- within Intellectual Property, International Law, Litigation and Mediation & Arbitration topic(s)
OFAC issued new guidance to clarify permissible activities by U.S. persons and reiterate the scope of prohibitions under Executive Order ("EO") 13959 ("Addressing the threat from securities investments that finance communist Chinese military companies").
In FAQ 863, OFAC stated that it is permissible for a U.S. person to engage in "clearing, execution, settlement, custody, transfer agency, back-end services [and] other such support services," insofar as the services are not provided to a U.S. person in connection with prohibited transactions.
In FAQ 864, OFAC stated that - regardless of a subsidiary of a Communist Chinese military company being expressly listed or not - transactions in the securities of that subsidiary are prohibited if the subsidiary has a name that "exactly or closely matches" the name of an entity identified in the Annex of EO 13959. OFAC also identified three examples of subsidiaries listed on the New York Stock Exchange, the securities of which are sanctioned because the subsidiaries' names "closely match" those of entities identified in the Annex to EO 13959. OFAC further clarified that compliance with EO 13959 (beginning on January 11, 2021) is measured by trade date, not by settlement date.
Primary Sources
- OFAC FAQ: Chinese Military Companies Sanctions - 863
- OFAC FAQ: Chinese Military Companies Sanctions - 864
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