OFAC Has Restricted Payments of Mandatory Contributions to the Budget of the Russian Federation for American Companies and Individuals

05 April 2023
Kirill Evstifeev
Junior Associate
Julia Korablyova

On 27.03.2023 the Subcommission of the Government Commission for the Control of Foreign Investments (the “Subcommission”) published an Extract from the minutes of its meeting No 143/4 dated 02.03.20231. This document provides for a new requirement which has to be fulfilled in order to obtain Subcomission’s permission with regard to sale of shares of Russian companies. Foreigners from unfriendly states are now obliged to transfer funds to state budget in the amount of 5%-10% of the target’s valuation. For more details about this measure in general, please refer to our review.

On 30.03.2023, the US Treasury Department, represented by the Office of Foreign Assets Control (“OFAC”), published Clarification No. 11182, which provides for a special procedure for paying a contribution to the budget of the Russian Federation for American companies and individuals.

OFAC indicated that it is possible to make this contribution only after obtaining a special license from the OFAC licensing department.

In addition, the US Department of the Treasury reminded that American companies and individuals were prohibited from any transactions involving the Russian Central Bank, the National Welfare Fund and the Ministry of Finance of the Russian Federation, including any transfer of assets to such organizations or any transactions with foreign currency on behalf of such organizations.

Thus, to carry out a transaction for the alienation of assets in Russia, American companies and individuals are required, in addition to the permission of the Subcommittee, to obtain an OFAC license to make a mandatory contribution to the budget of the Russian Federation.

1 https://minfin.gov.ru/ru/document?id_4=301633-vypiska_iz_protokola_zasedaniya_podkomissii_pravitelst...
2 https://ofac.treasury.gov/faqs/topic/6626