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On April 25, 2022, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) re-issued General License 13R (“GL 13R”) and General License 15L (“GL 15L”), narrowing those authorized activities with GAZ Group and entities owned 50% or more by GAZ Group (“GAZ”), as further described below.  OFAC also issued a set of updated FAQs to clarify the scope of authorized activities under these GLs.  Our most recent blog post on these GLs is available here

As way of brief background and as outlined in our blog post, GAZ was designed as a Specially Designated National (“SDN”) on April 6, 2018 for being owned and controlled by Oleg Deripaska such that US Persons (i.e., entities incorporated in the United States and their non-US branches; persons physically located in the United States; and US citizens and permanent residents wherever located or employed) have been broadly prohibited from engaging in transactions with GAZ since that time.  However, GAZ has benefitted from periodically issued GLs since that time such that US Persons have been authorized to engage in certain specified activities with GAZ despite its designation.  The revisions to these GLs narrowing their application indicate a change in stance with respect to enabling transactions between GAZ and US Persons by the US Government.  

Revisions to GL 15L

GL 15L has been significantly narrowed such that the only remaining activities authorized between US Persons and GAZ are those transactions and activities ordinarily incident and necessary to the wind down of transactions involving GAZ.  The following important revisions have been made to this GL:

  • As described in our previous blog post, GL 15 was previously expanded to authorize numerous activities including the “manufacture and sale of existing and new models of vehicles, their components, and spare parts” produced by GAZ and enumerated numerous activities authorized with GAZ (e.g., research and development, services, entry into JVs, etc.).  This language has been removed from GL 15L. 
  • GL 15L no longer authorizes maintenance of certain specified activities with GAZ (i.e., those relating to agreements in effect prior to April 6, 2018). 
  • GL 15L also no longer authorizes the use of funds blocked prior to May 22, 2018 for the activities it authorizes.
  • Lastly, the reporting requirement previously included in GL 15 requiring parties relying on GL 15 to submit reports to OFAC detailing wind-down activities or transactions has been removed.

Below are certain clarifications as provided via OFAC’s updated FAQs related to GL 15L:

  • FAQ 586 clarifies the narrowed scope of GL 15L as outlined above and emphasizes that after the expiration of GL 15L, all transactions with GAZ will be prohibited as to US Persons. 
  • FAQ 589 clarifies that transactions between GAZ and non-US parties will not be considered sanctionable under secondary sanctions authorities (i.e.,, will not be considered “significant”) so long as US Persons would not require a license if they engaged in such activities themselves. 
  • FAQ 590 includes conforming changes and clarifies that payments into a blocked account associated with activities authorized under GL 15L are not necessary prior to GL 15L’s expiration. 
  • FAQs 591, and 592, clarify that GL 15L continues to authorize US Persons to:
    • Export items to GAZ provided such transactions are ordinarily incident and necessary to the wind-down of transactions with GAZ;
    • Receive regularly scheduled payments of principal and interest from GAZ to the extent such transactions are ordinarily incident and necessary to the wind-down of transactions; and
    • Receive accelerated payments or voluntary prepayments from GAZ, so long as such accelerated payments or voluntary prepayments were ordinarily incident and necessary to the wind-down of transactions as authorized by GL 15L.  However, GL 15K does not authorize US persons to send accelerated payments or voluntary prepayments to GAZ.

GL 15L replaces and supersedes in its entirety General License 15K, and extends the deadline of its expiration from April 27, 2022 to 12:01 a.m. ET on May 25, 2022.

Revisions to GL 13R

  • GL 13R has been revised to authorize only the wind-down of certain transactions by US persons ordinarily incident and necessary to divest or transfer debt, equity, or other holdings in GAZ to non-US persons.
  • FAQs 570 and 571 were revised to make conforming changes related to GL 13R, and emphasize that after the expiration of GL 13R, US Persons will be prohibited from engaging in any divestment or transfer activities on behalf of US Persons or non-US parties related to debt, equity, or other holdings that were previously authorized. 
  • GL 13R replaces and supersedes in its entirety General License 13Q, and extends the deadline of its expiration from April 27, 2022 to 12:01 a.m. ET on May 25, 2022.
Author

Bart McMillan leads the Chicago Office’s International Trade Compliance Subpractice within the North American International Commercial Practice. He advises US and non-US companies on international trade compliance matters arising under US export controls, trade sanctions, and antiboycott rules, as well as under US customs laws with respect to classification, valuation, country of origin, free trade agreements, and the protection of intellectual property at the US border. His practice also covers anti-bribery and specialized commercial compliance issues in sales and sales promotion under the US Foreign Corrupt Practices Act (FCPA), non-US anti-bribery law, and non-US commercial laws. Mr. McMillan has been practicing with Baker McKenzie for the entirety of his legal career, and during 2004 he was located in the Washington, DC office. He is a frequent speaker on international trade compliance matters at seminars, conferences, and company training events. While pursuing his J.D. at NYU School of Law, Mr. McMillan was Staff Editor (1997-98) and Associate Editor (1998-99), New York University Law Review; and he participated in a semester exchange to the Central European University (Budapest) (Legal Studies Dep’t).

Author

Meghan (Meg) Hamilton is a member of the International Commercial Practice Group and the International Trade Compliance Sub-Practice Group in Baker McKenzie, Chicago, where she has been an associate since 2015. Meg regularly assists multinational companies on sanctions, customs and export control compliance as well as other international trade matters, including commercial agreements and anti-boycott regulations. She is active in civic activities throughout Chicago, serving on the Young Professional Board of the Center for Disability and Elder Law as well as the Auxiliary Board of the Chicago Legal Clinic.

Author

Andrea Tovar regularly advises multinational companies on cross-border commercial transactions and complex privacy and international trade matters. Andrea is also a member of the Firm’s Technology, Media & Telecoms Global Industry Group and Co-Chairs the North America Baker Unidos Affinity Group.

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