What you need to know if you find your registrar on the sdn list New u.s. sanctions issued targeting russian registrars and banks

On November 21, 2024, the U.S. Office of Foreign Assets Control (OFAC) added more than 30 registrars[1] and several Russian banks, including Gazprombank and its subsidiaries, to the sanctions list (SDN List). Please read our comments below to find out what it means for you.

Concurrently with adding persons to the SDN List, OFAC issued General Licenses[2] No. 113 and No. 114 (valid through December 20, 2024) that authorize certain actions to be taken that are aimed at winding down transactions involving the banks that were added to the SDN List on November 21, 2024. These general licenses allow companies and individuals (primarily the so-called U.S. persons) to complete previously initiated transactions and/or terminate obligations to these banks within the established time limit without running a risk of violating the sanctions regime.

As regards the sanctions against Russian registrars, as of the date of this publication, the SDN List includes all organizations licensed to maintain a register of securities holders. In other words, at the moment, Russian joint-stock companies have been deprived of the ability to switch to a registrar or obtain services from a registrar that has not been sanctioned.

What does it mean for Russian companies that a registrar has been added to the SDN List?

Adding a registrar to the SDN List will result in blocking the shares recorded by that registrar. In other words, from the point of view of the United States, shares recorded by the registrar will be considered blocked. Among other things, this means that transactions with respect to such shares (their disposition, transfer, etc.) carried out by U.S. persons will be considered invalid. Furthermore, there has been imposed a prohibition on income and dividends that are received from such shares through registrars.

Formally, these restrictions apply to U.S. persons as defined by OFAC. Russian joint-stock companies and their shareholders, unless if they are U.S. persons, are not subject to these restrictions. But at the same time the very fact of any dealings with a registrar added to the SDN List would in theory entail a risk of ‘secondary’ sanctions being imposed, which may have an extremely adverse effect on shareholders and companies operating in jurisdictions, other than Russia.

Furthermore, adding any person to the SDN List implies a prohibition on any transactions with those on the SDN List.

Perhaps, in the near future, the Russian authorities will somehow respond to the U.S. sanctions and take some measures that will enable Russian joint-stock companies neither to violate applicable Russian laws nor to risk secondary sanctions. We will be monitoring the situation and let you know if it becomes possible to somehow rectify this situation.

We would be pleased to assist you in devising solutions for structuring your business, subject to the existing restrictions.

If you have any questions or you would like to discuss this further, please feel free to send an email to Julia Talagaeva or Artem Eretenko.

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[1] All Russian registrars have been added to the SDN List, according to the Central Bank of Russia.

[2] A general license is a document issued by OFAC that authorizes certain transactions with persons on the SDN List, despite the sanctions imposed. It allows strictly defined actions to be taken, such as the completion of previously initiated transactions or the execution of limited transactions, without breaching the sanctions regime.