UK Treasury Prior Obligations License

On May 22, UK Treasury issued general license on prior obligations.

  • OFSI issued Prior obligations general licence INT/2023/3024200 and reporting form.
  • The license permits a UK person who is owed funds or economic resources by a DP, under a contract that was signed before the DP in question was designated, to receive payment, provided that the terms of the general licence INT/2023/3024200 are met.
  • Granted under reg 64 of The Russia (Sanctions) (EU Exit) Regulations 2019 and reg 32 of The Republic of Belarus (Sanctions) (EU Exit) Regulations 2019 (2019/600).
  • Usage Requirements
  • The contractual obligation must have been signed before the designated person (DP) in question became designated and the payment must be for the benefit of UK person.
  • Payments due may not exceed £200,000 inc. VAT (allowing for currency fluctuations).
  • The general license permits DP correspondent banks or financial institutions to transfer funds or economic resources in line with the permissions of the general license.
  • No other UK person can use the license to receive funds or economic resources.
  • When reporting to OFSI, license users must confirm no other UK person will use the license to receive funds, economic resources arising from same contractual obligation.
  • Certain types of contracts are not applicable under this general license; UK OFSI recommends consulting Annex A of the license for full details of ineligible contracts.
  • Reporting Requirements
  • Within 1 month of receiving payment under INT/2023/3024200, a UK person (except 'relevant institutions') must report to UK Treasury, with details, supporting evidence.
  • Record-Keeping Requirements
  • A DP or person must keep accurate, complete, readable records, paper or electronic, of activity purporting to have been permitted under the license for minimum of 6 years.
  • Effectiveness
  • The license takes effect from May 22, 2023 and expires at 23:59 on Nov. 21, 2023.
  • May 2023 Background to New License
  • On May 24, 2023, UK OFSI published a blog regarding new prior obligations license.
  • License issued due to receiving unprecedented number of license applications to permit prohibited transactions/activities owing to more sanctions re Russia, Belarus.
  • Many of these applications involve UK persons who are owed money by Russian and Belarusian designated persons (DPs) under contracts agreed before the designation of those DPs and can only receive such payments once they receive an OFSI license.
  • UK persons should not be disadvantaged by sanctions on Russian and Belarusian DPs.

Regulators UK OFSI; UK Treasury
Entity Types Auditor; Bank; Corp
Reference Bl, 5/24/2023; PR, GL INT/2023/3024200, 5/22/2023; StIn 2019/855; StIn 2019/600;
Functions AML; Compliance; C-Suite; Financial; Legal; Operations; Reporting; Risk; Sanctions; Treasury
Countries Belarus; Russia; United Kingdom; Cross-Border
Category Central Government
Products Banking; Corporate; Payments
Regions EMEA
Rule Type Final
Rule Date 5/22/2023
Effective Date 11/21/2023
Rule Id 173427
Linked to N/A
Reg. Last Update 5/24/2023
Report Section AML & Enforcement

Last substantive update on 05/25/2023