The Moscow Stock Exchange (MOEX) is under U.S. sanctions 

The Moscow Exchange (MOEX), the largest exchange holding in Russia, was added to the U.S. sanctions list on June 12, 2024. Along with it, the National Clearing Center (NCC) and the National Settlement Depository (NSD), both part of MOEX, were also included in OFAC’s SDN list. This U.S. sanctions list was timed to align with the G7 summit and aimed at further “weakening Russia’s financial infrastructure,” which underpins the country’s military-industrial complex.

The main consequence of the Moscow Stock Exchange being under U.S. sanctions was the suspension of trading in U.S. dollars and Euros. The Central Bank of Russia was forced to urgently revise how it determines the ruble’s exchange rate against the U.S. dollar and Euro, switching to an over-the-counter method, which is significantly less transparent and potentially more volatile.

As expected, the news that MOEX was sanctioned spread quickly and caused widespread panic among both professional traders and ordinary investors. All funds invested in foreign company stocks or in any way connected to MOEX, NCC, or NSD were frozen.

OFAC General Licenses No. 99A and 100A expired on October 12, 2024 

It is important to highlight that along with the U.S. sanctions on June 12, 2024, the Office of Foreign Assets Control of the U.S. Department of the Treasury (OFAC) issued two General Licenses, No. 99 and 100. General License No. 99 allowed the completion of transactions involving MOEX, NCC, or NSD, as well as certain transactions related to the transfer of debt obligations or shares issued or guaranteed by blocked entities, or derivative contracts involving them, in favor of non-U.S. persons.

OFAC General License No. 100 allowed certain transactions related to the transfer of debt obligations or shares in favor of non-blocked persons or non-U.S. persons, or for currency conversion, with the participation of one or more blocked entities exclusively as a securities depository, trading or clearing house, central counterparty, or public securities market. Both licenses were set to expire on August 13, 2024. However, on August 2, OFAC issued two additional General Licenses: No. 99A and No. 100A, which effectively extended the validity of licenses No. 99 and No. 100 until October 12, 2024.

Unfortunately, despite the availability of these licenses, very few market participants were able to move their assets out from under sanctions and transfer them to non-sanctioned structures. The primary reason for this was the tendency of American and other Western banks to adopt a cautious approach, choosing to withhold blocked funds rather than risk antagonizing OFAC by not strictly adhering to sanction regulations, which could result in substantial fines or even secondary sanctions for non-U.S. banks. It is worth noting that this cautious approach by Western banks is not only characteristic of their handling of licenses No. 99, 100, 99A, and 100A, but also extends to many other similar OFAC general licenses.

OFAC Specific License 

Previously, some may have held out hope that they could release their funds by directly contacting, for instance, JPMorgan Chase or The Bank of New York Mellon. However, those who approached these or other banks during the validity of General Licenses 99, 100, 99A, and 100A either received no response or were told that to unblock their assets, they would need to obtain an OFAC specific license.

Therefore, if your funds are still frozen, you should waste no time in applying to OFAC for a specific license. You can handle this on your own or with the assistance of an OFAC lawyer , who can efficiently guide you through the process and, most importantly, ensure it is done correctly. Hiring an attorney may not be worth it if only a small amount of funds has been frozen. However, if significant assets are blocked, it’s better not to take any chances and to seek professional assistance.

Conclusion 

If you decide to take a proactive approach and apply for a license, feel free to contact us, and we’ll explain how we can assist you.