American Club Circular No. 20/14 1 JULY 17, 2014 CIRCULAR NO. 20/14 TO MEMBERS OF THE ASSOCIATION Dear Member: US ECONOMIC SANCTIONS UPDATE: NEW US SECTORAL SANCTIONS AGAINST CERTAIN RUSSIAN ENTITIES: ADDITIONS TO THE SDN LIST On July 16, 2014, the United States increased the economic sanctions pressure on Russia by announcing a new round of sanctions against certain Russian entities in the financial and energy sectors (sectoral sanctions). These new sanctions were imposed pursuant to Executive Order (EO) 13662 by way of Directives issued by the US Treasury’s Office of Foreign Assets Control (OFAC). The new sanctions prohibit transacting in, providing financing for, or otherwise dealing in, debt with a maturity of longer than 90 days, or equity, if that debt or equity is issued after on or after July 16, 2014 (the applicable sanctions effective date) (“new debt” or “new equity”) by, on behalf of, or for the benefit of, certain named persons operating in Russia’s financial and energy sector, their property, or their interests in property. All other transactions with these persons, or involving any property in which one or more of these persons has an interest, are permitted, provided such transactions do not otherwise involve property or interests in property of a person blocked pursuant to Executive Orders (EOs) 13660, 13661 or 13662, or any other sanctions programs implemented by OFAC. Persons identified in the Directives will not be added to the Specially Designated Nationals (SDN) list, and the action does not require US persons to block the property or interests in property of the entities identified in them. US persons should reject transactions or dealings that are prohibited by these Directives, and to the extent required by the Reporting, Procedures and Penalties Regulations, US persons must report to OFAC any rejected transactions within ten business days. Persons identified in the Directives will be added to OFAC’s Sectoral Sanctions Identification List. Under the new sanctions, the term debt includes bonds, loans, extensions of credit, loan guarantees, letters of credit, drafts, banker’s acceptances, discount notes or bills, or commercial paper. The term equity includes stocks, share issuances, depositary receipts, or any other evidence of title or ownership. The prohibitions apply to all transactions involving new debt with a maturity of longer than 90 days or new equity; all financing in support of such new debt or new equity; and any dealing in, including provision of services in support of, such new debt or new equity. The prohibitions extend to rollover of existing debt, if such rollover results in the creation of new debt with a maturity of longer than 90 days. Transacting in, providing financing for, or otherwise dealing in, any debt or equity issued prior to the sanctions’ effective date by, on behalf of, or for the benefit of, the entities operating in the financial and energy sectors which are identified in the Directives is permissible. In addition, transacting in, providing financing for, or otherwise dealing in, debt instruments with maturities of 90 days or less American Club Circular No. 20/14 2 issued by or on behalf of the entities identified in the Directives, even if they are issued after the sanctions’ effective date, is permissible. US financial institutions may continue to maintain correspondent accounts and process US dollarclearing transactions for the persons identified in the Directives, so long as t