- within Intellectual Property, International Law, Litigation and Mediation & Arbitration topic(s)
OFAC issued five FAQs regarding Communist Chinese military companies sanctioned under Executive Order ("EO") 13959, as well as a list of such identified entities.
As previously covered, beginning on January 11, 2021, EO 13959 will prohibit U.S. persons, including financial institutions, from engaging in transactions in the securities of Chinese companies that the U.S. Secretary of Defense and/or the Secretary of the Treasury determines to be supplying or otherwise supporting China's military, intelligence and security services.
OFAC stated that prohibitions outlined in EO 13959 apply to the publicly traded securities of:
- subsidiaries of Communist Chinese military companies, after the subsidiary is publicly listed by Treasury (FAQ 857); and
- an entity with a name that "exactly or closely matches" that of an entity identified either in the Annex of EO 13959 or in subsequent updates (FAQ 858).
In separate FAQs, OFAC also:
- defined a "publicly traded security" (FAQ 859);
- identified financial instruments covered by the prohibitions (FAQ 860); and
- clarified that EO 13959 prohibits U.S. persons from investing in both (i) exchange-traded funds ("ETFs"), and (ii) other funds that hold the publicly traded securities of a Communist Chinese military company, "regardless of such securities' share of the underlying index fund, ETF, or derivative thereof" (FAQ 861).
In addition, OFAC published the names of entities identified as Communist Chinese military companies, pursuant to EO 13959, along with "identifying information." OFAC cautioned that it intends to add to this list any company that issues publicly traded securities and (i) is 50 percent or more owned by one or more Communist Chinese military companies, or (ii) is controlled by one or more Communist Chinese military companies.
Primary Sources
- OFAC FAQ: Chinese Military Companies Sanctions - 857
- OFAC FAQ: Chinese Military Companies Sanctions - 858
- OFAC FAQ: Chinese Military Companies Sanctions - 859
- OFAC FAQ: Chinese Military Companies Sanctions - 860
- OFAC FAQ: Chinese Military Companies Sanctions - 861
- Non-SDN Communist Chinese Military Companies List
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