OFAC license for operations with Moscow Exchange group expires
MOSCOW. Oct 14 (Interfax) - The U.S. Office of Foreign Assets Control's license for winding down operations with the Moscow Exchange and the National Settlement Depository (NSD) and National Clearing Center (NCC), which are part of the MOEX group, has expired.
On June 12, OFAC added the Moscow Exchange, the NSD and the NCC to its sanctions list and issued a license for winding down operations with them by August 13, which was extended at the start of August to October 12. The UK joined the U.S. sanctions against the Moscow Exchange, the NSD and the NCC on June 13. The NSD has also been sanctioned by the EU since June 2022.
Trading in U.S. dollars, euros and Hong Kong dollars was immediately stopped on the exchange following the introduction of the U.S. sanctions. These currencies' official exchange rate in Russia is currently determined based on OTC trading. After sanctions were introduced against the Moscow Exchange, the market discussed the risks of stopping exchange trading in yuan after the OFAC license expires, but no official statements confirming this scenario from the Russian Central Bank or the exchange itself were issued prior to the deadline. At the start of July, CBR deputy governor Philipp Gabunia said that trading in yuan would continue on the Moscow Exchange after the license expires.
MOEX plans to challenge the U.S. sanctions and develop lines of defense, the Investor Protection Club said, citing a representative of Step Forward, the group's legal adviser.
OFAC published an explanation the day before the license expired. All securities belonging to American persons and held at the NSD, as well as dividends or other income received via the NSD, should be treated as blocked from October 12, the document said.
OFAC also mentioned Russian President Vladimir Putin's decree No. 840 of October 2, on the temporary accounting procedure for certain securities, the task of which according to the CBR is to stop attempts to bring Russian shares to auction from type C accounts, bypassing anti-sanctions regulations by clarifying their accounting procedure. The document stipulates the transfer of securities which depositories account for in type C depo accounts of their depositors to type C individual accounts opened by the depositories themselves. OFAC considers this decree an attempt to evade sanctions on the NSD.
"The Russian Federation has attempted to take action to evade or avoid OFAC sanctions on NSD via Presidential Decree 840 by requiring the transfer of certain securities to local Russian registrars. OFAC cautions that such transfers may not be authorized under the general licenses and may be considered null and void pursuant to OFAC's regulations. OFAC understands that these transactions may involve other blocked persons, including certain local Russian registrars. OFAC is also investigating the remaining non-blocked local Russian registrars for future designation under E.O [Executive Order] 14024," OFAC said.
