OFSI has received unprecedented numbers of licence applications to permit prohibited transactions or activities owing to more sweeping and far-reaching sanctions imposed relating to Russia and Belarus. Many of these applications involve UK persons who are owed money by Russian and Belarusian Designated Persons (DPs) under contracts agreed before the designation of those DPs and can only receive such payments once they receive an OFSI licence.
It is extremely important to OFSI that UK persons are not unintentionally disadvantaged by the financial sanctions imposed on Russian and Belarusian DPs. OFSI has therefore issued General Licence INT/2023/3024200 in respect of prior obligations.
This General Licence is in place to allow a UK person to receive payment, where they are owed funds or economic resources by a DP under a contract that was signed before the DP was designated. This is of course, subject to the terms of the General Licence being met.
Anyone wanting to make use of these permissions should carefully consider the terms of the General Licence before doing so. Some of the key details of the General Licence are as follows:
- The contractual obligation must have been signed before the designation was made
- The payment must be for the benefit of a UK person, as defined in the General Licence
- The maximum value permitted for payment under any such contract is £200,000 inclusive of VAT (or equivalent in other currencies)
- A DP may also include any entity owned or controlled by a DP. However, it should be noted that OFSI is not responsible for making the ownership and control determination, and users of this General Licence for such situations may consider seeking independent legal advice
- The General Licence permits designated correspondent banks or financial institutions to transfer funds or economic resources
- No other UK person can use the licence to receive funds or economic resources arising from the same contractual obligation
- The term of the General Licence is 6 months. It will expire at 23:59 on 21 November 2023
The following are examples of ineligible contract types (please note this list is not exhaustive):
- Contracts involving financial instruments, such as bonds, derivatives, credit default swaps, repo transactions
- Professional legal fees and/or expenses, which may be authorised under the Legal Services General Licence INT/2023/2954852, provided the terms of that General Licence are met
- Ongoing prior obligations. This is where a legally enforceable contract was signed prior to the designation – but where the services have been incurred post-designation
People with contracts that are ineligible to use this General Licence should apply for a specific licence. Licence applications are assessed by OFSI on a case-by-case basis.
Reporting Requirements
Those who use the General Licence must report to OFSI, using the form on the General Licence page. Reporting is due within one month of receiving a payment under this General Licence. Users must send in the relevant legally enforceable contract, details of the payment, and confirmation that no other UK person will use the licence to receive funds or economic resources arising from the same contractual obligation. Those using the General Licence must keep records of its use for 6 years.
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