is a weekly recap of events and news related to sanctions around the world.