OFAC provides advice on sanctions regarding changes to agreements referring to LIBOR – Finance and Banking

United States: OFAC provides guidance on penalties for amendments to agreements that refer to LIBOR

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OFAC has published an FAQ stating that “Loans, contracts or other arrangements that use LIBOR as a benchmark rate that are amended to replace that benchmark benchmark rate will not be treated as new debt for the purposes of the sanctions. ‘OFAC, as long as no other material condition of the loan, contract or agreement is modified.

In the new FAQ 956, OFAC noted that in previous guidelines it had indicated that certain modifications to pre-existing loan facilities and other agreements may have the effect of converting existing and eligible debt into a “new one.” debt ”which is prohibited under sanctions (see FAQ 947 (“ Sanctions from Belarus ”), FAQ 553 (“ Sanctions from Venezuela ”) and FAQ 394 (“ Sanctions related to Ukraine / Russia ”)). In FAQ 956, OFAC clarified that the conditions of the LIBOR reference rate in pre-existing agreements can be changed and replaced without triggering any relevant sanction prohibitions, as long as no other material condition of the loan, contract or the agreement is not changed. These benchmark changes will not be treated as “new debt” for the purposes of OFAC sanctions.

Primary sources

  1. OFAC press release: Publication of a new frequently asked questions
  2. OFAC FAQ: sanctions against Belarus – 956
  3. OFAC FAQ: sanctions against Belarus – 947
  4. OFAC FAQ: Sanctions in Venezuela – 553
  5. OFAC FAQ: sanctions related to Ukraine / Russia – 394

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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