§ 589.209 Prohibitions or strict conditions with respect to correspondent or payable-through accounts of foreign financial institutions that have knowingly facilitated certain significant transactions.
(a) Prohibited activities. A U.S. financial institution shall not:
(1) Open or maintain a correspondent account or a payable-through account in the United States for a foreign financial institution for which the opening or maintaining of such an account is prohibited pursuant to this section; or
(2) Maintain a correspondent account or a payable-through account in the United States for a foreign financial institution in a manner that is inconsistent with any strict condition imposed and in effect pursuant to this section.
(b) Sanctionable activity by foreign financial institutions involving certain activity for persons with respect to which sanctions are imposed pursuant to section 4 of the Ukraine Freedom Support Act of 2014, as amended (22 U.S.C. 8921–8930) (UFSA). The Secretary of the Treasury, in consultation with the Secretary of State, may determine that a foreign financial institution knowingly engages, on or after August 2, 2017, in significant transactions involving the following activities for persons with respect to which sanctions are imposed pursuant to section 4 of UFSA (22 U.S.C. 8923):
(1) Knowingly manufacturing or selling defense articles transferred into Syria or into the territory of a specified country without the consent of the internationally recognized government of that country;
(2) Transferring defense articles into Syria or into the territory of a specified country without the consent of the internationally recognized government of that country; or
(3) Brokering or otherwise assisting in the transfer of defense articles into Syria or into the territory of a specified country without the consent of the internationally recognized government of that country; or
(4) Knowingly, on or after December 18, 2014, assisting, sponsoring, or providing financial, material, or technological support for, or goods or services to or in support of, any entity owned or controlled by the Government of the Russian Federation or owned or controlled by nationals of the Russian Federation; and with respect to an activity described in paragraph (a)(1), (2), or (3) of this section;
(5) Knowingly making a significant investment in a special Russian crude oil project; or
(6) The withholding by Gazprom of significant natural gas supplies from member countries of the North Atlantic Treaty Organization, or further withholding by Gazprom of significant natural gas supplies from countries such as Ukraine, Georgia, or Moldova.
Persons with respect to which sanctions are imposed pursuant to section 4 of UFSA (22 U.S.C. 8923) will be identified either on OFAC's Non-SDN Menu-Based List (NS–MBS List) or on OFAC's Specially Designated Nationals and Blocked Persons List (SDN List). Upon the imposition of non-blocking sanctions from a menu of sanctions as provided by section 4 of UFSA, OFAC will place the name and other relevant identifiers of the sanctioned person on the NS–MBS List. The NS–MBS List also will specify the type of sanction or sanctions imposed on the listed person and the legal authority under which the person is sanctioned. When blocking is chosen as a menu-based sanction and imposed on a person, that person is identified solely on OFAC's SDN List, along with any other menu-based sanctions imposed on that person.
(c) Sanctionable activity by foreign financial institutions on behalf of Russian persons included on the SDN List. The Secretary of the Treasury, in consultation with the Secretary of State, may determine that a foreign financial institution has, on or after September 1, 2017, knowingly facilitated a significant financial transaction on behalf of any Russian person included on OFAC's SDN List pursuant to UFSA, E.O. 13660, E.O. 13661, E.O. 13662, or any other Executive order addressing the crisis in Ukraine.
For information regarding persons included on OFAC's SDN List pursuant to UFSA, E.O. 13660, E.O. 13661, or E.O. 13662, or any other Executive order issued pursuant to the national emergency declared in E.O. 13660, including identifier information for entries on the SDN List, see note 1 to § 589.201.
(d) Imposition of sanctions on foreign financial institutions. Upon determining that a foreign financial institution has engaged in sanctionable activity described in paragraph (b) or (c) of this section, the Secretary of the Treasury, in consultation with the Secretary of State, shall:
(1) Prohibit the opening by a U.S. financial institution of a correspondent account or a payable-through account in the United States for the foreign financial institution; and
(2) Prohibit or impose one or more strict conditions on the maintaining by a U.S. financial institution of a correspondent account or a payable-through account in the United States for the foreign financial institution. Such conditions may include the following:
(i) Prohibiting or restricting any provision of trade finance through the correspondent account or payable-through account of the foreign financial institution;
(ii) Restricting the transactions that may be processed through the correspondent account or payable-through account of the foreign financial institution to certain types of transactions, such as personal remittances;
(iii) Placing monetary limits on, or limiting the volume of, the transactions that may be processed through the correspondent account or payable-through account of the foreign financial institution;
(iv) Requiring pre-approval from the U.S. financial institution for all transactions processed through the correspondent account or payable-through account of the foreign financial institution; or
(v) Prohibiting or restricting the processing of foreign exchange transactions through the correspondent account or payable-through account of the foreign financial institution.
The names of foreign financial institutions for which the opening of a correspondent account or a payable-through account in the United States is prohibited and for which the maintaining of a correspondent account or payable-through account is prohibited or subject to one or more strict conditions pursuant to this section will be added to the List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions (CAPTA List) on OFAC's website (www.treas.gov/ofac), and published in the Federal Register along with the applicable prohibition or strict condition(s).
Section 216 of the Countering America's Adversaries Through Sanctions Act (22 U.S.C. 9511) (CAATSA) requires Congressional review prior to the termination of sanctions imposed pursuant to UFSA. Section 5(g) of UFSA (22 U.S.C. 8924(g)) describes the Congressional notification required prior to the termination of sanctions imposed pursuant section 5 of UFSA.
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