Moscow Exchange plans to challenge U.S. sanctions
MOSCOW. Aug 20 (Interfax) - The Moscow Exchange Group plans to challenge the U.S. sanctions imposed in June and is working on lines of defense, according to a report by the Investor Protection Club, citing a representative of the group's legal consultant, Step Forward.
The representative spoke about the lines of defense being developed to challenge the U.S. sanctions at a meeting of the Investor Protection Club on August 19. "There are also plans to contact OFAC to obtain clarification on the use of general licenses when unfreezing assets," the report said.
The U.S. Treasury Department's Office of Foreign Assets Control (OFAC) on June 12 added Moscow Exchange and its group members National Clearing Center (NCC) and National Settlement Depository (NSD) to its sanctions list. OFAC also issued a license to wind down operations with them by August 13 - this was extended until October 12 at the beginning of August.
The UK sanctioned the exchange, NSD and NCC on June 13. The Office of Financial Sanctions Implementation (OFSI), the UK regulator in charge of enforcing sanctions, said it, too, had extended its general license which allows for the sale, divestment or transfer of financial instruments held at the NSD and the payment of safe keeping fees until October 12.
According to a presentation by a representative of Investor Protection Club legal consultant Delcredere, U.S. and UK sanctions are not applicable when the Belgian Treasury and the Luxembourg Finance Ministry make decisions to unblock assets frozen in NSD accounts. "At the same time, at the stage of executing the received license, Euroclear/Clearstream may request U.S. or UK licenses if the assets are linked to the relevant jurisdiction (by issuer or currency)," the presentation says.
The OFAC license, valid until October 12, potentially allows assets on NCC accounts with JP Morgan Chase and BNY Mellon (NCC correspondent banks for settlements in U.S. dollars) to be unfrozen, the presentation says. However, NCC's American counterparties have aired their position that only American entities, but not Russian ones, will be able to use this license, Delcredere said.
"The advice is to contact JP Morgan Chase and BNY Mellon directly regarding asset transfers under General License No. 100A, as OFAC may not issue individual licenses for transactions covered by the General License," the presentation says.