Aviation and oil companies added to ‘Non-SDN CMIC list’

The US Treasury’s Office of Foreign Assets Control (‘OFAC’) has added the Aviation Industry of China (‘AVIC’) and the Chinese National Offshore Oil Corporation (‘CNOOC’) to its Non-SDN CMIC list (Non-SDN Chinese Military Industrial Complex Companies List).

As reported in WorldECR, in early June US president Joe Biden issued an executive order amending and clarifying the terms of his predecessor’s EO, 13959, addressing the threat ‘from securities investments that finance certain companies of the People’s Republic of China (PRC).’

The EO prohibits US persons from transacting in certain kinds of financial instruments issued by listed entities, setting dates by which any divestments must be made.

OFAC FAQs explain that:

• ‘Examples of financial instruments covered by this provision include, but are not limited to, derivatives (e.g., futures, options, swaps), warrants, American depositary receipts (ADRs), global depositary receipts (GDRs), exchange-traded funds (ETFs), index funds, and mutual funds, to the extent such instruments also meet the definition of “publicly traded security” as defined in section 3(c) of E.O. 13959, as amended.

• For purposes of E.O. 13959, as amended, activity by U.S. persons related to the following services are considered permissible, to the extent that such support services are not provided to U.S. persons in connection with prohibited purchases or sales: clearing, execution, settlement, custody, transfer agency, back-end services, as well as other such support services.

• Market intermediaries, including market makers, and other participants may engage in ancillary or intermediary activities that are necessary to effect divestiture during the relevant wind-down periods or that are not otherwise prohibited under E.O. 13959, as amended.  Purchases or sales by U.S. persons (including investors and intermediaries) involving investment funds that are seeking to divest during the relevant wind-down periods are permitted.’ 

https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20210616